What don’t I know (enough) about money?
March 8, 2022
With the usual caveats that I know that I’m usually doing the best I can with what I know / knew, and we’ve managed to make our way to a decent place financially with the requisite combination of hard work and good fortune, as I map out our 2022-2026(?) financial plans, I wonder what I don’t know now.
How much I didn’t know five, ten and fifteen years ago when I made important decisions about our money!
I didn’t know that my experiment with real estate wouldn’t necessarily be the game-changer originally hoped for, not when balanced against my desire to be an ethical rental owner who did repairs quickly, maintained the property well, and keeping rent relatively low. It’s possible that just putting that seed money into our investment accounts, and the maintenance costs over the years, would have generated similar or better returns for less angst and less work. But I also sold earlier than the plan originally called for so it’s also possible that had I held on to good renters for several more years, if the whole project hadn’t risen to truly irritating levels, it would have beaten market returns. It made enough to be worthwhile but it wasn’t as much fun as I had hoped.
I should have prioritized my make up retirement savings over JB’s 529 plan. I wonder if Nicole and Maggie talked about this earlier than 2016. If so, I should have thought about it in the context of my own plans and revised them. They definitely discussed prioritizing retirement over college savings, I just can’t remember when it was.
I made the mistake of mixing pre-tax IRA contributions and post-tax IRA contributions in the same account.
I definitely shouldn’t have believed my dad’s lies. I suppose the internet did tell me so at one point.
So….. what don’t I know enough about today?
Roth backdoor conversions always felt like a big pain that I couldn’t quite get my hands around until I realized that quite likely our income bracket at this point in life is the highest it’ll be versus in retirement.
I’m not sure how to untangle the withdrawals from my IRA when the time comes (with the mixed pre and post tax nonsense). The account is too old to see the original transactions but might try to sleuth out what the holdings were by the time I started mixing funds. That might be possible.
I don’t know of any cryptocurrency that makes sense to me and doesn’t seem to destroy our environment. I cannot get behind an alternative investing route that is so utterly destructive.
Health insurance (affordability, what plans will be available) in the next five to whatever years, if we should manage early retirement savings, is a total mystery. This is less a my-knowledge-is-lacking and more a what-on-earth-is-America-doing problem.
How much do we really need to have in liquid funds? Hindsight says we were too conservative from 2020-2021 but that’s also only because hindsight also knows we didn’t get laid off between 2020-2021. In the moment, we had no way of knowing whether that cash would be desperately needed to keep up with the bills.
When will we have enough for me to feel secure about subtracting work from both our lives and taking better care of my health? (What kinds of compromises will that create with the perception that if we don’t have to work anymore, we MUST have all kinds of free time?) I noodle around with various spreadsheets all the time because I enjoy mapping out those possibilities but PiC and I need to keep discussing our actual expectations for that life, too. It would be terrible to work hard for a future we don’t know what to do with.
Obviously there’s a lot more that I don’t know that I don’t know, particularly with our climate and the future of the US and whether our children are growing up into a hellscape that we can’t survive etc etc, but those are the money things off the top of my head.
We also put money in a 529 when we should have been putting it into retirement. Our logic was that DC1 would be going to college before we retired and we were already saving a lot for retirement. I didn’t think about how I could save less for retirement and cash-flow later if we needed to. Or that I could pull principal out of a roth if I needed to. But we’re doing fine– if those are our money problems, then we don’t really have money problems.
I could probably stand to learn more about diversification and tax diversification. I’m also concerned that if we continue on our fascist trend that the US government could decide to seize our assets some day in the future (this will likely depend on how much CRT I decide to teach or something) so I would like to know a bit about off-shore funds as another form of diversification. But I’m not there yet.
It’s nice to have problems that aren’t. Or problems/decisions that weren’t optimal and not be deeply affected by that.
I have similar concerns re tax diversification and this country going full fascist. Hope you’ll share what you learn about offshore funds if/when you look into it.
Awesome socks club is having a mystery sock sale: https://awesomesocks.club/products/awesome-socks-mystery-sale
Ooh have you used their socks? Are they thick and cushy? I couldn’t tell from the pics but they look really fun.
I wish I knew more about what to do for short-term savings.
I’m planning to take a chunk of time off work and don’t know what to do with that money – let it sit in a checking account? money market account? I did invest in the I bonds that are giving a good interest rate, and plan to cash out those in November and February. I’ll have to sacrifice a quarter’s worth of earnings unless I can delay that cash-out, but I think I’ll still come out ahead .. but am not positive.
Some of the money is in the stock market even though I have a very near-term use for it. Now I’m trying to decide when to pull it out – just pick a date on the calendar, or hold off for some kind of rally? And if so, to what amount?
In the grand scheme it’s not that much money so I don’t want to be too paralyzed but .. it’s a little stressful.
Oh that’s a great question with the interest rates being so dang low. Since I assume you’re going to need that money in the near term, accessibility is probably the most important thing about that money, right? Maybe a money market account that’s making at least a bit of interest would be best.
I assume that if you make 9 months of interest across 12 months, without really doing the math, with the high interest in the first 6 months, you’re probably going to be coming out ahead.
I’m right there with you having commingled pre and post tax contributions in an IRA. And in my case it dates back older than your existence! I have been told that your annual tax return has the information and that you can request all of your returns from the IRS, for a fee, and that will give you the information you need to pro-rata make ROTH conversions. I haven’t done that yet though and am not sure it is worth the trouble in my case since I’m approaching RMD’s in a few years.
Your tax return only has all the information if you always filed the right form and I know for a fact that we missed it a few times. I don’t intend to make conversions but I am concerned about how I’m going to figure out the taxable part and the non taxable part. Do you have a plan for that?