Criticisms about gaming the system or dodging one’s “obligation” to pay their fair share of taxes doesn’t carry much weight when between 57% and 40% of US households (depending on the year) don’t pay a cent in federal income taxes and a portion of those people also receive free money back from the IRS.
And there it is those people don’t pay any federal income tax. You know what you are right.
I have two things to say about that. First we hold high income/wealth in high regard when they game the system. Man Tom was so smart he is spending 185 days in FL and avoiding all those state taxes. Or ABC Corp has been able to keep revenues/profits overseas in a tax haven. These people are geniuses. Then you have Sally who is low income and is just playing by the rules in her state to get whatever benefits that are available and she is considered a freeloader.
Second, it is true there are many households that don’t pay any federal income tax. People need to realize that state & federal income taxes are not the only taxes we have in our society. If you buy goods and sometimes services you are paying a sales tax.(Unless you are part of a church that literally pays no taxes). If you rent a home or an apartment you are paying the property taxes. The landlord is just the person that collects it from you and remits to the state. Heck the little a landlord pays in income taxes on the property comes from the renter. There are both state and federal taxes when you purchase gas. Realistically any tax a corporation comes from their customers and guess what some of those those people are low income paying no federal income tax.
Would it make people feel better if low income people paid some federal income tax and didn’t have to pay federal gas tax or other taxes.
We have let the people at the top drive a wedge and convince people who make $70-$140K that people who make less than $50K are the problem when instead the people at the top are really the problem.
And if we want to cut federal spending why don’t we just cut the military by 25% and that will save tons of money.
On the issue of a second home - I’ve thought a lot about that (not that we have huge funds for it - but it could be an option in retirement).
While I know a second place works for many, many people, as I approach the next stage one value that keeps coming to the fore is being less tied down by things and material responsibilities. Owning a second home to me represents concerns, costs, maintenance, weather issues, thinking about appreciation/deprecation, etc.
I’d rather rent a place in warm weather a few months out of the year (maybe the same place every year, to build community there). With Air BnB etc. so many short term rental options…
H’s family has owned a small, very modest cottage 3+ hours from us for many years. H will own it once his mom passes. Even this unassuming place costs more than $6k/year just for basics (taxes, insurance, sewer, electric, association fees). Of course, there are added costs for maintenance/upkeep, not to mention the hours of work required to open, close, maintain property, etc. It’s nice to have, but I honestly wouldn’t choose it. I’d much rather take vacations to various places I’ve never been.
We have no plans to acquire a second property in retirement. I think we’ll probably downsize at some point, but we like to travel to a variety of places, and are not so much into staying at a beach house or cabin in the woods for an extended period. Neither of our sons is geographically close enough for us to have a second home as a gathering place. Sigh. I don’t think we’ll ever get to be the kind of active, day-to-day grandparents many of you are (assuming that blessed event ever happens).
Of course, I may eat my words if we can no longer do the big trips and want to just go someplace different for a few months. If we get to that point, I think we’d just rent.
My in laws spent the entire summer at the cottage once FIL retired. H & I have no interest in doing that, which I think plays into my feelings about keeping it. We will keep it at least for a while, but even H is beginning to cool on the idea of keeping it indefinitely. Our kids enjoy it, but they are busy & rarely stay out there these days.
We were in so exactly this situation. 3.5 hours away, very small and needy, basic things to keep it running costing thousands each year + the time to maintain it, etc. While the choice to sell it wasn’t all ours (long story) we did and considered buying a second place closer to our home. Instead we made the choice to buy a new main home (the house our kids grew up in wasn’t a “age in place” house) with amenities for it to be our and our immediate families “staycation”. In the end I think things worked out.
@Colorado_mom, yes. “Dinner parties” is a quaint term. But, we entertain a lot (last night an Italian recipe of pasta with swordfish with a red sauce with anchovies and hot peppers; tonight mahi mahi with a kaffir lime rub (?) barbecued on a cedar plank). Sometimes just a couple (like tonight and tomorrow night) and sometimes more (last night with colleagues). Usually we invite people we already know (although sometimes we add people who friends think we would like and add them to the party). Then, we get invited to other people’s houses, often with folks we don’t know. Keeps our lives interesting.
Part of what I do professionally is to synthesize knowledge, ideas and facts from disparate fields and write stuff that I hope is useful to the world. I’ve written some things that are inflicted upon business, law and public policy students and I’ve been told have influenced significant decisions (e.g., how they set up the rules for labor relations in South Africa post-Mandela based upon a chapter of a book I co-authored – despite the fact that I am not an expert in labor relations per se. I hope it worked). So, I really thrive on learning new stuff, often from meeting people who are pushing frontiers.
@abasket, we have a similar situation. We and one of ShawWife’s siblings purchased a crumbling cottage that was their family’s summer/winter/weekend home from their other two siblings. Great sentimental value. We had to knock it down and rebuild it (it was completely moldy, but did so in an incredibly frugal manner). It is 6 hours drive away. I’d be delighted not to own it as it costs some money (it is very energy efficient but we have to pay for electricity, heat, snow clearing, taxes, etc.) and we don’t use it that much. Our kids love it as we used to spend a few weeks each summer there and they would drive up during college, but don’t use it much either. We later sold the house where we raised our kids and bought an aging in place/staycation house, so I wonder how long we will have to own our share of this house.
LOL - We don’t talk much on current events or policy (the group has a variety of views). Lots of chatting about family. And sometimes retirement topics like in this thread.
To pay off or not to pay off… that is the question…
We paid our mortgage off when our portfolio skyrocketed during COVID. No regrets. Mr. B says it feels liberating not to have someone breathing down your neck when making home improvements.
you answered your own question. While paying off a low interest loan in today’s market is sub-obtimal from a pure finance perspective, the emotional lift can be worth a lot. But its a personal thing.
I have posted before about my friend who keeps refinancing her home and getting HELOCs to draw out equity to pay for things such as a remodel and an HVAC and a new car. Her house is an ATM machine. Now she wants to retire and is considering taking SS at 62 because she needs the money to make the math work. She is always trying to get me to justify my financial decisions, and last week I finally told her that while I don’t agree with her decisions that I respect them and that I don’t understand why she can’t do the same for me.
I know she always has thought that I was silly for being so conservative, but, hey, our house is paid off, and she owes hundreds ot thousands on hers when we bought at the same time. We are younger than she and her dh and are retired while she is struggling to go part time and her dh is working full time and has no plans to quit. I am happy with our choices.
I do understand the idea of not paying off a mortgage of 3.5% or lower ahead of time in this economy if you are putting that money into a high-yield account. You come out ahead. But that’s not what my friend is doing. She simply can’t afford to pay her house off and needs to be able to tap the equity to pay for necessities.
We don’t have the money to pay it off without a giant IRA withdrawal, that’s not happening
Our mortgage is at 2.99%, my money in the bank is making 5.2%, so what’s the incentive?
The low mortgage rate and the SALT limitation, combined with inflation adjustments from the IRS, means that for the first time in over 30 years, we’ll be taking the standard deduction instead of itemizing.
Funny you should say that … She paid off her cc debt many years ago after listening to Dave Ramsey. And she no longer carries cc debt; she pays it off every month so that’s great. But she’s kind of unrealistic about her finances; she doesn’t want to face facts.
Example: She has had a series of meetings with her FA in the past several weeks about how to make the numbers work so that she can retire. After she and dh left the first meeting, she was talking about maybe taking out a HELOC in case they need a new HVAC or something, and the dh said that they have $30k in cash to pay for that to which she told him that they don’t really have $30k cash. They USED to have $30k years ago when they first met with the FA but now they don’t. I told her that the FA needs to know that her numbers have changed, but she said that the FA is looking long-range and not at current holdings. I tried to explain to her that the FA needs to know that they aren’t as liquid as he thinks because if they have to spend down retirement accounts to pay for that kind of thing all the projections are wrong. She didn’t want to hear that. It’s stressful to watch, truthfully, but she’s going to do what she’s going to do.
Tha seems like her FA is doing some bizarre financial planning. Sure, plan for the long range, but he or she should really have an accurate picture of what they have right now.
We refinanced into a 3% mortgage when they started dropping into that range. It never made sense to refinance to anything lower or to pay it off.
It also impacts any decision to relocate or to buy another house. We will stay put here for the immediate future. We don’t live in an area of the country where we would utilize a ton of equity or be able to buy another house that compares to the one we have.
Our costs are low for housing. Even with a mortgage
It’s stressful to watch, truthfully, but she’s going to do what she’s going to do.