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Posts in Life Planning

How much of my house-sale proceeds should I use for purchasing a new home?

How much of my house-sale proceeds should I use for purchasing a new home?

How much to use will depend on the rest of your financial situation, including your monthly income, the size of your emergency fund, whether you are on track for retirement savings, and even the terms of the divorce. While it is important you get a place of your own, take your time with this decision. You don’t want your excitement over buying a new home to overshadow your rational analysis and decision-making.

Also Covered:

Impacts on monthly cash flow are key
Don’t overspend, especially in this market
Don’t unravel the fairness of the divorce settlement with the home purchase

Life Planning, Investing, Retirement PlanningJoshua Escalante Troesh, CFPMay 1, 2022Buying A Home, Divorce, Retirement Planning, Emergency Fund, Selling a Home

As a university student who only works part-time, how much work history do I need in order to be eligible for a mortgage to purchase a rental property?

As a university student who only works part-time, how much work history do I need in order to be eligible for a mortgage to purchase a rental property?

I applaud you for beginning the process of building a property portfolio while you are in college. Generally speaking, you will not be able to get a mortgage without a steady history of income that is both stable and sufficient to pay the mortgage. With a 50% down payment, it is possible to get an asset-based loan, which will be approved primarily based upon the equity in the home, even without a steady personal income. Based on the numbers you have provided, however, I would not recommend going that route.

Investment real estate requires more cash than just the downpayment
There are safer and easier real estate investment alternatives

Life PlanningJoshua Escalante Troesh, CFPDecember 1, 2021Buying A Home

Purposeful Budgeting | A budget that integrates finances with your desired life

Purposeful Budgeting | A budget that integrates finances with your desired life

Budgeting shouldn’t be a limiting exercise designed to tell you how to spend your money. At its best budgeting is a tool for organizing your financial resources toward your great life, both now and in the future.

Also Covered:

A Better Version of Budgeting
Opportunity Cost
Changing Costs
Changing Priorities

Life PlanningJoshua Escalante Troesh, CFPJanuary 12, 2021Retirement & Legacy, Retirement Planning, Budgeting, Building Wealth, Financial Foundation, Financial Advice, Starting Out

How is my severance package taxed?

How is my severance package taxed?

Severance packages are considered compensation by the IRS and are taxed the same as other income from a job, but this means not all of your severance is subject to taxation. Reviewing the terms of the agreement with your CPA or financial advisor can help you know exactly how it is taxed. If you are still negotiating your severance, you have an opportunity to lower your taxes by changing the terms of the package.

ALSO COVERED:

The Severance Agreement
Estimating Tax Withholdings
Avoiding Taxation — healthcare & fringe benefits

Life Planning, Tax PlanningJoshua Escalante Troesh, CFPJune 10, 2020Young Families, Starting Out, Financial Foundation, Corona Virus, Covid 19, Severance Package, Layoff, Building Wealth, Career Advice, Career Planning, Career Development

Coronavirus: How Does Payroll Protection Program Loan Forgiveness Work

Coronavirus: How Does Payroll Protection Program Loan Forgiveness Work

ALSO COVERED:

May be forgiven vs. Will be forgiven
Is the interest forgivable?
What is the interest rate?

Business Advising, Life PlanningJoshua Escalante Troesh, CFPApril 8, 2020Young Families, Corona Virus, Covid 19, Debt Relief, Small Business, Business Owners, Self Employment, Independent Contractor, Government Aid, CARES Act, Payroll Protection Program

Coronavirus: Help for Small Business Owners & Self Employed whose businesses are impacted

Coronavirus: Help for Small Business Owners & Self Employed whose businesses are impacted

The federal government has created the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Eligible business and individuals can borrow 2.5 x prior average payroll (up to $10 million) with no loan payments due for six months. If you maintain your workforce, the SBA will forgive 8 weeks of payroll plus certain other expenses

ALSO COVERED:

Eligibility and amounts available
How to get Loan Forgiveness
Applying for the loan and an advance

Business Advising, Life PlanningJoshua Escalante Troesh, CFPApril 1, 2020Young Families, Corona Virus, Covid 19, Debt Relief, Small Business, Business Owners, Self Employment, Independent Contractor, Government Aid, CARES Act, Payroll Protection Program

Coronavirus: What mortgage help is available?

Coronavirus: What mortgage help is available?

Resource are available to help including ways to replace your income and relief programs to help make your mortgage easier to manage. Start by identifying who owns your mortgage to determine the programs available to you.

ALSO COVERED:

Freddie Mac relief programs
Fannie Mae relief programs
How to request help from a bank or credit union

Life Planning, Debt ManagementJoshua Escalante Troesh, CFPMarch 26, 2020Young Families, Starting Out, Financial Foundation, Stock Market Crash, Bear Market, Stock Market Correction, 30-year mortgage, 15-year mortgage, Mortgage, Debt Management, Corona Virus, Covid 19, Debt Relief

Is it worth paying points to buy down the mortgage interest rate?

Is it worth paying points to buy down the mortgage interest rate?

If you keep the mortgage for 30 years it is generally worth it, but almost no one does this for either their home or investment property. If you sell the property in 3 months it doesn’t make sense to pay $10k in points to get a $170 monthly savings. The question is: How long do you need to have the mortgage to make paying that fee (the points) worth it - considering the time-value of money?

Article Also Covers:

How to calcluate the net present value of the bank’s offers
How banks calculate their offers
Estimating how long will you keep the mortgage
The rate of return on alternative uses for the funds
Multi-decade tax planning and mortgage points

Debt Management, Tax Planning, Life PlanningJoshua Escalante Troesh, CFPFebruary 18, 2020Real Estate Investing, 30-year mortgage, Tax Deduction, Tax Planning, Income Tax, Mortgage, 15-year mortgage

What should my fiancé and I do with the extra $7,000 we make each month?

What should my fiancé and I do with the extra $7,000 we make each month?

Before worrying about strategies for saving and investing start by having a discussion about the goals you and your fiancé have for your life together; such as buying a home, having children, or even taking vacations. Then focus on how you can align your finances toward those goals. This discussion on your goals is the most important financial discussion you can have as it is the only one which directly connects to the life you want to build.

Also Covered:

INVEST MORE AGGRESSIVELY
OPEN A HEALTH SAVINGS ACCOUNT (HSA)
SAVE UP FOR A DUPLEX/TRIPLEX
SAVE UP TO START A BUSINESS
BUY A HOUSE

Investing, Life PlanningJoshua Escalante Troesh, CFPFebruary 11, 2020investment property, Investment portfolio, Starting Out, Building Wealth, Financial Foundation, HSA, Health Savings Account, Small Business, Business Owners, Marriage, Real Estate Investing

Should I take out a loan on my rental property or sell it to pay off my debt?

Should I take out a loan on my rental property or sell it to pay off my debt?

You should start by determining if owning this rental property is in your long-term life plan (without considering the credit card debt). Below are my comments on some of the issues to consider including the true rate of return of the property, transaction costs associated with the sale, and how the rental property may impact your lifestyle and career goals.

Investing, Life PlanningJoshua Escalante Troesh, CFPNovember 20, 2019Real Estate Investing, Debt Management, Credit Card Debt

I just paid off my debt and built up a four-month emergency fund; what's next?

I just paid off my debt and built up a four-month emergency fund; what's next?

Congratulations on giving yourself the foundation for financial freedom. If you were a client, I would respond to your "what's next?" question with asking you the same thing. What is next on your personal life agenda? Think about your major life goals you want to accomplish in your future. Retirement is obviously one of the major ones, but also think about whether you want to . . . .

Life Planning, Retirement PlanningJoshua Escalante Troesh, CFPNovember 6, 2019Starting Out, Financial Foundation, Building Wealth, Young Families, Individual Retirement Account, Retirement Planning, Investment portfolio, Emergency Fund, Debt Management, Debt payoff

What is the best way to save for the future outside of a work retirement plan?

What is the best way to save for the future outside of a work retirement plan?

It sounds like you have a good handle on your retirement savings based on your contributions to both the TSP and your workplace plan, assuming you are contributing at least 10% to 15% of your income. If so, begin investing outside your retirement accounts in a taxable investment account to fund other goals such as buying a home, starting a business, or taking a major vacation.

Investing, Life PlanningJoshua Escalante Troesh, CFPSeptember 18, 2019Starting Out, Building Wealth, Buying A Home, Young Families, IRA Rollover, Individual Retirement Account, Thrift Savings Plan (TSP), 401(k)

Would Getting a Paper Divorce Help Financially?

Would Getting a Paper Divorce Help Financially?

Yes, getting a paper divorce can help you financially but it can also be a financial negative depending on your personal situation. As with most things with Personal Finance, the answer is it will depend on a large number of factors related to your family's finances. Below are a few of the consideration that immediately spring to mind, which you will want to explore.

Life Planning, Tax PlanningJoshua Escalante Troesh, CFPSeptember 11, 2019Starting Out, Building Wealth, Young Families, 401(k), Financial Foundation, Divorce, Estate Planning

As a college student, should I continue investing or save to pay off my debt first?

As a college student, should I continue investing or save to pay off my debt first?

The good news is you are choosing between two good options, so you really can't go wrong with either decision. If your student loans are subsidized loans, then the U.S. Government is paying the interest for you, so there is no reason to pay anything on the loans until you graduate. If they are not subsidized loans, then you may want to consider paying just the interest on the loans and then contributing to (or even maxing out) your IRA. This will give you the best of both worlds: being able to invest in your IRA and . . . .

Life Planning, InvestingJoshua Escalante Troesh, CFPJuly 25, 2019Starting Out, Financial Foundation, Budgeting, Retirement Planning, Individual Retirement Account, 401(k), Emergency Fund, Debt Management, Debt payoff, Student Loans, Stafford Loan

As a college graduate with a new job, how should I structure what I do with my income?

As a college graduate with a new job, how should I structure what I do with my income?

As with many things in the financial world, the best answer is "a little of everything." You should get in the habit of investing in your retirement from day 1, even if it is a small amount. Those who put off contributing to their retirement for 'a little while' often find themselves 10 or even 20 years into their career with no retirement savings. To catch up they need to contribute huge portions of their income to retirement accounts. Here is my recommendation for what to focus on:

Life Planning, InvestingJoshua Escalante Troesh, CFPJuly 4, 2019Starting Out, Financial Foundation, Budgeting, Retirement Planning, Individual Retirement Account, 401(k), Emergency Fund, Debt Management, Debt payoff, Student Loans, Stafford Loan

Should we pay off our mortgage when on fixed income pensions?

Should we pay off our mortgage when on fixed income pensions?

I generally don't advise clients to aggressively pay down their mortgage unless they have so much money in retirement assets and income that the mortgage money won't make a difference to them. Unlike what many might suggest, your mortgage does not present a risk to you and your wife during retirement. So long as you can afford to pay your monthly payment and . . . .

Retirement Planning, Life PlanningJoshua Escalante Troesh, CFPJune 13, 2019Retirement & Legacy, Retirement Planning, Individual Retirement Account, Thrift Savings Plan (TSP), 30-year mortgage, Debt payoff, Investment portfolio, Roth IRA, Roth Conversion, Tax Planning

Should I use my 401(k) for a down-payment?

Should I use my 401(k) for a down-payment?

While most people argue against the use of an IRA for purchasing a home, I think it can be a good use of the funds if the situation is right. The fact you are currently contributing to a retirement plan is one of the factors I would want to see, although I'd like to be able to calculate what your current course to retirement would look like. If you are on track with your retirement without the $14,000 then using it for a house would likely be . . . .

Life Planning, Retirement PlanningJoshua Escalante Troesh, CFPJune 7, 2019Starting Out, Building Wealth, Buying A Home, 401(k), Individual Retirement Account, Retirement Planning

Is it too early to start a portfolio for my one-year-old child?

Is it too early to start a portfolio for my one-year-old child?

It is definitely not too early and I commend you for taking advantage of the incredible returns you can get by starting an account at one year old. I am assuming your child will not need the money for at least 18 years so a stock-heavy portfolio would be appropriate. I would even be comfortable with a 100% stock portfolio assuming . . . .

Life Planning, InvestingJoshua Escalante Troesh, CFPMay 3, 2019529 Plan, UGMA/UTMA, Starting Out, Building Wealth, Young Families, Investment portfolio, Stock, Bond