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Author: malaoshi Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Ummmmm Date: 4/4/2008 8:50 PM
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Some sleazy telemarketer was questioning me about assets available for investment or already invested. I said things had gone down a lot in 2008 and joked about it. The guy was humorless and we ended our relationship..

But the fact is, I'm retired even if DH isn't, and despite the fact there is very modest pension money coming in, our nest egg HAS gone down on paper. Even if at present, our ticky tacky little house is valued at over a million because everything is overpriced here, the values are going down fast.

DH isn't worrying and has booked his "Big Trip" just like the budget says we can, but I begin to feel a little more insecure.

I really trust our broker who listens without condescending. He meets with us regularly to discuss/reconfirm our goals .I even called him when I saw a news item that bothered me. He took lots of time with me and was glad I was paying attention to fund news. He wrote to his clients to give him a heads up if they had unusual short term needs this year as he forsees a rocky year ahead...

We may need to invest a bit in DD2's duplex as she moves to condoize from TIC...but that's the only short term spending. No big deal.And we are both on Medicare as of last month which helps a lot.

Anyone else out there feeling less complacent about their nest egg or is it just me?

Big Momma.
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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12768 of 19257
Subject: Re: Ummmmm Date: 4/4/2008 8:56 PM
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DH isn't worrying and has booked his "Big Trip" just like the budget says we can, but I begin to feel a little more insecure.

Yes! Do the trip! Travel has been a huge bonus in our retirement. But then we have a lot of time share condos. Big up front cost, but it feels good after that.

cliff

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12769 of 19257
Subject: Re: Ummmmm Date: 4/4/2008 8:58 PM
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Anyone else out there feeling less complacent about their nest egg or is it just me?

It's not just you.

I had planned on beginning to draw down from my 401(k) this year after meeting the magic 59 1/2, but I'm revising that plan because of the market. I've allowed for this in my planning, though, so I'm diversified enough that I have other sources for needed cash while giving the market some time to recover.

Phil

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12770 of 19257
Subject: Re: Ummmmm Date: 4/4/2008 9:08 PM
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<<Anyone else out there feeling less complacent about their nest egg or is it just me?

Big Momma.
>>


I've taken hits, most notably my Washington Mutual stock, down 75% in the past year, and could go down a lot more.


But I've also had positives from energy and foreign stock mutual funds.

Also, my withdrawal rate borders on the trivial, since I don't spend much money.


What--- me worry?


On the other hand, if I had significant anxieties about how my planning were holding up as you describe, I wouldn't hesitate to make changes early. But it may be hard to justify cutting DH's big trip because you are feeling anxious.


You'd have to be the judge of the wisdom of doing that.

Discussing your anxieties and reconsidering your plan when he returns would be a lot easier to justify, but of course the horse is gone from the barn as far as that money goes.



Seattle Pioneer

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12773 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 8:12 AM
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I know looking at your financial statements right now is scary but let him take the trip if it's really important to him.

I don't think things are as bad as they may seem right now. I've been down as much as $70K this year. This morning I'm only down $19K. $29K bounce this week alone. We'll probably go down again in the coming months, but I'm feeling more confident of a market recovery by year-end even if the economy is still slow.

I'm sticking with my own travel plans, most of which are in the first half of the year. I evaluated the situation and decided that's what I want to do. If markets haven't improved by January I'll cut back next year, but for now I'm following my budget.

One other factor I bring up only because I've seen it happen too many times. God forbid something should happen to him in the next year, you may regret not letting him make the trip.

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Author: DorothyM Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12774 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 9:02 AM
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Some sleazy telemarketer was questioning me about assets available for investment or already invested. I said things had gone down a lot in 2008 and joked about it. The guy was humorless and we ended our relationship.

I don't talk to telemarketers, sleazy or otherwise, and can't imagine joking with one of them.


DH isn't worrying and has booked his "Big Trip" just like the budget says we can, but I begin to feel a little more insecure.

Not taking the trip now could mean that waiting until you're feeling more secure financially you'll be less secure physically.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12775 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 9:43 AM
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It's not just you. My investments are down and I'm nervous. I've been socking my income into cash lately. As I am self-employed I am anticipating that next year may be a little slower, so I have bumped up my e-fund from 6 to 8 months of expenses.

But the trip? Take it! I recently had to cancel a trip for health reasons, and my philosophy is to travel while you can - you never know what the future will bring.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12776 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 10:39 AM
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<<But the trip? Take it! I recently had to cancel a trip for health reasons, and my philosophy is to travel while you can - you never know what the future will bring.
>>


My philosophy:


Travel is a luxury. If you can't afford it, don't go.


Even though I can afford it, I have three tests for spending on luxuries:


1) It has to be something I can afford without compromising other important goals such as financial security and retirement.


2) It has to be something I personally desire--- spending because other people think I should or because of social pressures doesn't count.

3) It has to be something I'll use intensively enough to be worthwhile.



For me, travel often flunks all three of those tests. It can take YEARS or DECADES to consume money spent for that kitchen remodel --- but money spent on travel is gone forever, utterly consumed, the day you get back.

So personally, I find travel overrated as a value much of the time.


Rather than your idea of traveling UNLESS you are sick, I generally travel primarily when my routines in life are unsatisfying and a change of pace would be refreshing psychologically. That's something like traveling because you ARE sick, or at least for quasi-therapeutic reasons. By this standard, I find that my NEED for travel is relatively small, and that elaborate and expensive trips are usually not needed.


Spend on travel all you like for yourself. I certainly don't care. But:

<<It's not just you. My investments are down and I'm nervous. I've been socking my income into cash lately. As I am self-employed I am anticipating that next year may be a little slower, so I have bumped up my e-fund from 6 to 8 months of expenses.

But the trip? Take it! I>>



That sounds like taking significant risks with your future to me. Spending substantial amounts of money on luxuries when I haven't secured the necessities of life is not my method of financial planning.



Too often, I find that people give themselves permission to be irresponsible about travel. It's TRAVEL! the normal rules of rationality and planning don't apply! I want it and I do it!

It's Middle Class Mania, in my view.


But, do as you wish, it certainly matters not to me. I explained in an earlier post why I am NOT worried about investment returns. One reason is that my expenses are low because I'm not off doing expensive trips, and another reason is that I have ample assets, in part because I didn't do very much in expensive trips in years past.

I have achieved financial security in part by not spendingly lavishly for luxuries such as TRAVEL in the past.


Again, I'm not trying to tell you what to do. Spend for whatever you like. I merely offer my own analysis and philosophy of making spending/investment choices so that people can choose a different approach that holds TRAVEL costs accountable as luxuries, rather than often treating them as not-to-be-examined necessities.



Seattle Pioneer

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12777 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 1:58 PM
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According to the widely accepted 4% safe-withdrawl-rate rule, if your portfolio is structured properly and you don't take too much out each year, it should survive the ups and downs of the market for decades, providing the future is no worse than the worst of the past (Great Depression and stagflation of 1966-82 being the two worst periods).

That's not to say that market gyrations don't produce emotional roller-coaster rides, whether you're convinced of the validity of the 4% rule or not. Especially when 100% of your income comes from your portfolio, as does ours.

I follow a couple of investment advisors who have managed to beat the market indexes over the past 15 years. Any tiny amount of beating the market gives you a bigger safety margin. Part of that can include taking a defensive posture when things start to go south. As a result of their words of wisdom, I got out of the market early in 2000 and back in late in 2002, avoiding the downturn. If I hadn't done that, I wouldn't have been able to retire. Right now both of these guys are calling our current situation a correction from which we should be heading back up shortly, if it hasn't started already. You can read all about it at http://www.marketminder.com/Default.aspx . The Cover Stories are especially interesting, going back over the past several months.

Above all, don't get taken in by the fear-mongers in the press.

--fleg

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12778 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 2:19 PM
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SP: I know you don't like travel. You have made that clear over the years. That's cool. But for me it is a necessity. Right after food and shelter.

It passes all three of those tests for me, but even if I had to work a bit longer to have been able to have afforded some of the trips I've been on, I would choose to do it in a heartbeat. It ha made my life so much better in ways tangible and intangible. It has fundamentally helped form me as the person I am today. I would happily choose travel over a kitchen remodel, or even buying a house. Luckily I have been able to afford both travel and a house (well, luck and good planning), but if I had to choose to be a renter so that I could travel, I would have done so.

To each their own.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12779 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 3:08 PM
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<>but if I had to choose to be a renter so that I could travel, I would have done so
I should say this is not just theoretical. I was a renter for 18 years. In part because I didn't want the obligations of a house, but also in part because I wanted that extra $2K a month for travel, savings and fun stuff. Being tied to a house in my 30's would have meant a lot less travel.

I love my house now, but I have 100% no regrets about not buying earlier and having all that $ available for travel.

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Author: Gingko100 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12780 of 19257
Subject: Re: Ummmmm Date: 4/5/2008 3:09 PM
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OCD - re-posting for mormating...

but if I had to choose to be a renter so that I could travel, I would have done so

I should say this is not just theoretical. I was a renter for 18 years. In part because I didn't want the obligations of a house, but also in part because I wanted that extra $2K a month for travel, savings and fun stuff. Being tied to a house in my 30's would have meant a lot less travel.

I love my house now, but I have 100% no regrets about not buying earlier and having all that $ available for travel.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12781 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 12:39 AM
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but money spent on travel is gone forever, utterly consumed, the day you get back.

Well, maybe if your memory is busted!

Can't tell you how many times my husband, kids, or I bring up a travel experience we shared for us to "relive" it together. We spend time looking forward to and back on our trips with great pleasure, not just enjoying it while we're there. Plus I appreciate documentaries and articles about the places I've been so much more than before I went. And as a non-perfectly-healthy person, being able to travel gives me a lot of confidence, makes me feel that adventure and challenge can still be part of my life. Not to mention that travel can change you in other positive ways, introduce you to new friends, new foods, new languages, new ways of looking at things.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12782 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 12:43 AM
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Hit the Submit key too fast...

To sum up, I feel that money spent on travel pays me dividends for the rest of my life. Just because you can't physically "use" your trip after it's over, doesn't mean you can't continue to enjoy it mentally.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12783 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 2:02 AM
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<<but money spent on travel is gone forever, utterly consumed, the day you get back.

Well, maybe if your memory is busted!

Can't tell you how many times my husband, kids, or I bring up a travel experience we shared for us to "relive" it together. We spend time looking forward to and back on our trips with great pleasure, not just enjoying it while we're there. Plus I appreciate documentaries and articles about the places I've been so much more than before I went. And as a non-perfectly-healthy person, being able to travel gives me a lot of confidence, makes me feel that adventure and challenge can still be part of my life. Not to mention that travel can change you in other positive ways, introduce you to new friends, new foods, new languages, new ways of looking at things.

>>


Ok. Assume for a moment that your family runs into a rough patch when you get home from that trip. A breadwinner gets sick and laid off from work for a couple of months. You have medical bills to pay plus no income coming in from that person.


Do you have the cash to keep your family functioning through that difficult situation? Suppose it takes several months to find a new job?


How much money can you raise to support your family by liquidating your memories of that vacation trip?



Seattle Pioneer

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12784 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 2:39 AM
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Seattle Pioneer asks,

Ok. Assume for a moment that your family runs into a rough patch when you get home from that trip. A breadwinner gets sick and laid off from work for a couple of months. You have medical bills to pay plus no income coming in from that person.


Do you have the cash to keep your family functioning through that difficult situation? Suppose it takes several months to find a new job?


How much money can you raise to support your family by liquidating your memories of that vacation trip?

</snip>


Is it OK to take a vacation once I've set up my six-months' of expenses emergency fund?

intercst

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12785 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 3:17 AM
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<<How much money can you raise to support your family by liquidating your memories of that vacation trip?

</snip>

Is it OK to take a vacation once I've set up my six-months' of expenses emergency fund?

intercst

>>


I suspect you are amply covered with your millions, intercst.


And I'm discussing an idea here, not telling people what they are permitted to do.



Seattle Pioneer

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12786 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 7:50 AM
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<<<How much money can you raise to support your family by liquidating your memories of that vacation trip?>>>

Taking this one step further, you should not have children either. They cost a tremendous amount to raise and you can't sell them or your memories of their childhood if you hit a financial rough spot.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12787 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 10:01 AM
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Do you have the cash to keep your family functioning through that difficult situation? Suppose it takes several months to find a new job?

Why yes, I do ;-)

You can make the same argument against any discretionary spending: never spend a penny above bare necessity because a disaster might be around the corner. Honestly, I'm an above-average worrier, and even I'm not that pessimistic. Once you figure out how to LBYM and have no consumer debt and a generous E-fund, why not take some affordable pleasure in life? (I realize that distant travel isn't one of YOUR pleasures, but that doesn't mean it shouldn't be ANYBODY'S, eh?)

No doubt some people go traveling on the financial edge, but among my acquaintance who live above their means, travel isn't the problem (rather too much car loan(s), clothes/shoes/toy shopping, eating out).

My husband was laid off a couple of weeks before a trip to visit DD abroad in the late 90s. I agonized over it (DH is not a worrier--I do the worrying for two ;-), but we had non-refundable plane tickets, and ultimately went ahead--but I downgraded some of our plans. DH called home for messages, and was on his next job within a month of the previous one--his salary was higher than before, and his signing bonus made up for the missing income (lucky break!). So I'm glad I didn't cancel the trip--but we had no debt other than an affordable mortgage, prepaid much of the trip and had funds earmarked for the rest (and a generous E-fund), it was a seller's housing market and we could've sold for a hefty profit, and with extra frugality, could manage for at least a year on my salary, unemployment, and taxable savings. I would've been very sad to spend down our savings, so I'm glad I didn't have to.

BTW, did I mention that all my vacations till my mid-30s were camping trips, visiting family, or staying at home? Most them afterwards, too. I didn't even need a passport till I was 46 years old.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12788 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 10:32 AM
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<<Do you have the cash to keep your family functioning through that difficult situation? Suppose it takes several months to find a new job?

Why yes, I do ;-)

You can make the same argument against any discretionary spending: never spend a penny above bare necessity because a disaster might be around the corner. Honestly, I'm an above-average worrier, and even I'm not that pessimistic. Once you figure out how to LBYM and have no consumer debt and a generous E-fund, why not take some affordable pleasure in life? (I realize that distant travel isn't one of YOUR pleasures, but that doesn't mean it shouldn't be ANYBODY'S, eh?)
>>


If you can really afford the cost after funding other important life goals, then you can afford lucuries such as travel, or whatever appeals to you.


I'm primarily concerned about those who can't afford it but buy luxuries anyway.



Seattle Pioneer

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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12789 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 11:10 AM
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...TRAVEL costs accountable as luxuries, rather than often treating them as not-to-be-examined necessities...

That is not what MasterCard or VISA would want us to believe.

TB

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12790 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 1:45 PM
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I'm primarily concerned about those who can't afford it but buy luxuries anyway.

I share your concern. Whatever happened to the fear of debt? It had all but vanished, but is now making a comeback. It's all over the media so often now, with so much detail, that few can escape awareness despite trying.

While travel seems to be your bugaboo, I get especially freaked out by out-of-scale mortgages or when each member of a couple has a car loan so 2 or more going at the same time, and upside down to boot. I think these are more common problems than travel debt. But I get your point: that travel debt could be as high as car debt, without something to sell to pay it off. On the other hand, one can sell one's cars to pay off travel debt as well as car debt. Best to avoid any such outcomes, we agree.

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12791 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 2:46 PM
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"On the other hand, one can sell one's cars to pay off travel debt as well as car debt"

Most people with loans never have positive equity in their cars. They usually are underwater from day 1 and always owe more than the car is worth. Most never pay it off, buying or leasing a new car every few years.

HOw many middle class people to you know that actually own the car they drive?

t.

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Author: MichaelRead Big gold star, 5000 posts Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12792 of 19257
Subject: Re: Ummmmm Date: 4/7/2008 3:49 PM
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I think we all here get the point of not going into debt for almost anything and, if you can afford it, do it. And, if it brings some enjoyment, all the more reason for doing it even though – as some have pointed out – everything is risk.

Last year Elly and I went to a upscale resort in Campbell River ( www.aprilpoint.com/ ) and spent money out the yingyang on a totally pampering/fishing trip where we ate like royalty and lived high on the hog. Most people fly in for an expensive two-day stay – we stayed for a week. One day I caught a fair-sized pink salmon and took it to the resort’s chef who prepared it for our evening meal: it was served and people in adjoining tables (some bearing forks) came over to look at this whole-cooked fish artfully displayed on a silver salver. We still talk about that.

Oh, where was I? Yes, I could have taken the cost of that trip (it was substantial) and invested it in something and, yes, my accounts would be higher than they are yet what value a memory that sticks?

SP once wrote that if he had his druthers he’d take his boat and sail from Puget Sound all the way up the Inside Passage stopping at all the resorts and working on their HVAC. What a marvelous idea. Yet that’s risky. There’s many ‘what ifs’ with it. Yet, even with the what ifs, what of the memories made?

I don’t think I’ve ever said to house guests, “Want to see my picture of my bank book?”

MichaelR

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Author: Follydolly Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12793 of 19257
Subject: Re: Ummmmm Date: 4/9/2008 2:44 PM
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Travel is more important to some than others. After my DH died, I took my daughter and went to Maui, using my late husband's perk money. Trip was almost all free, including the rental car.

I will never forget that wonderful vacation. It was a beautiful 10 days. Much later I took the GK and daughter to Disney World. We stayed on grounds, ate out. Stayed for a week. It was a wonderful vacation. I don't regret spending the money. Later, we went on another beach vacation and I was quite unhappy with the trip. Haven't gone since.

Although I have been invited to visit family in other states, I rather stay home. Often, I go away only to wish I was home. But that is me.

You do not want to go into debt to travel. But if that is what you love to do and you can find the funds to pay for it, go for it. You only go around once.

~Birgit

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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12794 of 19257
Subject: Re: Ummmmm Date: 4/9/2008 2:51 PM
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You do not want to go into debt to travel. But if that is what you love to do and you can find the funds to pay for it, go for it. You only go around once.

~Birgit

Not quite the same as going into debt for travel, but <sniff> we don't have enough frequent flyer miles fo go to both Australia AND Hawaii next year <Bawwww!>. Probably has something to do with the three first/business class trips we have scheduled for this year, including Europe, all on FF miles.

I know you are all broken up at this sad news.

cliff

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12795 of 19257
Subject: Re: Ummmmm Date: 4/9/2008 2:57 PM
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I know you are all broken up at this sad news.

I feel your pain. I hope that the pleasure you find at the destinations will make it worth the pain and indignity of air travel nowadays.

Phil

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12796 of 19257
Subject: Re: Ummmmm Date: 4/9/2008 4:58 PM
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Is not going into debt the reasonable standard? It seems to me that still invites reckless spending.


The person who is living paycheck to paycheck and uses a tax refund to go on an expensive vacation is not acting reasonably, in my view. Before spending for such luxuries, having an emergency fund and reasonable resources against illness, disability or layoff would be prudent and reasonable, in my view.




Seattle Pioneer

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Author: DorothyM Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12797 of 19257
Subject: Re: Ummmmm Date: 4/10/2008 8:42 AM
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The person who is living paycheck to paycheck and uses a tax refund to go on an expensive vacation is not acting reasonably, in my view. Before spending for such luxuries, having an emergency fund and reasonable resources against illness, disability or layoff would be prudent and reasonable, in my view.

Names please. Or is this just a hypothetical somebody about whom we can worry during those off hours when we have nothing to do, nothing to read, no one to talk to?

I'll try to fit in all that worrying about people I don't know around my trip to Quebec in May/June, Venice and Paris in December and India next February (no firm plans beyond that).

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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12798 of 19257
Subject: Re: Ummmmm Date: 4/10/2008 10:38 AM
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The person who is living paycheck to paycheck and uses a tax refund to go on an expensive vacation is not acting reasonably, in my view. Before spending for such luxuries, having an emergency fund and reasonable resources against illness, disability or layoff would be prudent and reasonable, in my view.

Names please. Or is this just a hypothetical somebody about whom we can worry during those off hours when we have nothing to do, nothing to read, no one to talk to?



Anybody who can use nothing more than a tax refund to go on an "expensive" vacation, really has nothing to worry about. They are making a TON of money.

AM

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12799 of 19257
Subject: Re: Ummmmm Date: 4/10/2008 12:18 PM
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"Anybody who can use nothing more than a tax refund to go on an "expensive" vacation, really has nothing to worry about. They are making a TON of money."

And they need to adjust their withholding.

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12800 of 19257
Subject: Re: Ummmmm Date: 4/10/2008 3:35 PM
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Anybody who can use nothing more than a tax refund to go on an "expensive" vacation, really has nothing to worry about. They are making a TON of money.

Well, not necessarily. The largest refunds I've seen this year are going to the people who are low income with children and receiving earned income credit. Of course, most of them are using their refunds to pay their back rent or car payments so they have a place to live and something to drive to work.

Rose
Tax Preparer

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12810 of 19257
Subject: Re: Ummmmm Date: 4/11/2008 11:24 AM
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Of course, most of them are using their refunds to pay their back rent or car payments so they have a place to live and something to drive to work.

Just curious, Rose--if most of these low income folks reduced their withholdings, could they stay current on rent and car payments? Perhaps the pleasure of getting an annual "windfall" overwhelms a more logical plan.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12811 of 19257
Subject: Re: Ummmmm Date: 4/11/2008 11:48 AM
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Just curious, Rose--if most of these low income folks reduced their withholdings, could they stay current on rent and car payments? Perhaps the pleasure of getting an annual "windfall" overwhelms a more logical plan.

Well, letting them be ignorantly blissful is certainly one way to keep them poor. Eliminating those late fees and putting the money to their own use would be a significant improvement for people who are living hand to mouth.

The low-income tax clinic I work at is associated with a broader effort to financially educate the working poor and help them make wiser choices. This year they added a program set up with local banks to establish no-fee interest-bearing savings accounts. We're definitely talking about baby steps, and we're having few takers, but it's a start.

Phil

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12819 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 9:23 AM
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Just curious, Rose--if most of these low income folks reduced their withholdings, could they stay current on rent and car payments? Perhaps the pleasure of getting an annual "windfall" overwhelms a more logical plan.

No. Earned income credit doesn't work that way. Many of them have little or nothing withheld from their paychecks during the year. EIC is a refundable credit for low income wage earners. The amount they receive depends on how much they earned, filing status and how many children (0, 1 or 2) they have. I don't have my reference material here to give you the specifics and don't have it memorized since my tax program figures it for me when I'm doing returns.

Rose
Tax Preparer

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12820 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 10:21 AM
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Many of them have little or nothing withheld from their paychecks during the year. EIC is a refundable credit for low income wage earners. The amount they receive depends on how much they earned, filing status and how many children (0, 1 or 2) they have.

Most people eligible for the EIC pay no income tax. What they do pay through withholding during the year, just like all employees, is the employee's portion of FICA/Medicare, even if nothing is being withheld for income tax.

The way around this is advance payment of the EIC, so a portion is credited each paycheck throughout the year. I've discussed this with a lot of people over the years, but few want to do it. The primary reason they give is uncertainty and the fear that they would somehow wind up having to pay it back come next April.

Phil

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Author: rosewine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12821 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 10:53 AM
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The way around this is advance payment of the EIC, so a portion is credited each paycheck throughout the year. I've discussed this with a lot of people over the years, but few want to do it. The primary reason they give is uncertainty and the fear that they would somehow wind up having to pay it back come next April.

Another reason they give is that they frequently change jobs. Many of these people come in to the tax office with 3 or more W2s from various jobs. I had one early in this tax season who had 8 W2s for 2007. I have to give her credit for going out and finding another job every time she lost one. I'm not sure I'd have had the stamina for the constant job search. It would be very easy to give up in that circumstance.

Rose

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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12822 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 11:29 AM
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Another reason they give is that they frequently change jobs. Many of these people come in to the tax office with 3 or more W2s from various jobs. I had one early in this tax season who had 8 W2s for 2007. I have to give her credit for going out and finding another job every time she lost one. I'm not sure I'd have had the stamina for the constant job search. It would be very easy to give up in that circumstance.

Rose

<snort!> You may have had my SIL. No, wait, I did her tax return.

Why do people with low income and no complexity (1040EZ) use a tax preparer, which costs them money?

cliff

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12823 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 12:35 PM
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Why do people with low income and no complexity (1040EZ) use a tax preparer, which costs them money?

Because for a stiff fee they can get their refund instantly instead of having to wait a month or two.

--fleg, former H&R Block employee

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Author: TurkeyBreath Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12824 of 19257
Subject: Re: Ummmmm Date: 4/12/2008 2:39 PM
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Why do people with low income and no complexity (1040EZ) use a tax preparer, which costs them money?

Nearly two generations ago I took a course which ending in providing free tax preparing for the community. I learned that most of my low income patients had no idea that they paid for the rebates they will receive.

TB

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12832 of 19257
Subject: Re: Ummmmm Date: 4/13/2008 1:56 AM
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I learned that most of my low income patients had no idea that they paid for the rebates they will receive.

Sadly, this is hardly restricted to an economic group. During my IRS days part of every taxpayer contact was a required compliance check to make sure they were current on all filing and paying. Way too many would respond, "I didn't pay last year, I got a refund."

Phil

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Author: Capcon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12833 of 19257
Subject: Re: Ummmmm Date: 4/13/2008 2:15 AM
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"I didn't pay last year, I got a refund."

My apologies if someone else mentioned this - I didn't read the whole thread...but

Although I realize it wouldn't work, the way to get people to understand just how much they are taxed is to eliminate withholding. Unfortunately, most people would not prepare and on April 15th, could not pay the bill.

Cap

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12835 of 19257
Subject: Re: Ummmmm Date: 4/13/2008 9:17 AM
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Although I realize it wouldn't work, the way to get people to understand just how much they are taxed is to eliminate withholding. Unfortunately, most people would not prepare and on April 15th, could not pay the bill.

Interestingly enough, that's how it worked until WW II, when withholding and estimates were introduced to make sure there was a steady flow of revenue.

Phil

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