So the average transaction price for a new vehicle is just shy of $48000. It blows my mind that people are buying such expensive vehicles and then complaining they can’t afford them. We bought a new vehicle 3 months ago and its price is only half that amount. Yet it comfortably seats two adults and two kids.

There are plenty of vehicles for sale under $30k. But the people are choosing not to buy them. 🤷‍♂️

This is generally not advisable, as it would mean you are likely to end up selling during a market downturn, at a significant discount.

Willingness to take risks is one thing but ability to take risks is another one. In you case, since you need the funds in case of emergency, your ability to take risks is 0.

So your options are limited to riskless assets such as CDs, govt bonds, savings accounts, etc.

As you grow your assets and portfolio, naturally, some part of your portfolio will be invested into bonds, and some part into equity. In that situation, you will be able to count the bonds portion, specifically riskless ones, as part of an emergency fund, provided they are liquid and of small duration. But in the meantime, savings account would probably be the way to go

With a 0.03% difference, it doesn’t make a lot of difference. That being said, it depends on your financial situation. Some things to consider:

• Repaying the loan early or investing the money into cds such that the cash flow from the cds matches the cash flow to the loan repayment is almost equivalent. In the corporate world, this would probably even qualify for accounting defeasance, which would allow you to keep the debt but removing it from your balance sheet. This is just an illustration of how accounting wise, both situations are pretty equivalent
• keeping the loan outstanding and the cash invested vs repaying early gives you option. If you do the former, you always have the options to do the latter later. Whereas if you repay the loan early, it is a definitive action. So there is an advantage to not repay early. You can always wait and see. If you invested in bonds instead of CDs, you could even potentially benefit from movements in interest rates.
• your return on investments might be 5% at your current level of assets, but your marginal return might be different. As an example, someone with only 10k to invest might not be able to bear much risk and only be limited to bonds. 100k and it opens the door to a diversified portfolio of stocks and bonds. At 1M they are qualified investors and have access to more options. So even though your whole portfolio might give 5% return now, every dollar you add on top opens the door for potentially more returns. If you use money to repay loans, you are shaving off the dollars that would have brought you the highest expected marginal return.

Agreed, cash advance is generally bad. I have thought about doing it in the past for obtaining foreign currency when travelling abroad and needing to pay cash.

Yes, you get very high interest, but overall, if you compare with alternatives:

• withdraw $1000 using a debit card, you get the standard 3% fee with most banks, end up paying $30 of fees
• withdraw $1000 using a travel credit card that waives foreign currency exchange fees, and pay it back immediately. Maybe the transaction posts within 3 days and you pay 3 days worth of 30% interest. That is still only about $2 or $3 worth of interest depending on their day count convention. Better than the first option.
• exchange cash at a foreign currency kiosk: ouch. Fees are extremely high.

I think the travel credit cards that waive the foreign transaction fee still apply it for cash advance? In the grand scheme of things it is not a huge difference

If you know about finance, you realize a lot of what he says is dumb. However, if you consider his audience, it makes more sense. According to the S&P Global FinLit Survey, only 57% of Americans can answer at least 3 out of 5 basic financial literacy questions (other countries range from 13% to 71%). Dave Ramsey is targeting people who are not financially literate and need very simple rules.

For example: He says to avoid debt, when we know debt can sometimes be good or bad. But for someone who doesn’t grasp the concept of interest rate in the first place, the simple rule of avoiding debt works for them. It is simple.

Kinda like when you learn that the square of a number is always positive. Then you learn about ‘i’ in the next grade. And so forth. Dave targets the people who are still in the 1st grade of financial class, and opinions may differ but arguably he does a pretty good job if his students are learning something useful?

Excellent ! This is the quality content this community needs.

Note on interest: if you use the “cash advance” feature, and withdraw cash with a credit card, interest will accrue from the first day.

On credit cards not being for everyone: I like to see it as a metaphorical Stanford marshmallow experiment. If you belong to the group who would would eat the first marshmallow right away, credit cards are not for you.

Credit cards are objectively better than debit cards if you can play the game right. They have better protection, cash back, etc… But they do have traps, and you have to be the type of person who can avoid those traps. They are designed to make you want to spend more. Examples: no interest for the first 18 months on some, cash back on most, some are even made of metal and shiny which boosts your ego when you pay at the cash register.

Also this most is mostly relevant for the US, probably Canada and a few other countries. Rules might differ elsewhere.

Once the property is fully depreciated, the trick is to do a 1031 exchange to buy a new one, and then you can depreciate the new one.

We use some sort of holistic approach. We don’t have specific envelopes or accounts for saving. We do have specific accounts for asset allocation although it’s not relevant for budgeting.

1. sometimes in January, I look at our yearly income, input that through a model along with other things such as discount rate, net worth etc. The model shows us the projected time it will take to reach the table flipping point* (TFP) based on what we decide to spend.
2. Generally, as with most people, income increases over the years as our career progresses so we usually have three options: increase spending and keep the TFP the same, keep spending the same and reach TFP sooner, or a mix in between. I show that to my wife and we decide which option we want.
3. We now have a target spending for the year. I allocate it into categories in our budgeting app. I try to predict bills based on previous years. For example I try to account for likely increases in housing, etc.
4. every couple months, I look back and adjust the categories based on actual spending. Reallocate between under budget categories and over budget categories. I look at the ratio year-to-date spending / year-to-date projected spending. It generally fluctuates between 90% and 110%, because actual expenses are not linear throughout the year. Vacations are discrete events for instance. If it goes over 110%, we start slowing down on lifestyle. Maybe eat out slightly less, etc.
5. next year, repeat the process

With practical numbers: in 2023 for instance, we set our target spending to about 25% - 30% of our income at the time. Money comes in, and as long as we control what money goes out, the rest is bound to stay saved.

• Table flipping point: the point in time at which the amount of income provided from your portfolio becomes equal to the amount you are spending. From this point in time you have the constant option of flipping the table in your boss’s face, say I quit, and live from your investments from now on. It is usually called early retirement, but I don’t like that word because it assumes that you plan to retire when you reach it. Table flipping point means you keep working, but you do it because you enjoy your work, not because you need the money. You don’t have to take crap from your boss, you don’t have to worry about AI replacing you, etc…

Good point, I know you can find metrics on the average mileage cost of a car, including gas, maintenance, insurance, depreciation, etc. But I would be curious to see how those numbers fluctuate throughout the life of the vehicle. That is, what is the marginal cost of a mile, based on the already existing mileage. Based on the vehicle, you could plot the marginal mile cost structure, similar to how you would plot a yield curve.

No need to use a script, you can put the numbers directly into a financial calculator and use the TVM feature, or use the annuity formula directly (or annuity due if investing at the start of a period).

If you invest at the end of the period, daily is better, as more money will compound longer (vs waiting until the end of the month) If you invest at the beginning of the period, monthly is better (invest every at the beginning of the month)

Example with investing at end of period:

• invest $143 every day at 3% APR: value after a year: $52,983.60
• invest $4349.58 at the end of every month for 12 months, value after a year: $52,918.66

This is assuming you compound every day, as in practice, day count conventions may be different, and ignoring things such as the opportunity cost of the time spent time logging in to your bank to make daily transfers

I started wearing ear plugs and an eye mask every day. Eventually I got so used to it to the point that 1) it feels comfortable and 2) my body associates those things with sleep.

When on a plane I just put the ear plugs and eye mask on, and my brain just knows it’s sleep time.

Also, not all neck pillows are created equal. I found the biggest factor is the pillow having straps to secure it to the head rest. It will do the work of holding your head and you won’t drift sideways as you fall asleep.

This is a hard question because it highly depends on your whole financial situation and is also psychological.

Some elements you may consider:

Purely on a financial side, it depends on your risk tolerance and opportunity cost. How much would you earn if you kept the money? If you have 100% of your portfolio in equities, and you invest everything in the S&P, purely based on CAPM your expected return should be around 8.4 % (10y treasury at about 4, and risk premium at 4.2). If you have different market assumptions or a different risk tolerance and thus portfolio allocation, your expected return will be different. So, based on that, you can see what is financially optimal.

But there is also another important consideration, and this is where your assets matter a lot. Imagine you have 60k saved, and your loans are 50k. Of your assets, the first 20k are your emergency fund, and are barely earning interest. The next 60 are maybe in a safe ish portfolio. Overall, those 60k would be expected to earn let’s say 4 or 5% overall. Ot would seen financially optimal to pay back a 6% loan. However, this would leave you with no debt and only 10k in assets. That is, at risk of having to take on new debt if you have an unexpected expense, possibly at an unfavorable rate.

If in a different example you have 500k in assets and 50k of debt, the situation is different, all else equal. So you can see where this is not just based on interest. You don’t want to pay back a 6% loan only to find yourself in a situation where you have to resort to credit card debt because you spent all the cash paying back the loan.

Tldr: on a purely financial optimization side, it may or may not be optimal to pay back the loan based on your portfolio allocation and market expectations. On a behavioral side, a less financially optimal plan may still be desirable depending on other objectives such as keeping your safety net

The other way around, I use the script to generate a PDF based on the money Manager Ex file (which is in SQLite format).

Fortunately I am able to download a CSV from most financial institutions, so I never have to parse their pdf.

My workflow is

• download all CSVs and import in money Manager Ex
• categorize spending within the software, reconcile transactions, etc
• run the script against the money Manager Ex file to generate a PDF.

I am surprised you have to copy paste from your monthly statements? Is it possible that on your banks portal, deep into the menus you have an option to download as CSV?

Money Manager Ex. It saves the file as a SQLite database, which makes it easy to parse. I have a couple python scripts that extract the numbers, and generate a JSON file with numbers, png graphs using matplotlib, and I have another module that takes the generated graphs, numbers, and a latex template, and generate a nice PDF.

For instance, when the script finds a brokerage account, it separates out deposits / withdrawals from actual P/L to calculate true time weighted returns.

Budget-wise, I look at it on a yearly basis. This is important because some significant expenses have an annual frequency (practice insurance, housing insurance, etc), or bi-annual frequency (car insurance…) And some expenses are discrete frequencies throughout the year (vacation, etc…)

It requires more discipline than on a monthly basis, but the reasoning behind it is if we spend more than we earn on a given month, it is not necessarily bad, because it might just be the month we went on vacation, or the month we had our yearly insurance premium. The important goal is to spend less than we earn on average . So over the long run wealth accumulates naturally. Short term deviations are not important as long as our long term lifestyle is aligned with our income.

We need a c/decisionsweremade

Of course! We used this recipe https://www.turtlefiji.com/fresh-fijian-kokoda/

We had to use tuna because it was one of the only sushi grade fish we could find where we live.

Coconut bowls often end up leaking, so you do need a plate eventually. But they add a nice visual flavor, and if you finish dinner before everyone else, you can start nibbling at your bowl.

Vegemite

Not a CPA, this is my understanding of the wash sale.

Let’s say you buy your company’s stock is currently trading at $100. You buy some shares at a discount, for $85, and hold them for a year, to leverage long term capital gains.

It is now December 2024, it turns out the stock has dropped in value and is now worth $80. You want to buy more to take advantage of the discount, and because you think it is likely underpriced. However you are worried that buying more will give you too much exposure to this single stock. A move you could do is sell the stock you owned, for $80, and buy back some stock, for $68 (since you get a discount). You could buy potentially the same amount you disposed of, ending up with the same value dollar-wise, but more stocks. Or maybe you have shares that are automatically bought through a pre-set plan.

Now this is when you trigger the wash sale. The wash sale rule doesn’t say you can’t do this, but it does say that if you do this, you cannot claim the loss on your taxes (in this case, the $5 loss arising from selling stock at $80 that you acquired for $85). What this means is that this loss will be added back to the cost basis of the new stocks you purchased for $68, giving you a cost basis of $73, and an unrealized gain of $7, as opposed to an unrealized gain of $12. So even though you can’t claim the loss now, your realized profit later on will be $5 less, and you will eventually get the tax benefit. (I am looking at IRS publication 550, wash sale section).

Basically, you can buy and sell all you want (from the IRS’ point of view. Your employer might have restrictions on holding periods and so forth), you just can’t use that strategy to lower your tax bill artificially.

On a side note, diversifying away from your employer’s stock can be good, because otherwise you double down on your risk. If your company is doing well, your portfolio increases, and your job is likely safe. If your company is not doing too well, you may lose your job at the same time as your portfolio taking a significant dip