Afford Anything

Tag: tax planning

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#492: How Does Side Hustle Income Affect Retirement Contributions?

Christine’s business is struggling. She needs more income. If she adds a full-time remote job to her plate, how will her retirement and finances change?

Rob enjoyed a banner year in 2023. He made over $1 million. But the sting of income tax has him making moves that violate his investment strategy. Is his tax tail wagging the dog?

Gena is excited to make the most of business deductions. Can she contribute 100 percent of her wages to a 401k and have the company match that?

Christina is tired of living like a pauper in the name of student loan repayment. Is Public Service Loan Forgiveness the answer?

Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.

Enjoy!

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#409: Ask Paula: Should I Sell My Rentals to Buy More Stocks?

Liz and her husband are planning to retire in 5 to 10 years. They have rental income properties, but Liz is bored of managing these, and she’s intrigued by the idea of buying stocks at a discount when the market is low.  Should she sell her rental properties and use the money to buy stocks instead?

Rebecca is a high income earner and thinking about investing in a Roth 401k … but she’s scared of how much she’ll have to pay in taxes. Should she do it anyway?

Anonymous made big changes last year: she got a new career AND sold a house! Now she needs help figuring out capital gains and lowering how much she’ll have to pay in taxes … and she won’t have access to her company’s 401K for most of the year.

Kyle and his wife are moving into their dream home! What should they do with their current place?

Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.

Enjoy!

P.S. Got a question? Leave it here.

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#374: Ask Paula: Watch Out! Here’s How Lowering Your Investment Tax Bill…Might Increase Your Risk

Jake wants investment cash flow until he’s eligible for his military pension in 10 years.  Should he buy small multifamily properties right now, wait a few years and invest in syndications or should he invest in index funds through taxable accounts?

Andy in Palm Springs is shoveling money into a taxable brokerage account. He wants to use these investments to create another stream of income. But there’s a problem: his tax bill is going to be high. What should he do?

Anonymous is a U.S. citizen, lives in London, and can’t invest in index funds. Can he emulate the index fund experience by directly buying a huge number of individual stocks?

Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.

Enjoy!

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By Paula Pant

#326: Ask Paula – The Dangers of Frugality

Photo of Paula Pant crouching down in the middle of woods“Hetty” is struggling with being too frugal, possibly to the detriment of her health. I mentioned in a previous episode that I struggled with frugality for a long time. She wants to know: in what ways was frugality a hindrance or an asset, and how did I get myself out of such a frugal mindset?

John and his wife aren’t sure how much they should contribute to their daughter’s Ohio 529 plan. They want her to graduate from undergrad debt-free, but they imagine she’ll get help from scholarships and that she’ll work as a teenager. How much is enough?

Rafael just got a job as a 1099 sales associate and is wondering how the heck to calculate what he’ll owe in taxes.

Rafael has a second question: he opened an account at Vanguard in December 2020 and noticed that he could still contribute to that account for the first few months of 2021. Which year should he have focused on contributing to?

Elizabeth has two rental properties: one that’s paid off and profitable, the other which shows a loss. If she put her profitable rental into an LLC, could she still combine the rent from both properties?

My friend and former financial planner Joe Saul-Sehy joins me to answer another round of questions.

By the way, if you have questions on business, money, trade-offs, financial independence strategies, travel, or investing, be sure to leave them here and we’ll answer them in a future episode.

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By Paula Pant

#318: Ask Paula – How to Think About Finances at the 30,000-Foot Level

Kim is newly divorced and celebrating the freedom to make her own financial decisions. She’s struggling to make a living — also as a new realtor — and wants to get started with real estate…but how can she do that on limited funds?

Kim also wants to know: should she move her funds from an actively managed Fidelity IRA to a Vanguard Roth IRA?

Chaz is 22 and has $2,100 – $2,500 left each month to put toward savings. Where should he keep this money if he’d like to move out-of-state in the near future?

Joe is a new real estate agent and he’s looking for ways to save. Is opening a SEP IRA a good account when you’re no longer a W2 employee?

Grace has a similar concern: she’s a tutor, but she’s paid as a contractor. Should she forget about her Vanguard brokerage account and open a SEP IRA or Solo 401k?

Anonymous just got a raise, and while awesome, it might push her income to a level that prohibits her from making full Roth IRA contributions. Should she make a partial contribution this year, or start adding money to a Traditional IRA to do a backdoor conversion?

My friend and former financial planner, Joe Saul-Sehy, joins me to tackle these questions. Let’s dive in!

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By Paula Pant

#252: Ask Paula – Will the Stimulus Cause Massive Inflation?

The government issued a $2 trillion stimulus. How will that affect the economy? Could we endure massive inflation or hyperinflation?

Bradley kicks off today’s Ask Paula episode with this timely question. What inflation rate will we see in 2020, and how can we prepare? How should we hedge against hyperinflation?

Anonymous Retiree (whom we call Sequencing Sally) is 64 and retired last year. She lives off of monthly withdrawals from a Vanguard portfolio. Given the bear market, should she leave her portfolio alone and spend from an emergency fund?

Additionally, her target allocation is off-kilter. Should she rebalance now or later?

Jay wants to reach financial independence in five years, but she’s in a job that will pay her $270,000 student loan balance if she stays there for another 17 years. Should she stay, or quit and face the balance?

Jan has $500,000 in a managed fund with a three percent annual fee. He wants to move his funds into his Vanguard personal brokerage account, without incurring a ton of taxes from the sales of his holdings. How can he accomplish this?

My friend and former financial planner Joe Saul-Sehy and I answer these questions in today’s episode. Enjoy!

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By Paula Pant

#221: Ask Paula – How Much of My Company Stock Should I Buy?

Vanessa is curious about Fidelity and Vanguard. She asks: what are your thoughts on the no-fee Fidelity index funds? What are your opinions on Vanguard’s financial advisors?

Andy wants to know: should my wife and I continue maxing out our traditional 401k and backdoor Roth IRA, or should we start contributing to the Roth 401k my employer offers?

Kyle is wondering – how can he minimize his taxes when he earns $450,000/year?

Rob is self-employed and has been maxing out a Roth IRA, but recently discovered that he can open a self-employed IRA. Should he move his Roth IRA money over, or just open a new account and fund it from scratch?

Christina is torn. She and her husband have been saving to buy a house, but because they live in New York, their savings won’t go very far. Is it a good idea for them to continue renting, despite their dreams?

Mercedes is wondering how REITs compare to stocks and owning actual real estate. Additionally, she’d like to know more about Forex trading.

Craig has an employee stock purchase plan (ESPP). Since these tend to be risky, he’s wondering: is he better off moving the $25,000 that he puts towards the ESPP into mutual funds? Or is an ESPP a good way to diversify his funds?

Former financial planner Joe Saul-Sehy and I answer these questions in today’s episode. Enjoy!

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By Paula Pant

#203: Ask Paula – Early Retirement and The Four Percent Rule

Many people in their 50’s or 60’s warn us about catastrophic or ‘black swan’ events. But what’s the likelihood that this will actually happen?

How can you use the 4 percent withdrawal rule for early retirement planning, given that your portfolio will be split among accounts with different tax treatments? How do you adjust your retirement plan for future taxes?

Should a couple in their 30’s switch from term life to whole life insurance?

Should a couple in their 50’s with adult children bother buying life insurance in the first place?

Is it okay to keep all your assets at one investment brokerage, like Vanguard or Fidelity?

And can you deduct rental losses if your income is over $150,000?

Former financial planner Joe Saul-Sehy and I answer these questions in today’s episode.

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By Paula Pant

#197: Ask Paula – Traditional IRA vs. Roth IRA — What Should I Choose?

Should Bret invest in a Traditional IRA or a Roth IRA?

If Amanda gets married, how will her child support be affected? What about her student loan forgiveness?

Joe is investing in bonds, which average a rate of return that’s equal to the interest rate on his mortgage. Should he switch to all-equities and redirect his bond investments into mortgage payoff, instead?

Taunia has a car loan, a 401k loan, a home improvement loan, a primary mortgage, and a second mortgage. She also has an emergency fund that only covers two months of expenses, and she’s trying to save for college for her two children. What should she prioritize?

Mickey has a six-month emergency fund. Should he leave it in a savings account or invest in bond ladders?

David made $10,000 from a side hustle last year. Can he open a Solo 401k or SEP-IRA for his side hustle business? If so, which one should he choose?

Should Andy invest in a Target Retirement Date fund, or should he split his money between a U.S. index fund and an international index fund?

Former financial planner Joe Saul-Sehy and I answer these seven questions in today’s episode.

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By Paula Pant

#193: Ask Paula – I Spent Ten Years in School, and Now I’m Behind on Retirement Savings

Lori is behind on retirement savings, as a result of being a full-time student for more than a decade. She makes good money and lives frugally, but she’s aware that she’s behind for her age. What should she do?

Sierra wonders whether she should apply her savings towards paying off her mortgage or building investments.

Jenessa plans to retire at age 35, and she’s wondering if the 4 percent withdrawal rule applies for such a long time horizon. Her friend swears that it’s designed to cover a 30-year retirement, not a 60+ year retirement. Is that correct?

Jacqui is 24 and recently married. She’d like to open a 529 College Savings Plan for her future children, which she doesn’t plan on having for another 8 to 10 years. Should she do this?

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Afford Anything