Loans and taxes

[Sparklyfairy]

Hey all!

I have a question regarding my income and whether I would get taxed the same amount on it if I am using most of it to pay out my loans.

Basically, if I am using most of my income to pay out my loans, and actually using just a small portion of my monthly income, is there any way they can lessen my income taxes? It's just such a huge sum of tax money that are taken out of our incomes and it left me for a loop, especially since I am using most of it to pay out my loans. Worth a shot to ask.

Also, if anyone has any idea on how to make extra easy income on the side would love to have any ideas.

Thank you

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[OutWest435]

Hey all!

I have a question regarding my income and whether I would get taxed the same amount on it if I am using most of it to pay out my loans.

Basically, if I am using most of my income to pay out my loans, and actually using just a small portion of my monthly income, is there any way they can lessen my income taxes? It's just such a huge sum of tax money that are taken out of our incomes and it left me for a loop, especially since I am using most of it to pay out my loans. Worth a shot to ask.

Also, if anyone has any idea on how to make extra easy income on the side would love to have any ideas.

Thank you

Paying off principal can not be written off, paying interest can

 

[redchesus]

paying interest can

That's also only if you make less than a certain amount

 

[deleted1166024]

You can deduct up to $2,500 of student loan interest you paid during the year.

The $2,500 phases out when your modified AGI is:
$70,000 - $85,000 if Single
$145,000 - $175,000 if Married

 

[Sparklyfairy]

Thank you guys!

 

[Thehighwind87]

Hey all!

I have a question regarding my income and whether I would get taxed the same amount on it if I am using most of it to pay out my loans.

Basically, if I am using most of my income to pay out my loans, and actually using just a small portion of my monthly income, is there any way they can lessen my income taxes? It's just such a huge sum of tax money that are taken out of our incomes and it left me for a loop, especially since I am using most of it to pay out my loans. Worth a shot to ask.

Also, if anyone has any idea on how to make extra easy income on the side would love to have any ideas.

Thank you

It's worth looking into some financial advice on paying off loans versus interest versus taxes.

When I first started off- 2010ish- I focused on paying off all my loans 200k worth. I got it done in about 3 year?. But I was dumping money into the principle etc.

Now If I had a balanced approach and I put some into loans- while INVESTING- some of that money into stocks/index funds- I would be wayyyy further in net worth.

Yes not having loans is a great thing- as it's not burdensome anymore- but the smarter person takes a balanced approach and invests while paying loans off. Time in the market cannot be "made" in the later years. Looking at amazons price in 2010-2013 and seeing my "loans" paid off sorta makes me sick- but then again- hindsight is 20/20.

 

[Big Time Hoosier]

It's just such a huge sum of tax money that are taken out of our incomes and it left me for a loop, especially since I am using most of it to pay out my loans.

Welcome to being a responsible adult! Someone has to fund the Bernie Sanders Free Stuff Brigade.

Big Hoss

 

[Thehighwind87]

Welcome to being a responsible adult! Someone has to fund the Bernie Sanders Free Stuff Brigade.

Big Hoss

Sucks to learn the hard way compounding interest on half a mil of loans.

Brutal. Glad I graduated in the 2010s with 200k

 

[yappy]

Funny story. I had the same dilemma recently. 2022 the market was down and I had cashed out in Jan 2022- meaning I had a huge sum of cash. Everyday with the market going down- I debated on just paying off my loans at 3% rates. I talked to my accountant about it- and he basically said- you can deduct interest- so in theory having a principle and having interest- in a way- is a good thing- if you balance it right. He advised against it so I didn't pay off loans- even though sitting in cash was painful. (at least I wasn't losing money in the market at least).

Instead I bought the dip, was up 7% for 2022, and 35% for 2023 YTD.

That sure beats 3%.

The moral of the story is that while you can pay off loans etc and dump into principle- it's worth talking to your accountant/personal financial advisor to figure out the best way to maximize your interest, loans, and other investments. A 42% gain in the span of 1 1/2 year while the market was down in 2022- goes a long long long way rather then paying off your loans at 3%.

this is the advice someone has to take if they’ve bought into the bank’s lending game. You can invest without having debt.

 

[Thehighwind87]

this is the advice someone has to take if they’ve bought into the bank’s lending game. You can invest without having debt.

That’s true that you can invest without having debt but at the same time, the opposite remains true to- cheap money (debt) means you can invest aggressively. It’s much harder to invest aggressively if you have debt at 7% rates. Refinancing to 3% when rates were zero bound and leveraging into appreciating assets during the qe 2010-2021 has shown great returns.

However now with 5% rates I wonder what the new gameplan is. If it’s gonna be cut back to 0% rates then it’s back to the same gameplan. Regardless all this should be talked with a financial advisor. Investing while having no debt is prob the safest route. That’s fine. That’s a 3% return annually. Balancing it out and investing with debt can prob yield greater returns. If you go the other extreme of aggressive investing it can work even better but obviously risk is higher.

I for one go the riskier route because I have all my debts under control.

 

[yappy]

That’s true that you can invest without having debt but at the same time, the opposite remains true to- cheap money (debt) means you can invest aggressively. It’s much harder to invest aggressively if you have debt at 7% rates. Refinancing to 3% when rates were zero bound and leveraging into appreciating assets during the qe 2010-2021 has shown great returns.

However now with 5% rates I wonder what the new gameplan is. If it’s gonna be cut back to 0% rates then it’s back to the same gameplan. Regardless all this should be talked with a financial advisor. Investing while having no debt is prob the safest route. That’s fine. That’s a 3% return annually. Balancing it out and investing with debt can prob yield greater returns. If you go the other extreme of aggressive investing it can work even better but obviously risk is higher.

I for one go the riskier route because I have all my debts under control.

I think the problem is most people talk themselves out of paying off debt to consume at a higher level, instead of actually investing.

 

[Roto Picante]

I think the problem is most people talk themselves out of paying off debt to consume at a higher level, instead of actually investing.

This is the entire backbone of the Ramsey way. People are dumb and spend instead of save.

 

[Thehighwind87]

I think the problem is most people talk themselves out of paying off debt to consume at a higher level, instead of actually investing.

Sadly- alot of older dentists are stuck in this predicament. 50+ with student loans and lots of fancy toys...but no real savings.

 

[charlestweed]

I think the problem is most people talk themselves out of paying off debt to consume at a higher level, instead of actually investing.

That’s why I am a big fan of Dave Ramsey. You shouldn’t invest when you’re broke. You are considered broke even when you make plenty of money to pay back all your student loans ontime every month. When our government can make payments to pay back the $31 trillion debt every month, it doesn’t mean our country is wealthy. Our country is broke. A lot of people make $200-300k/yr and still wonder where all their money goes….still wonder why they can’t pay back the loans….still wonder why they are not able to save for things like a large home repair, emergency fund, and retirement etc.

Pay off your debt first and then invest. Remember student loans cannot be fully discharged by bankruptcy. They are like taxes and you have to pay them back as long as you are alive.

I remember when I was a young new grad, a lot of my dentist friends advised me to consolidate all the high interest federal loans into one loan with lower interest rate. Some of them refinanced and stretched out the loan term to 30 years so their monthly payments would be lower. I am glad I didn’t listen to them and did the exact opposite. My wife and I paid off our combined $450k student loan debt in 5 years. Because we paid them off early, we ended up paying less than 3% in interest, instead of 6-7%. Another advantage of paying off early was we had less money to waste on things that we didn’t need.

All debts are bad....I don't care how low the interest rates are.

 

[Thehighwind87]

That’s why I am a big fan of Dave Ramsey. You shouldn’t invest when you’re broke. You are considered broke even when you make plenty of money to pay back all your student loans ontime every month. When our government can make payments to pay back the $31 trillion debt every month, it doesn’t mean our country is wealthy. Our country is broke. A lot of people make $200-300k/yr and still wonder where all their money goes….still wonder why they can’t pay back the loans….still wonder why they are not able to save for things like a large home repair, emergency fund, and retirement etc.

Pay off your debt first and then invest. Remember student loans cannot be fully discharged by bankruptcy. They are like taxes and you have to pay them back as long as you are alive.

I remember when I was a young new grad, a lot of my dentist friends advised me to consolidate all the high interest federal loans into one loan with lower interest rate. Some of them refinanced and stretched out the loan term to 30 years so their monthly payments would be lower. I am glad I didn’t listen to them and did the exact opposite. My wife and I paid off our combined $450k student loan debt in 5 years. Because we paid them off early, we ended up paying less than 3% in interest, instead of 6-7%. Another advantage of paying off early was we had less money to waste on things that we didn’t need.

All debts are bad....I don't care how low the interest rate is.

There is nothing wrong with being debt free- but as albert einstein said “Compound Interest is The Most Powerful Force in The Universe.”

OP get a financial advisor to figure out your finances.

 

[LFA20]

That’s why I am a big fan of Dave Ramsey. You shouldn’t invest when you’re broke. You are considered broke even when you make plenty of money to pay back all your student loans ontime every month. When our government can make payments to pay back the $31 trillion debt every month, it doesn’t mean our country is wealthy. Our country is broke. A lot of people make $200-300k/yr and still wonder where all their money go….still wonder why they can’t pay back the loans….still wonder why they are not able to save for things like a large home repair, emergency fund, and retirement etc.

Pay off your debt first and then invest. Remember student loans cannot be fully discharged by bankruptcy. They are like taxes and you have to pay them back as long as you are alive.

I remember when I was a young new grad, a lot of my dentist friends advised me to consolidate all the high interest federal loans into one loan with lower interest rate. Some of them refinanced and stretched out the loan term to 30 years so their monthly payments would be lower. I am glad I didn’t listen to them and did the exact opposite. My wife and I paid off our combined $450k student loan debt in 5 years. Because we paid them off early, we ended up paying less than 3% in interest, instead of 6-7%. Another advantage of paying off early was we had less money to waste on things that we didn’t need.

All debts are bad....I don't care how low the interest rates are.

Or you can just do PSLF. Work for 10 years in the Indian health service, public health, etc and have your remaining loans forgiven tax free.
There are also lots of loan repayment programs out there!

Charles, our current generation now doesn’t believe in working hard and paying off loans as fast as possible. It’s all about banking on the government to pay off our loans while maintaining an upper middle class life-style.

 

[Thehighwind87]

Or you can just do PSLF. Work for 10 years in the Indian health service, public health, etc and have your remaining loans forgiven tax free.
There are also lots of loan repayment programs out there!

Charles, our current generation now doesn’t believe in working hard and paying off loans as fast as possible. It’s all about banking on the government to pay off our loans while maintaining an upper middle class life-style.

Our current generation has basically seen bailout for wallstreet while savers and those that paid off their debts basically get screwed.

2008-09 broke the system and 2020 basically monetized the debt. When the debt was basically monetized (printed) it set a precedent that future generations may bank of total loan forgiveness.

Can you blame the current generation? No.

 

[charlestweed]

Or you can just do PSLF. Work for 10 years in the Indian health service, public health, etc and have your remaining loans forgiven tax free.
There are also lots of loan repayment programs out there!

This is one of the ways to pay back the student loan debt if you don’t mind giving up your youth years, giving up all the funs of the big cities, and are OK with living in a middle of nowhere for the next 10 years of your life. Hopefully, the government will keep its words and forgive your loans. I’d much rather work hard, pay off the loans faster (in 5 years) and get to live wherever I want. Being close to my family is very important to me. Nothing is easy. Life is a series of trade-offs. You have to give up something in order to gain something.

Charles, our current generation now doesn’t believe in working hard and paying off loans as fast as possible. It’s all about banking on the government to pay off our loans while maintaining an upper middle class life-style.

It’s not just your current generation. I want the same things as well. Who wouldn’t want to make more and work less? I chose dentistry (and later specialized in ortho) because I wanted to have the upper middle class lifestyle without having to work too hard. I don’t want to do all the hard work by myself either. I want someone else to help me pay off the loans ASAP (so I can start enjoying life sooner) and that’s why I married a dentist. Having 2 great incomes in a household is always better.

 

[Sparklyfairy]

I'm sure this thread is probably going to be helpful to a lot of new grads, thank you all for sharing insights!

 

[charlestweed]

Also, if anyone has any idea on how to make extra easy income on the side would love to have any ideas.

Thank you

1. Get another associate job somewhere else, if your current F/T job don’t have enough patients to offer you 6 days/wk work schedule. This is not an easy way but it sure beats all other side gigs in term of salary. When you are busy working all the time, you don’t have time to waste money on stupid things like online shoppings, eating out etc. It’s best to work like this when you are young, healthy, have no kids, and have plenty of free time. You will see that you’ll have less free time when you get older because of family and kids. And you will also be slower and less productive (due to decline in motivation, job burnout, physical limitation such as back pain, carpal tunnel etc) when you get older. Therefore, it’s not a good thing to still be in debt when you are in your late 40s, early 50s….and your kids will be about to enter colleges and need your financial help.

2. Tutor HS kids. That’s what my wife does on her spare time. The kids come to our house. She teaches them and cooks meal at the same time.

3. Learn to do work around the house instead of hiring housekeeper, gardener, handyman etc. You are more motivated to do these things when it’s your own house.

4. Wash your own car instead of bringing it in to a car wash. I am very particular about the swirl marks created by the dirty towels. I use clean towels when I wash my own car.

5. Instead of putting your 6-month emergency fund in a low yield saving account at your local brick-and-motar bank, put it in a high yield saving account at a no-name online bank…..and earn 5% interest. The current rates for short term 4, 8,13 wks T-bills are around 5% as well and you don’t have to pay state and local taxes.

 

[Thehighwind87]

1. Get another associate job somewhere else, if your current F/T job don’t have enough patients to offer you 6 days/wk work schedule. This is not an easy way but it sure beats all other side gigs in term of salary. When you are busy working all the time, you don’t have time to waste money on stupid things like online shoppings, eating out etc. It’s best to work like this when you are young, healthy, have no kids, and have plenty of free time. You will see that you’ll have less free time when you get older because of family and kids. And you will also be slower and less productive (due to decline in motivation, job burnout, physical limitation such as back pain, carpal tunnel etc) when you get older. Therefore, it’s not a good thing to still be in debt when you are in your late 40s, early 50s….and your kids will be about to enter colleges and need your financial help.

2. Tutor HS kids. That’s what my wife does on her spare time. The kids come to our house. She teaches them and cooks meal at the same time.

3. Learn to do work around the house instead of hiring housekeeper, gardener, handyman etc. You are more motivated to do these things when it’s your own house.

4. Wash your own car instead of bringing it in to a car wash. I am very particular about the swirl marks created by the dirty towels. I use clean towels when I wash my own car.

5. Instead of putting your 6-month emergency fund in a low yield saving account at your local brick-and-motar bank, put it in a high yield saving account at a no-name online bank…..and earn 5% interest. The current rates for short term 4, 8,13 wks T-bills are around 5% as well and you don’t have to pay state and local taxes.

Charles hits some good points- I do think though:

The easiest boost in income will be ownership. Tax deductions, lower overhead (more takehome pay) while building equity and maxing out your 401k. You can add an extra associate day here and there but I find that to be a waste of time as the amount you make as an associate in a day is minimal compared to a busy packed owner doc schedule. Plus life is short- the best thing about our job is a 4 day work week. Plus if you are young- you can hustle- open a friday/saturday and make even more income.

But what I wish I learned the most in my career was the the power of compounding interest. Make your money work for you. Learn what compound interest does and how at a certain level- you honestly don't even need to work anymore. Sometimes my staff are wondering and looking at me and saying doc the schedule for you is empty aren't you stressed...and the answer is no. Cuz my principle is making more then enough that I don't need to hustle like my younger days.

Just talk to a financial advisor/cpa and they can show you the value of practice ownership and compound interest.

Research and Insights - AMG Wealth

www.amgfunds.com

 

[charlestweed]

Charles hits some good points- I do think though:

The easiest boost in income will be ownership. Tax deductions, lower overhead (more takehome pay) while building equity and maxing out your 401k. You can add an extra associate day here and there but I find that to be a waste of time as the amount you make as an associate in a day is minimal compared to a busy packed owner doc schedule. Plus life is short- the best thing about our job is a 4 day work week. Plus if you are young- you can hustle- open a friday/saturday and make even more income.

But what I wish I learned the most in my career was the the power of compounding interest. Make your money work for you. Learn what compound interest does and how at a certain level- you honestly don't even need to work anymore. Sometimes my staff are wondering and looking at me and saying doc the schedule for you is empty aren't you stressed...and the answer is no. Cuz my principle is making more then enough that I don't need to hustle like my younger days.

Just talk to a financial advisor/cpa and they can show you the value of practice ownership and compound interest.

Research and Insights - AMG Wealth

www.amgfunds.com

Practice ownership indeed gives you better opportunities to make more. But you have do everything right such as choosing the right location, keeping the overhead low, having great business skills, non-stop effort to keep the patients happy (happy patients = more word-of-mouth referrals). The moment you stop putting in the effort, your office will fall apart very quickly. When the boss gets lazy, the staff will become less motivated and lazy as well. In dentistry, don’t expect to be on an “auto-pilot” or semi-retire mode and continue to make great income. Nobody cares about your practice the same way that you do. That’s why many older dentists, who are at my age (51), don’t produce as much as when they were younger. The ones who continue work hard to maintain their reputation continue to make a lot of money.

The problem with practice ownership is the initial capital risk that many young dentists (myself included when I was young) are not willing to take, especially when many of them already have massive student loan debt. Years ago, it was much cheaper to build a practice because we, older dentists, didn’t need any of the expensive modern equipment in order to provide excellent care for our patients. Sadly, today young grads can’t work without these expensive toys. Due to such huge financial risk, many young grads find it much safer to just work for someone else for a few years. And the best way to increase the associate income is to work as many days as possible.

According to the link you provided, for the compound interest to work, “it requires three things: the original investment remains invested, the reinvestment of earnings, and time. The more time you give your investments, the more you may be able to accelerate the income potential of your original investment”. To me, that still takes way too long to generate the right amount for retirement. You cannot take out the money to spend it and have to keep reinvesting. I find it way faster to accummulate wealth by practicing dentistry, which is what I am good at, and I can spend it on things that I like. I am glad I used my dental income to invest in rental properties, which continue to appreciate in value + generate passive income. And I can raise rents every few years.

 

[Thehighwind87]

Practice ownership indeed gives you better opportunities to make more. But you have do everything right such as choosing the right location, keeping the overhead low, having great business skills, non-stop effort to keep the patients happy (happy patients = more word-of-mouth referrals). The moment you stop putting in the effort, your office will fall apart very quickly. When the boss gets lazy, the staff will become less motivated and lazy as well. In dentistry, don’t expect to be on an “auto-pilot” or semi-retire mode and continue to make great income. Nobody cares about your practice the same way that you do. That’s why many older dentists, who are at my age (51), don’t produce as much as when they were younger. The ones who continue work hard to maintain their reputation continue to make a lot of money.

The problem with practice ownership is the initial capital risk that many young dentists (myself included when I was young) are not willing to take, especially when many of them already have massive student loan debt. Years ago, it was much cheaper to build a practice because we, older dentists, didn’t need any of the expensive modern equipment in order to provide excellent care for our patients. Sadly, today young grads can’t work without these expensive toys. Due to such huge financial risk, many young grads find it much safer to just work for someone else for a few years. And the best way to increase the associate income is to work as many days as possible.

According to the link you provided, for the compound interest to work, “it requires three things: the original investment remains invested, the reinvestment of earnings, and time. The more time you give your investments, the more you may be able to accelerate the income potential of your original investment”. To me, that still takes way too long to generate the right amount for retirement. You cannot take out the money to spend it and have to keep reinvesting. I find it way faster to accummulate wealth by practicing dentistry, which is what I am good at, and I can spend it on things that I like. I am glad I used my dental income to invest in rental properties, which continue to appreciate in value + generate passive income. And I can raise rents every few years.

I tried the real estate route but housing in my time was to expensive. Was much easier to generate alpha in the market for me. Glad real estate worked for you. Nasdaq is off to a record year so my money is generating great return this far.

 

[charlestweed]

I tried the real estate route but housing in my time was to expensive. Was much easier to generate alpha in the market for me. Glad real estate worked for you. Nasdaq is off to a record year so my money is generating great return this far.

My wife and I made money fairly quickly because we both worked 6 days/wk when we were young. We didn’t know what to do with the money since we were clueless (still are now) about stock investments. We didn’t want to let the money sit in the banks (and lost the value) either. So we bought rental properties. Since we had zero student loan debt (was paid off in 5 yrs) and had great income, the banks approved our loans without any problem. With our stable income, we could have bought more than just 3.5 properties (we shared cost on 1 property with my wife’s brother) if we wanted to, but we didn’t want to take too much risk. We didn’t want to be slaves to the banks….didn’t want work forever to pay back the debts. So we paid off all the loans ASAP.

I started to invest in stocks (followed my sister’s advice) 2 years ago when all the debts were paid off. And so far I’ve lost around $5k in stocks. I also invested in Bitcoin when it was around $47k/coin. I was excited when it went up to as high as $65k….now it’s only $29k. So I’ve lost the money on Bitcoin as well. For me, real estate investment is still the safest investment. I kind of want the fed to continue to raise rates so I can earn higher interest on my high yield savings and CDs.....and slows down the inflation rate.

 

[juniordentist]

My wife and I made money fairly quickly because we both worked 6 days/wk when we were young. We didn’t know what to do with the money since we were clueless (still are now) about stock investments. We didn’t want to let the money sit in the banks (and lost the value) either. So we bought rental properties. Since we had zero student loan debt (was paid off in 5 yrs) and had great income, the banks approved our loans without any problem. With our stable income, we could have bought more than just 3.5 properties (we shared cost on 1 property with my wife’s brother) if we wanted to, but we didn’t want to take too much risk. We didn’t want to be slaves to the banks….didn’t want work forever to pay back the debts. So we paid off all the loans ASAP.

I started to invest in stocks (followed my sister’s advice) 2 years ago when all the debts were paid off. And so far I’ve lost around $5k in stocks. I also invested in Bitcoin when it was around $47k/coin. I was excited when it went up to as high as $65k….now it’s only $29k. So I’ve lost the money on Bitcoin as well. For me, real estate investment is still the safest investment. I kind of want the fed to continue to raise rates so I can earn higher interest on my high yield savings and CDs.....and slows down the inflation rate.

What is your net worth at this point?

 

[LFA20]

I tried the real estate route but housing in my time was to expensive. Was much easier to generate alpha in the market for me. Glad real estate worked for you. Nasdaq is off to a record year so my money is generating great return this far.

I am kicking myself for not buying the dip. All these finance youtubers are predicting a crash with their reasoning being high core inflation, high interest rates, and QT. Got no choice but to wait till the next dip(if that ever happens...). Cash is parked in HYSA now collecting 4.65% in the meantime.

 

[deleted1166024]

I am kicking myself for not buying the dip. All these finance youtubers are predicting a crash with their reasoning being high core inflation, high interest rates, and QT. Got no choice but to wait till the next dip(if that ever happens...). Cash is parked in HYSA now collecting 4.65% in the meantime.

Stop waiting for the dip. Nobody can time the market. That's gambling. Make a plan to consistently invest over time. It won't let you down!

 

[charlestweed]

What is your net worth at this point?

Not enough to cover my current living expenses budget, which is around $17,000/month (including the $4500 amount that I have to put away every month for 401k). I don’t plan to sell my investment properties, which will eventually belong to my children. I continue to work for at least 8-9 more years, when I turn 60. I don’t mind working in my 60s because I am not sure what fun things there are for me to do after retirement. Staying at home doing nothing is boring. I am not really a fan of traveling….hate long flights. I know I am weird.

 

[charlestweed]

I am kicking myself for not buying the dip. All these finance youtubers are predicting a crash with their reasoning being high core inflation, high interest rates, and QT. Got no choice but to wait till the next dip(if that ever happens...). Cash is parked in HYSA now collecting 4.65% in the meantime.

That’s the problem with stock trading.…you don’t know when you should buy….so much uncertainty. But for rental properties, you can buy them any time if you have the 20-30% down payment amount and a good stable job like dentistry (so the banks will approve the loan). The tenants help pay the mortgage and then 20-30 yrs later, you’ll have 100% ownership of the house, which will be worth 3-4 times the original purchase price. The only problem with real estate investment is 20-30% down payment amount can be a large amount of money for some. Only people (like dentists and doctors), who have good salaries, can come up with such large amount in a short period of time.

 

[Thehighwind87]

I am kicking myself for not buying the dip. All these finance youtubers are predicting a crash with their reasoning being high core inflation, high interest rates, and QT. Got no choice but to wait till the next dip(if that ever happens...). Cash is parked in HYSA now collecting 4.65% in the meantime.

Time in the market beats timing the market. NOONE knows what the market will do, but long term your returns should be fine. All these youtubers make their money off views. They don't know anything either- but what makes them money is the clicks to their videos...and what brings in clicks? DOOMSDAY QT INFLATION MARKET CRASHING.

Regardless- the market has been pretty kind to me, and this year has been amazing 35% YTD +

 

[Thehighwind87]

That’s the problem with stock trading.…you don’t know when you should buy….so much uncertainty. But for rental properties, you can buy them any time if you have the 20-30% down payment amount and a good stable job like dentistry (so the banks will approve the loan). The tenants help pay the mortgage and then 20-30 yrs later, you’ll have 100% ownership of the house, which will be worth 3-4 times the original purchase price. The only problem with real estate investment is 20-30% down payment amount can be a large amount of money for some. Only people (like dentists and doctors), who have good salaries, can come up with such large amount in a short period of time.

The only problem with getting into real estate right now is that houses have appreciated so high. Getting a 20% payment on 1 mil + house is not easy. Getting it on a few houses is even harder. Plus you have to deal with tenants, and be a handyman. In addition real estate is not liquid.

I would rather just buy the dip like tesla stock when it dipped to 100 and double my money without any worry.

Real estate isn't for everyone and with higher capital requirements 20% on 1 mil + house along with high interest rates isn't for everyone.

 

[charlestweed]

The only problem with getting into real estate right now is that houses have appreciated so high. Getting a 20% payment on 1 mil + house is not easy. Getting it on a few houses is even harder.

That's correct. You have to have $200k for a down payment…..or more…. some banks require 30% down for investment property. You can always tap into your 6-month emergency fund, that you’re supposed to save, and then you can replenish it later. Just work 1-2 additional days per wk. For every work day that you add per wk, you can add $50-70k/year to your annual income. I wouldn’t recommend doing this long term because it will lead to job burnout. Just do this a couple of years and you should have a couple of properties when you’re in your 40s, 50s. Having a spouse who also works full time should help a lot.

Plus you have to deal with tenants, and be a handyman.

Also true. There is no such thing as easy money or get rich quick. Every investment has its pros and cons. The fastest way to build wealth is to work. Your greatest asset is still your dental income.

In addition real estate is not liquid.

Like stock investment, you are not supposed to touch/sell it. It’s supposed to be for your retirement (a nice source of passive income) when your weak old body can no longer generate income.

I would rather just buy the dip like tesla stock when it dipped to 100 and double my money without any worry.

I bought Tesla stock 2 years ago and I had lost money in the last 2 years. Luckily, gained it all back a couple of days ago….thanks to the recent Tesla’s historic 12-day gain. Hopefully, it'll go up from here.

 

[Thehighwind87]

That's correct. You have to have $200k for a down payment…..or more…. some banks require 30% down for investment property. You can always tap into your 6-month emergency fund, that you’re supposed to save, and then you can replenish it later. Just work 1-2 additional days per wk. For every work day that you add per wk, you can add $50-70k/year to your annual income. I wouldn’t recommend doing this long term because it will lead to job burnout. Just do this a couple of years and you should have a couple of properties when you’re in your 40s, 50s. Having a spouse who also works full time should help a lot.

Also true. There is no such thing as easy money or get rich quick. Every investment has its pros and cons. The fastest way to build wealth is to work. Your greatest asset is still your dental income.

Like stock investment, you are not supposed to touch/sell it. It’s supposed to be for your retirement (a nice source of passive income) when your weak old body can no longer generate income.

I bought Tesla stock 2 years ago and I had lost money in the last 2 years. Luckily, gained it all back a couple of days ago….thanks to the recent Tesla’s historic 12-day gain. Hopefully, it'll go up from here.

I ain’t gonna lie, your bitcoin purchases and Tesla purchases had me wondering about your stock market luck. The market 2020-21-23 has been easy money. 22 was rough but still came out with net gain. If you buy in lemme know so that I can sell- you seem to mark the tops of markets lol. No offense!

 

[charlestweed]

I ain’t gonna lie, your bitcoin purchases and Tesla purchases had me wondering about your stock market luck. The market 2020-21-23 has been easy money. 22 was rough but still came out with net gain. If you buy in lemme know so that I can sell- you seem to mark the tops of markets lol. No offense!

Yeah, it’s obvious that I am not good at stock trading. LOL. I try to diversify my investments but it doesn’t seem to work out. Luckily, I own less than 1 Bitcoin….and I only invested about $3k in Tesla stock. I’ve sold a bunch of stocks that I lost my money on. Currently, I only have AAPL, COST, TSLA, WMT.

 

[LFA20]

Time in the market beats timing the market. NOONE knows what the market will do, but long term your returns should be fine. All these youtubers make their money off views. They don't know anything either- but what makes them money is the clicks to their videos...and what brings in clicks? DOOMSDAY QT INFLATION MARKET CRASHING.

Regardless- the market has been pretty kind to me, and this year has been amazing 35% YTD +

Yeah I agree. Do you have most of your $ in SPY/QQQ? or you pick individual stocks? I put all my eggs in one basket in TSLA at 173/share for 1200 shares. Stock then plummeted to $100 and I was down 40% in an instant. I held through and didn't sell. Then I sold at breakeven since I got scared. Now its at $250s LMAO. I would have been up 120k now... sigh... I'm waiting for spy to pull back before buying just for my sanity lol..

@charlestweed there is no right time to buy. It's always best to buy and DCA and DON'T look at your portfolio. The hardest part is watching your PF being down and not panic/sell. Man I guess I should stick with index funds/ETF.

 

[LFA20]

I ain’t gonna lie, your bitcoin purchases and Tesla purchases had me wondering about your stock market luck. The market 2020-21-23 has been easy money. 22 was rough but still came out with net gain. If you buy in lemme know so that I can sell- you seem to mark the tops of markets lol. No offense!

Tons of people bought TSLA and other growth stocks at the top during the 2020-2021 run. They are still down 30-40%. Buying when there's blood on the street is hard...

 

[Thehighwind87]

Yeah I agree. Do you have most of your $ in SPY/QQQ? or you pick individual stocks? I put all my eggs in one basket in TSLA at 173/share for 1200 shares. Stock then plummeted to $100 and I was down 40% in an instant. I held through and didn't sell. Then I sold at breakeven since I got scared. Now its at $250s LMAO. I would have been up 120k now... sigh... I'm waiting for spy to pull back before buying just for my sanity lol..

@charlestweed there is no right time to buy. It's always best to buy and DCA and DON'T look at your portfolio. The hardest part is watching your PF being down and not panic/sell. Man I guess I should stick with index funds/ETF.

I have two accts:

1) Index fund where I invest about everyday into the spy rain or shine. Green Day or red day.

2) Managed portfolio of 10 stocks. Mostly concentrated in fang plus 2 speculation plays.

My managed port does well but when it dumps- it dumps. The spy one is pretty boring but if you do a backtest extrapolation and invest 500 a day into it you should be able to get at retirement 65… a cool 10 million on 7% return. 30 year investment horizon.

I’m banking on my managed to get me further but when it’s a red day… it can be extremely painful. I don’t really hold cash- I think my bank acct has like 30$. Cash imo is trash. Inflation running at 4-5% as they say- imo prob higher- and checking accounts pay nothing. Gotta hedge against losing your purchasing power. While money markets can give you 5% it’s hard to sit in it and watch the qqq up 30%+ and not have fomo.

 

[juniordentist]

Not enough to cover my current living expenses budget, which is around $17,000/month (including the $4500 amount that I have to put away every month for 401k). I don’t plan to sell my investment properties, which will eventually belong to my children. I continue to work for at least 8-9 more years, when I turn 60. I don’t mind working in my 60s because I am not sure what fun things there are for me to do after retirement. Staying at home doing nothing is boring. I am not really a fan of traveling….hate long flights. I know I am weird.

How are you spending 17k a month? That seems like a ridiculously high expenditure. Are you living a very lavish lifestyle?

 

[charlestweed]

How are you spending 17k a month? That seems like a ridiculously high expenditure. Are you living a very lavish lifestyle?

We have a comfortable, not lavish, lifestyle. The only “lavish” thing is the BMW, which costs us $1469/month to lease. The house is paid off but we still have to pay property taxes, insurance, utility bills, pool/landscape maintenances etc. The current monthly total is around $22k. It’ll be reduced to around $17-18k/month, when we no longer need to pay for our son’s college education (he’ll graduate in 3 years) and when we no longer need to help our parents (my dad and my wife’s dad). After college, if our son chooses to pursue either dentistry or medicine, we will have to continue to support him financially.

Property Tax: 1960
Property insurance: 290
Electricity: 450
HOA: 250
Gas: 70
Water: 150
Trash: 15
Gardening: 180
ADT security alarm: $75
Pool maintenance: 150
Internet: 150
Cell phones: 200
Youtube TV subcription: 73
House cleaning: 300
Life insurance: 684
Car insurance (for 3 vehicles): 600
Blue Shield PPO Health insurance (for 4 people): 1600
Disability insurance: 150
BMW lease: 1469
Grocery/Food: 1000
Restaurant dining: 1000
Gasoline: 300
401k: 4500
Financial assistants for both parents (my dad and my wife’s dad): $1000
Home supplies (toilet papers, soap, detergent, trash bags etc): $100
UCLA tuition + dormitory + food (for my son): $3250
Church + other charitable donations: $800
Gifts (Christmas, Father’s Day, Parents’ B-Days, nieces’ and nephew’s B-days etc): $200
Vacation (flights + hotel + ground transportation + dinning for 4 people): $1250

Total: $22,216

 

[charlestweed]

A lot of people make $2-300k and still wonder where all the money goes. It's important to have written budget and try to spend less than you make. Here is one of many examples. The caller lives in Kansas City, and not in expensive city in CA or NY.

 

[Thehighwind87]

We have a comfortable, not lavish, lifestyle. The only “lavish” thing is the BMW, which costs us $1469/month to lease. The house is paid off but we still have to pay property taxes, insurance, utility bills, pool/landscape maintenances etc. The current monthly total is around $22k. It’ll be reduced to around $17-18k/month, when we no longer need to pay for our son’s college education (he’ll graduate in 3 years) and when we no longer need to help our parents (my dad and my wife’s dad). After college, if our son chooses to pursue either dentistry or medicine, we will have to continue to support him financially.

Property Tax: 1960
Property insurance: 290
Electricity: 450
HOA: 250
Gas: 70
Water: 150
Trash: 15
Gardening: 180
ADT security alarm: $75
Pool maintenance: 150
Internet: 150
Cell phones: 200
Youtube TV subcription: 73
House cleaning: 300
Life insurance: 684
Car insurance (for 3 vehicles): 600
Blue Shield PPO Health insurance (for 4 people): 1600
Disability insurance: 150
BMW lease: 1469
Grocery/Food: 1000
Restaurant dining: 1000
Gasoline: 300
401k: 4500
Financial assistants for both parents (my dad and my wife’s dad): $1000
Home supplies (toilet papers, soap, detergent, trash bags etc): $100
UCLA tuition + dormitory + food (for my son): $3250
Church + other charitable donations: $800
Gifts (Christmas, Father’s Day, Parents’ B-Days, nieces’ and nephew’s B-days etc): $200
Vacation (flights + hotel + ground transportation + dinning for 4 people): $1250

Total: $22,216

Charles I’m not gonna lie but anyone that is living on 22k expenses and they say it’s not lavish is kidding themselves. You are not even upper middle class- you are plainly rich. And there is nothing wrong with that.

Your restaurant dining alone of 1k is more than my personal credit card expenses. Lol

A 1500$ lease is insane for middle class standards. That means you must have big pockets. The average American is struggling with a 500$ lease. Excluding my mortgage and just monthly expenses your car lease is half of my total expenditures a month of 3k.

That’s pretty wealthy.

 

[charlestweed]

Your restaurant dining alone of 1k is more than my personal credit card expenses. Lol

It’s still cheaper than taking expensive vacation strips around the world several times a year. We only travel once a year. We enjoy eating good food. What’s the point of living in So Cal and not being able to try all these good restaurants?

A 1500$ lease is insane for middle class standards. That means you must have big pockets. The average American is struggling with a 500$ lease. Excluding my mortgage and just monthly expenses your car lease is half of my total expenditures a month of 3k.

That’s pretty wealthy.

Instead of buying a nice $300k car like a Lambo or Astin Martin, I bought my first rental property at this price and rented it out. I currently collect $2850/month in rent for this property. It's more than enough to cover the monthly lease for the BMW.

Yeah, I am very fortunate to have this comfortable lifestyle. I didn't think my profession would help me get this far in life. Thank you, America!

 

[Molar Whisperer]

Charles I’m not gonna lie but anyone that is living on 22k expenses and they say it’s not lavish is kidding themselves. You are not even upper middle class- you are plainly rich. And there is nothing wrong with that.

Your restaurant dining alone of 1k is more than my personal credit card expenses. Lol

A 1500$ lease is insane for middle class standards. That means you must have big pockets. The average American is struggling with a 500$ lease. Excluding my mortgage and just monthly expenses your car lease is half of my total expenditures a month of 3k.

That’s pretty wealthy.

What @charlestweed didn't mention is he used to work every Saturdays, Holidays, (8 days/200 hrs a week) and kept his schedule very full, his indentured staff working very efficiently and his business expenses very low. He and his wife are both high earners and paid off all of their houses and properties. He probably has an elite team of CPAs and attorneys to help him write all of those expenses off (loopholes), so in essence, they are really paying very little out of pocket.

 

[Molar Whisperer]

Time in the market beats timing the market. NOONE knows what the market will do, but long term your returns should be fine. All these youtubers make their money off views. They don't know anything either- but what makes them money is the clicks to their videos...and what brings in clicks? DOOMSDAY QT INFLATION MARKET CRASHING.

Regardless- the market has been pretty kind to me, and this year has been amazing 35% YTD +

I get really excited about Energy stocks trading at 52 week low especially during Covid lockdowns, recessions, etc. The Blue Chip ones are guaranteed winners if you hold them during their lows. Since they provide nice dividends, I like to keep them when they're trading high. Real Estate is very nice and very tax friendly, but they require a lot of maintenance during rental cycles and if you don't have the experience, expertise and volume like @charlestweed, you might not come out that much ahead especially if you only have one rental property, with a lot of nightmares and sleepless nights.

 

[Thehighwind87]

What @charlestweed didn't mention is he used to work every Saturdays, Holidays, (8 days/200 hrs a week) and kept his schedule very full, his indentured staff working very efficiently and his business expenses very low. He and his wife are both high earners and paid off all of their houses and properties. He probably has an elite team of CPAs and attorneys to help him write all of those expenses off (loopholes), so in essence, they are really paying very little out of pocket.

Yeah I don’t doubt that. But to say it’s not a lavish lifestyle is disingenuous. 22k expenses a month is not a small sum. That’s 260k post tax. You can do the math on the earnings. Simply put that’s easily top 1%, but of course he worked hard.

On the other side- Charles if you wanna adopt someone- I’m willing to be adopted! 😂

 

[Molar Whisperer]

Yeah I don’t doubt that. But to say it’s not a lavish lifestyle is disingenuous. 22k expenses a month is not a small sum. That’s 260k post tax. You can do the math on the earnings. Simply put that’s easily top 1%, but of course he worked hard.

On the other side- Charles if you wanna adopt someone- I’m willing to be adopted! 😂

His thoughts are, all that money will not give you a head start in the afterlife and his kids needs to pay their dues. If so, they won't live in SoCal and they will hoard all their money. We Asians don't like to flash our lifestyles as much as other minorities but we love our food and it can get very expensive and labor intensive. If you want him to adopt you, he might indenture you to a point where you'll change your mind.

 

[charlestweed]

What @charlestweed didn't mention is he used to work every Saturdays, Holidays, (8 days/200 hrs a week) and kept his schedule very full, his indentured staff working very efficiently and his business expenses very low.

Still have to work 2 Saturdays and 3 Sundays a month. It’s like the government entitlement programs…. once you spoil the patients with the weekend office hours, it’s hard to eliminate these hours. Well, that’s the price that I have to pay for being in the top 1% club. Nothing in life is easy. Dentistry is a small business. To make money, you have to sit down and perform the procedures....the more days you work = more procedures you perform = higher income you will earn. Practicing dentistry doesn't make you super rich….unless you are doing something illegal or unethical.

He probably has an elite team of CPAs and attorneys to help him write all of those expenses off (loopholes), so in essence, they are really paying very little out of pocket.

No, I just have 1 CPA, who is just an ordinary guy. He handles all my payrolls, bookkeeping, tax filings. And I pay him a flat rate of $4800/yr + another $900/yr for the LLC tax filing (for my rental properties)….no lawyer…..no tax loopholes. I can’t deduct anything since I already paid off all my rental property loans. Because of the crazy amount of taxes that I have to pay, I have to keep working to save for my retirement.

 

[charlestweed]

Yeah I don’t doubt that. But to say it’s not a lavish lifestyle is disingenuous. 22k expenses a month is not a small sum. That’s 260k post tax. You can do the math on the earnings. Simply put that’s easily top 1%, but of course he worked hard.

On the other side- Charles if you wanna adopt someone- I’m willing to be adopted! 😂

Yup, at least $250k post tax. Nothing that I listed above is out of the ordinary, except for the BMW lease. Everyone has to pay property tax, home insurance, utility bills, automobile insurance, health insurance, food, and puts money aside for 401k etc. Even if I eliminate the restaurant dining and BMW lease, the monthly spending budget only gets reduced slightly…. to $19-20k. And that’s for living in So Cal (Orange County) and my son goes to UCLA. It’d be a lot more if I lived in San Jose, where all the big tech jobs are, and if my son went to a private college like USC, Stanford, or John Hopkins etc.

 

[orthowins]

It's worth looking into some financial advice on paying off loans versus interest versus taxes.

When I first started off- 2010ish- I focused on paying off all my loans 200k worth. I got it done in about 3 year?. But I was dumping money into the principle etc.

Now If I had a balanced approach and I put some into loans- while INVESTING- some of that money into stocks/index funds- I would be wayyyy further in net worth.

Yes not having loans is a great thing- as it's not burdensome anymore- but the smarter person takes a balanced approach and invests while paying loans off. Time in the market cannot be "made" in the later years. Looking at amazons price in 2010-2013 and seeing my "loans" paid off sorta makes me sick- but then again- hindsight is 20/20.

What would you recommend investing in?

 

[juniordentist]

4

We have a comfortable, not lavish, lifestyle. The only “lavish” thing is the BMW, which costs us $1469/month to lease. The house is paid off but we still have to pay property taxes, insurance, utility bills, pool/landscape maintenances etc. The current monthly total is around $22k. It’ll be reduced to around $17-18k/month, when we no longer need to pay for our son’s college education (he’ll graduate in 3 years) and when we no longer need to help our parents (my dad and my wife’s dad). After college, if our son chooses to pursue either dentistry or medicine, we will have to continue to support him financially.

Property Tax: 1960
Property insurance: 290
Electricity: 450
HOA: 250
Gas: 70
Water: 150
Trash: 15
Gardening: 180
ADT security alarm: $75
Pool maintenance: 150
Internet: 150
Cell phones: 200
Youtube TV subcription: 73
House cleaning: 300
Life insurance: 684
Car insurance (for 3 vehicles): 600
Blue Shield PPO Health insurance (for 4 people): 1600
Disability insurance: 150
BMW lease: 1469
Grocery/Food: 1000
Restaurant dining: 1000
Gasoline: 300
401k: 4500
Financial assistants for both parents (my dad and my wife’s dad): $1000
Home supplies (toilet papers, soap, detergent, trash bags etc): $100
UCLA tuition + dormitory + food (for my son): $3250
Church + other charitable donations: $800
Gifts (Christmas, Father’s Day, Parents’ B-Days, nieces’ and nephew’s B-days etc): $200
Vacation (flights + hotel + ground transportation + dinning for 4 people): $1250

Total: $22,216

While I agree that on the surface it doesn't seem like you are living an extravagant lifestyle, you actually are:

40k a year on your son
12k a year gift to parents

This is over 50k after tax, which is probably equivalent to 1.5x the median take home salary of the average American. You are spending a huge amount of money. Just because it isn't on material things doesn't mean it isn't a huge amount.

You are always preaching living a low key lifestyle. This isn't even close to low key