doomi

Excellent point and a huge differentiator! For perspective my home, while modest at 2,600 sq ft, was only $164,400 when I purchased it brand new in 2007. I'd imagine a home like that nearly anywhere on the coast would be significantly more expensive. And the cost of living here is far less overall, not just on housing.

My next major purchase is actually a lake home at Lake of the Ozarks. It is a fantastic area.

Bruze

Yup, been there. I did that a few years ago, and the first question was "How much will you need?"

It was a bit shocking and I couldn't answer it because I thought it was a dumb question. I view it as: At a safe withdrawal rate from my portfolio of 3-4%, it will produce $X per year. I have to fit my retired life around that number, making whatever lifestyle adjustments -- if any -- so I'm not withdrawing more than that. I look at it backwards from the way the "experts" do.

MLacroix

I bought my first Corvette when I got home from VietNam. On my 4th one now.

Bruze

LOL @ "needing a write-off." I have found two things about that phrase:

1) The people who use it almost never know what it means;
2) It seems the only people who DO know what it means are the IRS, CPAs, and us lowly self-employed people.

ruxvette

Ah, bruzee, you are un-American. When you walk in to buy a car the salesperson's first question is "How much can you afford in monthly payments". Not what do you want to spend for the car, just what you can afford monthly. Over the years I bought a car or two on a 36 month contract and it made me nervous. Now folks buy 'em on a 72 month contract.

Bruze

Haha, yes it's amazing how people "think." If you asked ten people off the street what their car cost, at least nine of them would tell you what their monthly payment is.

To me, when trading a vehicle in, the first thing I want to know is the cash difference between my vehicle and the new one. If you don't establish that first, then you don't really know where you're going. A year and a half ago when I was shopping for a new truck, one salesman didn't even know what I meant. I wasted an hour with him and left.

ByRiver

It worked for me in the late 90's and early 2000's in northern California when I was doing IT contracting. I was making excess and crazy money. I bought the most expensive home I could find so I could write off the interest and and property taxes. It saved me tens of thousands in Federal taxes. Even after claiming the most exemptions that I could, I was still getting refund checks of $40,000. I sold that house three years later, and cleared $199,000 after paying the realtor commissions, all tax free. I did a lot of the work on 1099 and corp-to-corp. It allowed me to put away huge amounts in a SEP account for retirement, and pay cash for Mercedes and other vehicles. I was given good advice from others who were doing this. It worked for them, and it worked for me. All the things I bought 18 years ago, I mostly still have except the Mercedes, which I sold. I still have two other vehicles that I bought back then. They don't have too many miles on them and they still run fine, so I kept them. I went into a partnership on a Cessna, which I also still have. I don't waste money or trade up on vehicles just to keep up with the Jones's.

Nelag

Have been scotch all my life. wanted to go southin the winter for a few months, but my in laws need looking after.
First corvette, 2012 gs. Had a 911 P for 3 years in the 1980s, not comfortable on long trip. 64 years old.. Corvette very comf..

Bruze

Another one that doesn't understand it.

bruno06

ByRiver

I am never to proud to learn from others. Could you explain what the "Another One's' don't understand?

Thanks.

Frankie15

I just turned 30 last week () and bought my Z06 last year. Bought my previous base C6 when I was 28. I'm a Software QA Engineer.

gradywhite931127

ZERRY 316

Good times, good times

rgibson214

lol!!!

owc6

Some I agree with, and some I don't with what you said.

Never negotiate according to the the monthly payment. Only the end price.

If you get the price you determine is fair, and they offer you 0% or up to a couple of percent, you'd be silly to pay cash (providing you are investing). Always have at least one financing option locked in before showing up to the dealer. They will always try to top the deal you already have, Take it (the "done deal" after the buy back to the credit union or bank, and they will try to top that) Give me a 72 month contract at 0.9%? Awesome!

Trading in? That's a separate issue. Which may or may not be part of the whole after the first two are determined.

I love car shopping. I just wish I had more money to do it more often.

rgibson214

I has a '79 Fiesta! Loved that POS except for its proclivity to eat heads on that old 1600 Kent engine. Mechanical lifters FTW!

Bruze

Sure, in a nutshell, at its simplest, ignoring actual tax rates (FWIW, I am not an accountant or IRS agent, nor do I pretend to be one anywhere). Let's look at Joe's Plastic Widget Company and his "write-offs". (God, I hate that term)

Last year he took in $200,000 in widget sales. His expenses for raw plastic, tooling, incidental machinery, wages for some part-time help, maintenance, utilities, bookkeeping, advertising, sales expenses, office supplies, etc. amounted to $140,000.

So he goes to the local bar, gets shitfaced, and starts squawking about how great his business was because he got a $140,000 "write off!" The other drunks were quite impressed, became his instant buddies, and they closed the place up -- Joe gladly picking up the tab.

But, of course, 200k minus 140k leaves him with $60,000 left over. This is what he is taxed on. The $140k is gone with the wind, spent in order to produce the $60k. So after taxes he is left with maybe $40k in his pocket on December 31. But . . . but he got a huge "write-off"! So what? The money was spent, it's gone, otherwise he wouldn't be able to "write it off."

So let's say Bob also has a widget company down the road from Joe's. Bob's a lot smarter than Joe, puts in more hours, and always has an eye for doing things cheaper and more efficiently. He also has $200k in sales but only has $100k in expenses. So on December 31 he is taxed on $100k, leaving him with, let's say, $65k in his pocket.

Which guy would you rather be: Joe with the big "write-off" and $40k in his pocket after taxes or Bob, with the smaller "write-off" and $65k in his pocket after taxes?

You cannot spend yourself into prosperity. The government has not yet figured out how to tax you on money you legitimately spent. If they did, no business could survive more than a couple of years.

The principle is the same for individuals. You can get a huge mortgage and a bigger house than you really want (as you said you did) and have thousands in interest "write-offs" per year. But you still have to pay that interest to the bank, along with the principle, for a bigger house than you really want. All those dollars are gone, out of your pocket and into the bank's. The amount you save on taxes will be a fraction of the interest you paid.

A legitimate "write-off" is money that was spent, it's gone. The only exception that I can think of off-hand is putting money into a tax-deferred retirement plan. But the money is out of reach, you cannot use it, and you WILL be taxed on it when you start withdrawing it ("deferred").

Something like that anyway, as I see it. If there are any REAL accountants here I will gladly stand corrected.

Sorry for vomiting all over this thread. Blame it on Batman! He first used the term "write-off!"

Batman75

Unless I'm missing something, your strategy was to minimize the money you paid to the government. Letting them keep $40,000 of your money interest free for a year isn't anything to brag about.

Batman75

It wasn't me, it was the advisor trying to talk us out of paying off our mortgage. I heard that a lot before the bottom fell out of home prices. Many of my friends were taking equity out of their home to pay off their credit cards, buy cars, toys and other things because the said, they could write it off. That is why so many lost their home due to owing more than what it was worth. I could never convince myself to do that.

I have a friend in the home mortgage business who re-refinanced my loan with no points or fees each time interest rates dropped. I took equity out only twice, but that was for home improvement.

I'm not wealthy because I've never been willing to take financial risks.