All Forum Posts by: Wesley C.

Bryan,
Kevin Kaczmarek is referring to a new wave of retirement planning that hinges upon manipulating whole life policies, more specifically universal whole life. There is a book a lot of advisers give out for free called "Tax Free Retirement" so they can sell you insurance. You can probably find a copy or read the reviews on amazon to learn most of what you need to know. The premise is you can take out a loan against the cash value with little or no interest and do not need to pay it back during your lifetime as long as you stay under the contribution maximum. Because the money is in the form of a loan it doesn't get taxed. You can easily read the book in one sitting to learn more (skip the first dozen chapters, they are fluff). In theory this strategy would work, but after reading the book and I wasn't convinced. The two big questions I had were 1)If this strategy catches on and the government closes the loophole of paying no taxes when borrowing against a life insurance policy then you are screwed and 2) You are committed to a set large payment that remains the same even if you lose a job or your circumstances change for the worse. Maybe there is an answer to these two concerns, but it wasn't addressed in anything I read. To be fair, I think there are some who have succeeded with this strategy, but call me a skeptic.

1. I do 401K only on the amount my employer matches.
2. I then max out my roth and wife roth (housewife) to the amount allowable by my income.
3. What is leftover goes to real estate

However, a roth allows you to take out the amount you put in without penalty, so this money can be tapped if you need a little help with a down payment or repair or something. It is a great way to save that can be liquidated if need be. I would never take a 401K loan.

Just one man's approach.

I vote sell if you avoid capital gains taxes. The $150K you'd make gives you options. Doesn't sound like you are looking to be a landlord, but if you are you could buy one or two properties where you'd actually have a positive cash flow. Not sure if you've refinanced your primary residence lately, but if you refinance in the 3%'s while applying that money, you not only save a fortune in interest but your monthly payment could be lessened tremendously freeing up some cash each month. A 15 year re-fi might also make sense for you. Good luck.

I was kind of approaching it as the learning experience you guys have stated. This kid is the son of the man who I respect more than any other person on earth. The father has been somewhat of a spiritual mentor to me. He has 8 children and I thought this would be a good opportunity for his oldest son to learn some skills and make some extra money (and get out of the house he shares with 7 siblings!). This is the last family on earth who would ever consider litigation, so I don't really have any concerns. But it never hurts to minimize risk when kids are involved, so I'll definitely be mindful of the situations I put him in.

Thanks for the reply Bill and also for the council. I'll definitely take your advice into consideration. This kid will only be doing the little things that happens before and after the 'real work'. Removing all the little stuff like outlet covers, door knobs, cabinet doors, etc....and then putting those things back in place after the work is done. Might have him pull weeds and mulch and help me unload the truck from Lowe's. Risks should be low. But your points are good and I'll make sure to keep him away from any hazards. Thanks again for your response to my question. I greatly appreciate it.

I am going to pay my friend's 15 yr old son to do odd jobs on a flip. It will just be things like removing cabinet doors, sanding, changing door knobs, landscaping, cleaning up and all the little tedious time consuming tasks that don't require any skill. Probably won't amount to more than a couple hundred dollars. Is this something I can document for tax purposes, or am I just better off pretending like it didn't happen?

I tend to agree with Joel on this one for most people. We often read statistics that college grads lifetime earnings are like a million more than non-grads. What they don't tell you is that those who went to college were the bright kids with a strong work ethic and those who didn't were the bad students with little work ethic in most cases. If you banned all those good students from attending college and forced the bad students to go, I would venture to say that the good students would still end up with a million dollars more even without the education because in the time the others were getting an 'education', the good students would be starting businesses, working up the chain, investing, and learning that compounded interest started early wins in the end. Motivated people will be motivated people with or without a piece of paper.

For the sake of disclosure, I'm one of those Dr.'s who ran up six figures in student loan debt. I'd do it again and have no regrets, but its no small matter that I gave my peers an eight year $125K headstart in earnings. My kids are young, but I still don't know what kind of advice I'll give them on this matter. This is a great discussion.

As to new grads living at home, they can play video games in the basement of their parents' house the same as they can in an apartment somewhere, all the while bashing the upper 1% who owes them a job or a check. (just kidding, no one get hostile with me)

Just read this whole thread for the first time. You did great! 45K profit on a house in that price range sounds good to me. I'm gearing up for my first rehab (apart from ones I've lived in) and I'd be ecstatic with that....at least until the tax man comes.

"Anyone else ridiculously excited to be going to Denver the same week that the greatest QB that ever lived will be signing with the Broncos? "

Joe Montana just signed with the Broncos? Did I miss something?

So as long as I live there 2 of 5 years, it doesn't matter which years to qualify for section 121? So if I live there year one, rent it year two and three, live there year four, rent it year five and then sell I am subject to section 121 exclusion? Forgive me that I'm a bit of a slow learner. Thanks so much for your responses. You guys are very helpful.