Could your hybrid make you money?

[dochawk]

as noone has pointed it out yet, Roth IRA if you're not already doing that.

I'm comfortably retired significantly earlier than I ever planned, and may well never pay a dime in income taxes, as most of what I have is in Roth.

Unlike other retirement accounts, you can (but shouldn't) withdraw your deposits (but not the gains) without penalty.

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[ClemsonU88]

as noone has pointed it out yet, Roth IRA if you're not already doing that.

I'm comfortably retired significantly earlier than I ever planned, and may well never pay a dime in income taxes, as most of what I have is in Roth.

Unlike other retirement accounts, you can (but shouldn't) withdraw your deposits (but not the gains) without penalty.

All the Roth IRAs are probably why some in Congress are considering a national sales tax. You really think our money grubbing politicians are going to let us build life changing wealth with a large portion of it being untaxed and not get their "fare share"?

 

[dochawk]

Do note that Roth was already taxed going in. (not like that will slow the demagoguery . . .)

 

[BradnChristine]

as noone has pointed it out yet, Roth IRA if you're not already doing that.

I'm comfortably retired significantly earlier than I ever planned, and may well never pay a dime in income taxes, as most of what I have is in Roth.

Unlike other retirement accounts, you can (but shouldn't) withdraw your deposits (but not the gains) without penalty.

At 76, I still seek routes to be able to add to my Roth IRA. It requires "Earned income" and I'm not working, but everything I can get into my Roth IRA will stay there and be the very last source of capital I tap.

1099-NECs are taxable earned income and you can put the amount into a Roth (subject to the annual limitations).

 

[dochawk]

I draw my monthly from the Roth, and have my taxes figured well ahead of year end. Then I do a conversion in the maximum amount that won' get me taxed--which also gives me enough income to get the health fairy dust for the obamacare subsidy.

I need to look at what my future RMDs might be; the rest of the non-Roth will keep growing, and probably almost certainly won't all come out before those start . . .

 

[BradnChristine]

I draw my monthly from the Roth, and have my taxes figured well ahead of year end. Then I do a conversion in the maximum amount that won' get me taxed--which also gives me enough income to get the health fairy dust for the obamacare subsidy.

I need to look at what my future RMDs might be; the rest of the non-Roth will keep growing, and probably almost certainly won't all come out before those start . . .

There was a regulation that allowed me to roll over non-Roth stuff back in 2010 and split the taxable over the 2010 and 2011 tax years. I bit the bullet and moved all retirement funds into Roth then. No RMDs for me!

 

[dochawk]

I did the four year spread for most of mine back in that special first year. Most, not all, got spread, as I was a grad student at the time, and that 1/4 wasn't enough to hit the taxable level of income. So I figured out to the dollar how much to do as just that year, and how much to spread.

But later, as a professor, I had the had the auxiliary TIAA-CREF option, which had no Roth option. Also, in a high income year, I took the deduction. And both outhouse have done so well, that I'd have to cough up to convert them. So it's as much as I can convert in a year withough being taxed for now. By the time I need to take RMDs, I may be in position to just donate them anyway!

 

[ClemsonU88]

Do note that Roth was already taxed going in. (not like that will slow the demagoguery . . .)

Yes, it was taxed going in, but we haven't paid (and won't pay) any taxes on the interest we've compounded over the decades. If you put in $100k, and it's now worth $300k, you didn't pay taxes on $200k.

My point is: do you think the gov't is ok with you essentially getting $200k tax free income? That's why some are thinking about a national Federal sales tax. Not only will they be able to tax the $200k as you spend it, BUT they'll also be able to tax AGAIN the $100k that was taxed prior to putting it in the Roth as you spend it. That's a win-win for the gov't.

Demagoguery? Maybe. Or it may be the gov't just trying to get more of our money. That's not too hard to believe, is it?

 

[ClemsonU88]

At 76, I still seek routes to be able to add to my Roth IRA. It requires "Earned income" and I'm not working, but everything I can get into my Roth IRA will stay there and be the very last source of capital I tap.

1099-NECs are taxable earned income and you can put the amount into a Roth (subject to the annual limitations).

Why would your Roth be the very last source of capital you tap? Because the interest is growing tax free? Not sure I wouldn't tap my traditional IRA last. That way if I never needed it, it could pass on to my kids and effectively never have been taxed (because children don't pay taxes on inherited money up to $1M).

 

[BradnChristine]

Why would your Roth be the very last source of capital you tap? Because the interest is growing tax free? Not sure I wouldn't tap my traditional IRA last. That way if I never needed it, it could pass on to my kids and effectively never have been taxed (because children don't pay taxes on inherited money up to $1M).

Because the Roth does not have any RMDs, for one. All my traditionals have already been converted to Roth.

 

[ClemsonU88]

I just purchased my 2025 Maverick which was $13,000 more than the trade-in value of my '22. lf I had just put all my gas savings into a savings account, it probably would have been worth $2,700. After 2.5 years, that's almost enough to pay for a battery replacement if needed. That was my initial goal.

In the end, since I had invested the money in Apple then NVIDIA, my $2,700 was actually worth $7,946. So I put that and another $5k as a down payment on my '25 Maverick and kept the same loan amount for another 2.5 years. And it was all because I essentially kept my budget the same when I got the hybrid and started saving $100/month in gas.

I'll continue to save my gas money, but this may be my last comment on this post...not sure.

This is kind of a get rich slow scheme. Any time you get a raise or reduce a regular expense don't just increase your standard of living. I'm not saying to never increase your standard of living, just do it slower than your increases to income. If your salary goes up $1,000, increase your standard of living by $333. If I can do this, anyone can. If you've read down to here, I hope this has been an encouragement to you and that you find some financial wisdom in this post and updates.

 

[tom_tucker]

I just purchased my 2025 Maverick which was $13,000 more than the trade-in value of my '22. lf I had just put all my gas savings into a savings account, it probably would have been worth $2,700. After 2.5 years, that's almost enough to pay for a battery replacement if needed. That was my initial goal.

In the end, since I had invested the money in Apple then NVIDIA, my $2,700 was actually worth $7,946. So I put that and another $5k as a down payment on my '25 Maverick and kept the same loan amount for another 2.5 years. And it was all because I essentially kept my budget the same when I got the hybrid and started saving $100/month in gas.

I'll continue to save my gas money, but this may be my last comment on this post...not sure.

This is kind of a get rich slow scheme. Any time you get a raise or reduce a regular expense don't just increase your standard of living. I'm not saying to never increase your standard of living, just do it slower than your increases to income. If your salary goes up $1,000, increase your standard of living by $333. If I can do this, anyone can. If you've read down to here, I hope this has been an encouragement to you and that you find some financial wisdom in this post and updates.

So unfortunately, the savings was all for naught. 13k is a little steep to upgrade. I'll say it's worth about 7k to have 2.5 years of use back and a better car. The other 6k just kinda got thrown away.

I'm pretty convinced that the only way to truly save money with a car is buy-and-hold. After 8 years you really start seeing a big return as depreciation levels off. Depreciation is the real cost here and you just started the clock over again. Not much financial wisdom in that move.

 

[ClemsonU88]

So unfortunately, the savings was all for naught. 13k is a little steep to upgrade. I'll say it's worth about 7k to have 2.5 years of use back and a better car. The other 6k just kinda got thrown away.

I'm pretty convinced that the only way to truly save money with a car is buy-and-hold. After 8 years you really start seeing a big return as depreciation levels off. Depreciation is the real cost here and you just started the clock over again. Not much financial wisdom in that move.

I didn't like the color (it was supposed to be cyber orange, not school bus yellow), I wanted the bigger screen & heated steering wheel, and I had already put 40k+ miles on a 1st year model vehicle in 2.5 years. Most people would have just traded in the vehicle they didn't want for the one they wanted and added 13k & 3 years to their loan.

The fact that I had saved my "gas" money and invested wisely meant I could afford what I wanted without increasing my debt or payments. The gas money savings was intended to be used to replace the battery when it needed replacing. Presumably I've kicked that can down the road for another 2.5 years.

For most of my life I've denied myself what I really wanted out of necessity or cheapness. Now that I can afford it, I'm trying to balance getting what I really want with still being frugal.

I've already got $400 saved for when this truck needs a new battery, AND I'm buying stocks while they're on sale. NVIDIA was at $150 last year but is only $95 today. Buy low, sell high.

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