Debt Dumpers - 2017

[DnA2010]

Sooo excited for this three paycheck month for both DH and myself. We will also hopefully get DH's federal refund since mine showed up but his still hasn't. We still have not heard about what DH's new salary will be for his promotion, which is super irritating, but that should go into effect sometime this month as well. Hopefully budgeting a lot of money to our horse show fund this month so we can get a good cushion going for our national horse show at the end of the year. I also took my last horseback riding lesson last night so that will put another $200/mo back in my pocket. I ride at a local barn through the winter because they have an indoor arena that I can use when it's bad weather over the winter. Keeps me in shape and riding during the months when I would otherwise become a hibernating bear lol.

Going to try to continue the trend of very little eating out this month. We did really well in February, I think we ended up spending about $125, which is about half what we usually do. Going to try to pack a lot of snacks/crockpot meals for our horse show at the end of the month so we're not tempted to eat out.

In other great news, some of you may remember that my FIL had a heart attack last year that left him with significant brain damage. Yesterday, he was cleared to start driving again!! He is very excited that he will no longer have to rely on my BIL to drive him everywhere. He is limited to only one hour of driving per day right now, but that's plenty to just allow him to get out of the house even if it's just up to Starbucks or grocery store. I am hoping this will give him a big boost of confidence and a desire to improve since it's been really tough on him being essentially homebound and not being able to do much on his own.

Finally got last T4 last night- my work literally waits till the total last minute to put them online...so annoying! I have no idea how our return will go this year, as I collected EI (maternity) from Sept onwards...
Good for you for keeping going with riding over the winter- I really should! I just started my horse back walking last week as the road is finally cleanr, arena is getting better but I think will be a couple of weeks yet...my horse had an injury in Oct (2K later- horses!) so starting him back super slow

Good job on the eating out! We've been working hard at it and really notice a difference!

Yay yay yay for FIL! glad to hear he can get out a bit now!

 

[mrsabbott]

Ok. So, went to my pain specialist for the followup to the MRI last week.

Was told that the MRI scanned the lower 2/3rds of my spine and that

1. There is detectable arthritis (unexpected, but not really surprising)
2. There were several bulging discs (expected, nothing new)
3. Some of the nerves appeared to be pinched (expected, nothing new)
4. There is evidence of the degeneration of the bone on my vertebrae (completely unexpected and definitely new) causing the bulging discs and pinched nerves.

I believe the actual phrase that was used was "degenerative bone decay" but I'm not absolutely certain at this point. I probably should have recorded the conversation, or at least written notes, but didn't think to do so at the time.​

I was asked where I was currently experiencing pain and told him that it was in my lower back. He asked if the pain ever went into my legs and I said yes, at times, but that I ALWAYS had back pain, and I occasionally did not have pain into my legs.

So what they are going to do is next week inject me with a numbing agent on one side of my spine to see if that causes the pain to go away. He said that it will only work for 4 or 5 hours, a day if I am lucky, but that they are testing to see if they have it correct. If it works, about 2 weeks after that, they will inject the other side of my spine with the same thing. If both treatments are successful, then a couple weeks after that I will go in for "radio ablation treatment", or as he said, "in layman's terms 'burning the nerves'".​

My understanding is (and I know that there are some medically knowledgeable people on here, so feel free to correct and/or inform me better) that with the degenerative issue there is no chance of my back "improving", and in fact it will only continue to get worse over time. The treatment will effectively burn the nerves that are sending the sensation of pain, so I won't feel pain, but the issues causing the pain will actually still be there.

I'm of a split opinion. I'm looking forward to being pain free, but I've always understood that pain was the body's way of letting me know that something was wrong. Knowing that this will permanently disable that response troubles me a touch, as (in my understanding) I won't be able to sense the continued deterioration - which I would think would increase the likelihood that I manage to cause further, irreparable, harm. I don't plan on competing in an Iron-man race, but I also don't want to end up permanently in a wheelchair earlier than I have to.

Thoughts?

My mom has this along with several other health issues. She has two different types of arthritis and osteoporosis. She has had several back surgeries, hip replacements, neck surgery, etc.. It wasn't until she fell and broke her ankle and tibia that she ended up wheelchair bound. Edited to add: She has dealt with this for 30 years and is in a wheel chair now but hopes to eventually work her way up to a walker. She is a determined woman! It is scary, but do not let fear hold you back! You may never need a wheelchair.

I would research and ask the doctor more questions before making a decision. ((Hug))

 

[Eureka]

NOT debt dumping but we just bought tickets for Billy Joel at Madison Square Garden in July! I love him, have seen him twice (once with Elton John) but Dh and kids have not seen him. We'd already decided to do a NYC vacation this summer so then went ahead and bought Lion King tickets too. Then it occurred to us that I haven't 100% cleared that week with my manager, oops. But it shouldn't be a problem. (I hope...tickets were not cheap!) now we need to find a good place to stay that's safe, near what we want to do and won't cost an arm and leg. I know it's cheaper to stay further or in NJ but we really enjoyed staying right in the city/ies when we were in Canada last summer. We'd like to be able to park the car and not use it again until we go home. Any suggestions for us about hotels? Shows, Empire State Building, museums and 9-11 memorial/museum are our main things we want to do.

 

[Ngwira]

Estimate came in and it's $3,000 WITHOUT flooring materials. This includes ALL labor plus some basic materials such as grout for the tiles etc.. I checked Lowes and looks like we will come in way under budget since they are having a sale on laminate right now. We are looking at less than a $1 per square feet and we need 500 square feet of laminate. I'll also use my Lowes card for an extra 5 percent off, but will pay the bill in full. The insurance company gave us $5,000 to work with so looks like we will have over $1,000 to play with. Wohoo.

 

[ruadisneyfan2]

I have a question for all of our legal peeps here. My FIL passed away in November.

Dh (& each of his 5 siblings) stands to inherit 1/6 of my in laws IRA account. The attorney handling the estate sent papers for dh to sign and he asked me to look over them. As I looked through them I noticed some of the papers were an application for an IRA with a sticky pointer at the signature line.
When I mentioned this to dh he said he told the attorney he just wanted the cash. So he called him back and was told that because FIL's fund was an IRA, it first had to be converted to an IRA in dh's name then he could cash it out. (Assuming then dh would pay penalties for early withdrawl.)

It all sounds weird to me but I'm no lawyer and my parents are still living.
I understand that laws vary state to state but does this sound even remotely normal?

 

[Gr8t Fan]

I have a question for all of our legal peeps here. My FIL passed away in November.

Dh (& each of his 5 siblings) stands to inherit 1/6 of my in laws IRA account. The attorney handling the estate sent papers for dh to sign and he asked me to look over them. As I looked through them I noticed some of the papers were an application for an IRA with a sticky pointer at the signature line.
When I mentioned this to dh he said he told the attorney he just wanted the cash. So he called him back and was told that because FIL's fund was an IRA, it first had to be converted to an IRA in dh's name then he could cash it out. (Assuming then dh would pay penalties for early withdrawl.)

It all sounds weird to me but I'm no lawyer and my parents are still living.
I understand that laws vary state to state but does this sound even remotely normal?

When my mom passed in 1995 my 2 siblings and I split her IRA and were required to pay taxes on the distribution, but not the early withdrawal penalty. We're in Illinois. Definitely check with someone in your state who knows for sure because you don't want to pay any more than you have to in penalties and taxes.

 

[Eureka]

I have a question for all of our legal peeps here. My FIL passed away in November.

Dh (& each of his 5 siblings) stands to inherit 1/6 of my in laws IRA account. The attorney handling the estate sent papers for dh to sign and he asked me to look over them. As I looked through them I noticed some of the papers were an application for an IRA with a sticky pointer at the signature line.
When I mentioned this to dh he said he told the attorney he just wanted the cash. So he called him back and was told that because FIL's fund was an IRA, it first had to be converted to an IRA in dh's name then he could cash it out. (Assuming then dh would pay penalties for early withdrawl.)

It all sounds weird to me but I'm no lawyer and my parents are still living.
I understand that laws vary state to state but does this sound even remotely normal?

My grandpa died a couple years ago and my mom got his IRA but I don't think she had to pay taxes on it because it was an inheritance.

 

[ruadisneyfan2]

I would expect to pay inheritance taxes to the IRS and to the state but I think it's weird that he is told that the ONLY way he can take possession of those funds is to open a new IRA.
As if his choice is have a new IRA or get $0 from this account.
He already has a 503b through his work and another we rolled over into a Vanguard when he left his last job.

 

[Gr8t Fan]

My grandpa died a couple years ago and my mom got his IRA but I don't think she had to pay taxes on it because it was an inheritance.

We would not have had to pay taxes on the distribution if we chose to roll it over into an IRA but we took cash distributions so we all had to pay taxes. We did not have to pay the early withdrawal penalty because of my mom's death.

 

[disneyduonj]

NOT debt dumping but we just bought tickets for Billy Joel at Madison Square Garden in July! I love him, have seen him twice (once with Elton John) but Dh and kids have not seen him. We'd already decided to do a NYC vacation this summer so then went ahead and bought Lion King tickets too. Then it occurred to us that I haven't 100% cleared that week with my manager, oops. But it shouldn't be a problem. (I hope...tickets were not cheap!) now we need to find a good place to stay that's safe, near what we want to do and won't cost an arm and leg. I know it's cheaper to stay further or in NJ but we really enjoyed staying right in the city/ies when we were in Canada last summer. We'd like to be able to park the car and not use it again until we go home. Any suggestions for us about hotels? Shows, Empire State Building, museums and 9-11 memorial/museum are our main things we want to do.

Where do you plan on parking your car??? It's a fortune in NYC to park.

 

[AquaDame]

I have a question for all of our legal peeps here. My FIL passed away in November.

Dh (& each of his 5 siblings) stands to inherit 1/6 of my in laws IRA account. The attorney handling the estate sent papers for dh to sign and he asked me to look over them. As I looked through them I noticed some of the papers were an application for an IRA with a sticky pointer at the signature line.
When I mentioned this to dh he said he told the attorney he just wanted the cash. So he called him back and was told that because FIL's fund was an IRA, it first had to be converted to an IRA in dh's name then he could cash it out. (Assuming then dh would pay penalties for early withdrawl.)

It all sounds weird to me but I'm no lawyer and my parents are still living.
I understand that laws vary state to state but does this sound even remotely normal?

First of all I am sorry for your loss.

My understanding that it has to be transferred to a inherited IRA. If your FIL was funding it for more than five years disbursements should be tax free. Easiest thing to do is check with a financial advisor or your own lawyer which you will likely want to do anyway since you just inherited a sum.

Many more words here: https://www.fidelity.com/viewpoints/retirement/non-spouse-IRA

 

[dayvewc]

Got my taxes filed. Woo-hoo. Did it electronically, so if they are accepted before Saturday morning, then the refund should deposit next Friday (3/10). Just in time for spring break!!

 

[Imagineer5]

Honest question:

I know a 401K withdrawal is not a "great" idea.

But we're early-30's - DH could take out a sum from his 401k (approx. 30% of its current value) and we could put that towards a debt that has a 10.19% interest rate.

Our current track has us paying off our 4 debts (including the high interest one) December 2019. If we withdraw that $$ from the 401K, the pay off date would move up to June 2019, and we would save $7804 in interest.

We still have 30 years of working, investing in the 401K with 5% matching.

Would like some honest thoughts? Thank you.

 

[ruadisneyfan2]

First of all I am sorry for your loss.

My understanding that it has to be transferred to a inherited IRA. If your FIL was funding it for more than five years disbursements should be tax free. Easiest thing to do is check with a financial advisor or your own lawyer which you will likely want to do anyway since you just inherited a sum.

Many more words here: https://www.fidelity.com/viewpoints/retirement/non-spouse-IRA

When my mom passed in 1995 my 2 siblings and I split her IRA and were required to pay taxes on the distribution, but not the early withdrawal penalty. We're in Illinois. Definitely check with someone in your state who knows for sure because you don't want to pay any more than you have to in penalties and taxes.

My grandpa died a couple years ago and my mom got his IRA but I don't think she had to pay taxes on it because it was an inheritance.

We would not have had to pay taxes on the distribution if we chose to roll it over into an IRA but we took cash distributions so we all had to pay taxes. We did not have to pay the early withdrawal penalty because of my mom's death.

Thank you all.
We've decided to do as they instructed but then roll it over to dh's Vanguard IRA asap.

 

[Jen and Ashwin]

Honest question:

I know a 401K withdrawal is not a "great" idea.

But we're early-30's - DH could take out a sum from his 401k (approx. 30% of its current value) and we could put that towards a debt that has a 10.19% interest rate.

Our current track has us paying off our 4 debts (including the high interest one) December 2019. If we withdraw that $$ from the 401K, the pay off date would move up to June 2019, and we would save $7804 in interest.

We still have 30 years of working, investing in the 401K with 5% matching.

Would like some honest thoughts? Thank you.

The general financial advice is to never raid your 401k if there are any other options. That is because you pay a 10% penalty on money that you withdraw and you could miss out on good market returns. An article I read gave this example:

If you had $10,000 invested between Dec. 31, 1993, and Dec. 31, 2013, it would have grown to $58,332 if it was constantly invested in the S&P 500. If you missed the 10 best days during that period, the investment would have grown to only $29,111, almost half of the amount if you simply left the money untouched. By missing the 20 best days, your total is reduced to just $18,140.

It is possible you would save money on interest, but loose even more money on lower investment returns. The market is currently at an all time high. I don't think I would want to pull my money out now when investments are doing so well.

Paying off your debts 6 months sooner doesn't seem worth the 10% penalty and the risk of lower returns.

ETA: I am also early 30s and the longer my money can sit, the better off I will be for retirement. Compound interest and investment returns are the best tool to ensure a better retirement, so investing early is easier than waiting until later. Depending on how long it takes you to recoup that 30% of your savings, it could reduce your overall retirement fund by a huge amount.

 

[Imagineer5]

The general financial advice is to never raid your 401k if there are any other options. That is because you pay a 10% penalty on money that you withdraw and you could miss out on good market returns. An article I read gave this example:

If you had $10,000 invested between Dec. 31, 1993, and Dec. 31, 2013, it would have grown to $58,332 if it was constantly invested in the S&P 500. If you missed the 10 best days during that period, the investment would have grown to only $29,111, almost half of the amount if you simply left the money untouched. By missing the 20 best days, your total is reduced to just $18,140.

It is possible you would save money on interest, but loose even more money on lower investment returns. The market is currently at an all time high. I don't think I would want to pull my money out now when investments are doing so well.

Paying off your debts 6 months sooner doesn't seem worth the 10% penalty and the risk of lower returns.

ETA: I am also early 30s and the longer my money can sit, the better off I will be for retirement. Compound interest and investment returns are the best tool to ensure a better retirement, so investing early is easier than waiting until later. Depending on how long it takes you to recoup that 30% of your savings, it could reduce your overall retirement fund by a huge amount.

That is all very true. I appreciate the input!! (The #'s I quoted were after taking the penalty into account, but still). Another thing of concern is that it IS a nice buffer IF something were to happen in the next couple of years, I would hate to take away that cushion. But it sure would be nice to get out of debt sooner lol...

 

[Jen and Ashwin]

That is all very true. I appreciate the input!! (The #'s I quoted were after taking the penalty into account, but still). Another thing of concern is that it IS a nice buffer IF something were to happen in the next couple of years, I would hate to take away that cushion. But it sure would be nice to get out of debt sooner lol...

But is paying off debt 6 months earlier worth large sums for your retirement later? Say you had $100,000 in retirement savings right now and you took out $33,000, which includes the penalty.

If you retire in 30 years, that $100,000 at 5% interest would be $432,194.24.

In 30 years, $67,000 at 5% interest would be just $289,570.14.

That is a difference of $142,621.10.

Most people who take money out never really repay that money by increasing payments later to make up for the loss. And studies show that people who raid their retirement accounts once are much more likely to do it again in the future, further jeopardizing their returns.

 

[Imagineer5]

But is paying off debt 6 months earlier worth large sums for your retirement later? Say you had $100,000 in retirement savings right now and you took out $33,000, which includes the penalty.

If you retire in 30 years, that $100,000 at 5% interest would be $432,194.24.

In 30 years, $67,000 at 5% interest would be just $289,570.14.

That is a difference of $142,621.10.

Most people who take money out never really repay that money by increasing payments later to make up for the loss. And studies show that people who raid their retirement accounts once are much more likely to do it again in the future, further jeopardizing their returns.

See this is why I asked. I need to look at it from the other POV not just the near term Thank you!

 

[disneyduonj]

Also, pretty sure if your husband loses his job, gets laid off, fired or quits that loan is due immediately in its entirety.

 

[Jen and Ashwin]

Also, pretty sure if your husband loses his job, gets laid off, fired or quits that loan is due immediately in its entirety.

That is if they take a loan v. an early withdrawal. There is no penalty with a loan, but a loan must be repaid with interest and it is due immediately if someone leaves their employment, either voluntarily or not.

An early withdrawal just takes principle from the account and incurs a 10% penalty on the money being withdrawn.