Disappointed in my tax refund results with $7500 EV credit.

[mongo]

Stop putting words in my mouth I never said anything of the sort.

Then we are missing a nuance:

I will reiterate that having a car payment higher than a house payment is always bad, in my opinion, source?

Rule: mortgage < car loan

(unless you meant mortgage + insurance + property tax, which can still be less than a car loan)

And they gave the hypothetical:

So you're saying that if I have paid off my mortgage, I should never take out a car loan? This advice makes no sense.

Mortgage = 0, car loan equals >0; thus car loan > mortgage. This violates your rule, which you said was bad, always, in your opinion.

Anyway, why buy more house when you can buy more TSLA? That will also appreciate, and you don't pay more closing costs on it. Plus, the new tax law gutted the property tax/ mortgage interest deduction.

 

[LyftupX]

All this talk is making me question writing off my Auto Pilot purchase of $6k.

I’ve had one tax guy say yes use bonus depreciation. Another say not sure. To me purchasing after the car was bought , it’s software and a tool to be used in business like any other.

Details 1099 car used 90% business in 2018 , rideshare. Still have decent net income after deduction , all put into solo 401k. 3rd year doing rideshare all positive net income producing.

Deduction saves me $1500 or so still on the fence if i use it. Car will be >50% business use going forward. I would not have bought the car or AP if i was not going to use as a tool.

$7500 ev credit shows as $6750 business and i think $750 rolls through on personal all showing up fine at this time.

Too aggressive? Or fine if I can back up with records on business use (mileage log and apps) of course.

 

[Barklikeadog]

As a self employed individual any accountant that tells me I can't deduct a home office or travel miles is a red flag.

The answer is always: it depends.

 

[Barklikeadog]

I agree. A home office is a completely legitimate deduction for self employed individuals. My tax guy has a standard form that goes into significant detail that I can honestly document. I have claimed that deduction for six years with no issues whatsoever.

People make it too easy. What did you spend on electric? 3000. 3k? Exactly 3k? 10k miles? 1k on gas? Yea no. Great thread

 

[voip-ninja]

Then we are missing a nuance:


Rule: mortgage < car loan

(unless you meant mortgage + insurance + property tax, which can still be less than a car loan)

And they gave the hypothetical:

Mortgage = 0, car loan equals >0; thus car loan > mortgage. This violates your rule, which you said was bad, always, in your opinion.

Anyway, why buy more house when you can buy more TSLA? That will also appreciate, and you don't pay more closing costs on it. Plus, the new tax law gutted the property tax/ mortgage interest deduction.

A better rule would be;

If $mortgage >0 then $mortgage > $car

There's no "rule" that covers all situations and the higher your income the less these things generally matter since car payments become an increasingly small percentage of income.

Generally though the people who need the advice most, of not becoming over-leveraged on a high car payment are the least likely to listen to the advice. Often a combination of being young, financially irresponsible (instant gratification) and generally thick-headed.

Had a reason conversation with a younger person (early 30s) who was under the impression that he really didn't need to put any money away for retirement because of social security and a small automatic company 401K contribution. Spends 100% of his monthly salary, etc.

 

[mongo]

A better rule would be;

If $mortgage >0 then $mortgage > $car

There's no "rule" that covers all situations and the higher your income the less these things generally matter since car payments become an increasingly small percentage of income.

Generally though the people who need the advice most, of not becoming over-leveraged on a high car payment are the least likely to listen to the advice. Often a combination of being young, financially irresponsible (instant gratification) and generally thick-headed.

Had a reason conversation with a younger person (early 30s) who was under the impression that he really didn't need to put any money away for retirement because of social security and a small automatic company 401K contribution. Spends 100% of his monthly salary, etc.

Sure, I'm all for fiscal responsibly (spend less than you make and save for the future).

What about:
Mortgage < X% of income,
car < Y % of income
Savings > Z % of income.
With Y< X, allowing the actual mortgage and loan to be higher or lower than each other? Having low housing cost should increase your ability to have a pricier car, not reduce it..

 

[Knightshade]

Sure, I'm all for fiscal responsibly (spend less than you make and save for the future).

What about:
Mortgage < X% of income,
car < Y % of income
Savings > Z % of income.
With Y< X, allowing the actual mortgage and loan to be higher or lower than each other? Having low housing cost should increase your ability to have a pricier car, not reduce it..

Should possibly be something in there about not having a big car payment if you have a 30 year mortgage, since a 15 year would save you an insane amount of money (and usually get you a lower rate too)

 

[Glamisduner]

Should possibly be something in there about not having a big car payment if you have a 30 year mortgage, since a 15 year would save you an insane amount of money (and usually get you a lower rate too)

so you should drive a gas car until you have made payments for 15 years?

 

[mongo]

Should possibly be something in there about not having a big car payment if you have a 30 year mortgage, since a 15 year would save you an insane amount of money (and usually get you a lower rate too)

I like 30 year due to the lower required payment, just in case. And with a 4% 30 yr, the interest rate impact is less critical that the 15 years less of payment, which you can still do by overpaying on the 30 yr...
Plus, if you can find an investment that makes better returns than the 4% mortgage rate, you should do that rather than pay down...

 

[Knightshade]

I like 30 year due to the lower required payment, just in case. And with a 4% 30 yr, the interest rate impact is less critical that the 15 years less of payment, which you can still do by overpaying on the 30 yr...
Plus, if you can find an investment that makes better returns than the 4% mortgage rate, you should do that rather than pay down...

I'm paying 2.5% on a 15 year.

over the life of the mortgage, even assuming an average home price, you're talking around $150,000 in interest savings versus a 30 year 4% loan.

The way home loans amortize make the savings for shorter terms pretty huge rather than car loans where it's simple interest.

For folks in places like CA with insane housing prices the savings is a lot higher of course.

 

[voip-ninja]

Sure, I'm all for fiscal responsibly (spend less than you make and save for the future).

What about:
Mortgage < X% of income,
car < Y % of income
Savings > Z % of income.
With Y< X, allowing the actual mortgage and loan to be higher or lower than each other? Having low housing cost should increase your ability to have a pricier car, not reduce it..

In 10 years any car will be worth little compared to what you paid for it, while admittedly you get whatever enjoyment out of it you personally get.

In 10 years a house, in many markets will appreciate x%. Larger/nicer/expensive homes often appreciate at a higher rate than the median.

 

[Knightshade]

so you should drive a gas car until you have made payments for 15 years?

I didn't say anything even resembling that claim, so no.

(though certainly if you have a reliable, paid for, gas car, it probably makes little financial sense for most to buy a new Tesla and pay on a 30 year mortgage, rather than re-fi to a 15- if you already HAVE a 15 going shorter doesn't help nearly as much so knock yourself out... especially if you're able to get a 1-2% car loan for as long as possible since as I mention car interest doesn't work like mortgage interest).

 

[redgt]

15 year is the only choice in my opinion. I'd rather buy less house and get 15 year note. 1st payment will pay more to principal than interest. compare that to a 30 year

 

[Glamisduner]

I didn't say anything even resembling that claim, so no.

(though certainly if you have a reliable, paid for, gas car, it probably makes little financial sense for most to buy a new Tesla and pay on a 30 year mortgage, rather than re-fi to a 15- if you already HAVE a 15 going shorter doesn't help nearly as much so knock yourself out... especially if you're able to get a 1-2% car loan for as long as possible since as I mention car interest doesn't work like mortgage interest).

I like my 30 year locked in at 3.5%, I see no reason to re-fi as a new appraisal will only trigger even higher property tax since my house is likely doubled in value. And I bought a tesla. YOLO!

 

[Knightshade]

I like my 30 year locked in at 3.5%, I see no reason to re-fi as a new appraisal will only trigger even higher property tax since my house is likely doubled in value. And I bought a tesla. YOLO!

Ok...I mean you're gonna pay way more than the Tesla cost in extra interest your way, but you do you.

Oh- also- the max your property taxes can go up under California's Proposition 13 property tax law, barring any other changes, is the lesser of the increase in the value of your property or 2 percent a year.

 

[voip-ninja]

I like my 30 year locked in at 3.5%, I see no reason to re-fi as a new appraisal will only trigger even higher property tax since my house is likely doubled in value. And I bought a tesla. YOLO!

People can do whatever they want to do, just don't expect me and other taxpayers to bail your ass out when you do something dumb (note, I am not saying you are dumb for having a mortgage). Same goes for big businesses, I think too-big-to-fail crap is just that, crap. My wife's business sure as hell isn't going to get a rescue from the .gov if she makes bad decisions and the business goes kaput.

A coworker asked me about buying a new car and if it was smart (compared to buying old used one) and one of the first things I asked him is if he has 3-6 months worth of net salary saved up as an emergency rainy day fund. His response was if he loses his job he'll just go get another one. Well what happens if you can't work for a while due to an injury, illness, etc., genius?

There's a saying somewhere that when something hasn't happened in three generations it becomes a legend since nobody alive remembers it happening. We are approaching that with the lessons learned from the great depression, government tyranny, influenza outbreaks that kill millions, etc.

I never take the approach that someone else will take care of me if my life goes sideways. Old timey folks used to call it living below your means.

 

[mongo]

People can do whatever they want to do, just don't expect me and other taxpayers to bail your ass out when you do something dumb (note, I am not saying you are dumb for having a mortgage).

If they do do something dumb, the 30 year is a lower payment per month they are on the hook for.
Like I said, you can pay down a 30 years faster, but you can't make your 15 year last 20...

 

[Glamisduner]

People can do whatever they want to do, just don't expect me and other taxpayers to bail your ass out when you do something dumb (note, I am not saying you are dumb for having a mortgage). Same goes for big businesses, I think too-big-to-fail crap is just that, crap. My wife's business sure as hell isn't going to get a rescue from the .gov if she makes bad decisions and the business goes kaput.

A coworker asked me about buying a new car and if it was smart (compared to buying old used one) and one of the first things I asked him is if he has 3-6 months worth of net salary saved up as an emergency rainy day fund. His response was if he loses his job he'll just go get another one.

There's a saying somewhere that when something hasn't happened in three generations it becomes a legend since nobody alive remembers it happening. We are approaching that with the lessons learned from the great depression, government tyranny, influenza outbreaks that kill millions, etc.

I never take the approach that someone else will take care of me if my life goes sideways. Old timey folks used to call it living below your means.

Yea, well I find I need to enjoy life. I commute 84-100 miles a day. My old dodge 3500 was costing almost my payment on the tesla in diesel after my large down payment. I bought the tesla because I wanted it. Of course, financially I would have been better off buying a used prius and putting that down payment towards my house, or solar loan, but I would hate my commute every single day. I spend 2 hours in the car every day so I like to enjoy that time as much as possible. Also while statistically buying a bigger house or making that investment is better, tell that to all the people who lost their houses in the big bubble. House value is like funny money, even though my house has doubled in value, Selling it to buy an equal prices house is only going to get me about as much house as I have now...An extra 40-50k paid down isn't going to make or break the cost of selling and moving into a larger place, or paying down my loan. But I do know that I enjoy driving my car every day, instead of hating my life for 2 hours.

Having seen many people die at a young age you never know how long you have or what your future holds. It's always best to save save save, and never use credit or loans financially, but you might save your whole life and come up short with cancer or a stroke and never get to enjoy your savings.

That's not to say I don't save up or do super irresponsible purchases, but I also find it important to stop and smell the roses along the way. Life is about the journey so enjoy it. The destination is the same for everyone.

 

[voip-ninja]

If they do do something dumb, the 30 year is a lower payment per month they are on the hook for.
Like I said, you can pay down a 30 years faster, but you can't make your 15 year last 20...

I'm not saying taking out a 30 is dumb, I did that myself. When interest rates fall to a certain level, and the interest is tax deductible it is essentially free money.

I even slowed down on paying off my principal early because I'm getting much better returns on what I am investing than what I am paying in interest over that same period of time.

What I'm saying is dumb, in general, is someone who puts a disproportionate amount of their disposable income for a vehicle, but again, people can do whatever they hell they want, free country, kind of.

 

[mongo]

It's always best to save save save, and never use credit or loans financially, but you might save your whole life and come up short with cancer or a stroke and never get to enjoy your savings.

Not so, buying on a credit card you pay off every month gains you up to 60 days of float that you can keep in an interest bearing account.
Loans, too, can be advantageous, if their interest rate is lower than your investment's...