Student Loans vs. 401(k)

HellbornElfchild · 2012-05-25T14:01:55.993208+00:00

You might want to pay down the higher rate loans. But the others are so low... I would just pay them out over their term, not early.

I had a few large loans around 3%, and a small one at 5.5%. I took my first year out of college (while I was not vested with 401k) to pay off the 5.5% and create an emergency fund. When the year was up, the 5.5% was gone and I had three months backup ready. One year later, I started my 401k, just the 5% my employer would match, used the rest to build that emergency fund a bit bigger... and started saving a ROTH IRA on the side.

I have no regrets, and generally speaking, I would recommend this strategy to just about anyone in their early 20's.

HellbornElfchild · 2012-05-25T13:35:18.525721+00:00

Think of it this way, if your student loans are at 5%... what rate of return can you get on the 401k investments?

If it's more than 5%, you invest in 401k.

If it's less than 5%, pay down student loans.

As for the rate of return, it's a gamble. So there's no right answer because we can't predict the future returns.

That aside, generally speaking, I think you'll see folks here advocate for doing the company match, not a penny more, and pay down what you can with the leftover.

Saving for retirement works better if you start early and build as much as you can in your 20's. It's hell to catch-up as a 50 year old. What you have today might not seem like much, but you've got 30 years to let it grow. It won't always be roses and sunshine in your portfolio, but retirement savings has a very, very long timeline.

GaRFyelD · 2012-05-25T13:24:43.373404+00:00

So why are you on this subreddit?

Not trying to be a dick, but we're all just anonymous internet people here - every single post is like this.

twenafeesh · 2012-05-25T12:40:58.366250+00:00

That analogy gives Zestimates too much credit.

Wikipedia has each entry manually edited, peer reviewed, and cites sources.

Zillow uses outdated databases, they do not scrub their data for quality, you are only allowed to correct data on your own home, they do not challenge false data that would seriously impact the value, and it has no standing in the relevant business community.

In short, Zillow does not have Wikipedia's clout.

twenafeesh · 2012-05-25T00:34:36.882109+00:00

Can't argue with that. I'm not proposing that there is a better way to get massive amounts of accurate, nationwide data. But I do think it's important to call out the flaws of the current data we reference.

twenafeesh · 2012-05-25T00:26:52.152232+00:00

Yes and no.

Foreclosures and short sales have a hidden cost of business for a buyer. Homes are often in diminished condition. Banks are still notoriously slow to approve and close transactions - having anything other than a first-time home-buyer is very problematic in this circumstance. In that sense, there is a an additional non-monetary cost, so it kinda makes sense to remove these since there is industry-standard for adjusting for these factors.

On the other hand, you can't deny that foreclosures and short sales are taking away buyers from legit sellers who are capable of taking the loss on their own (or aren't selling at a loss at all!). So in that sense, YES, they should be factored in.

To your macro-point, the entire real estate market in the U.S. is badly broken in about 50 different ways. And this country's leaders (political and business) do not have the appetite for massive structural overhauls to major parts of our economy. So we look for bandaides and continue on as if this will never happen again.

twenafeesh · 2012-05-25T00:17:43.787825+00:00

True, but it's a fallacy. Your transaction is controlled by the lender, your agent, and the local law - as represented by your bank, your agent(s) and your title/escrow attorney. They use the appraisal for their purposes - Zestimates get laughed out of the room.

Ok ok, I'm being tough - it's a decent bench-marking / pulse of the market tool. But it's not precise, and it doesn't take into account all factors that NEED to be taken into account.

Plus, foreclosures and short sales have a hidden cost of business for a buyer. Homes are often in diminished condition. Banks are still notoriously slow to approve and close transactions - having anything other than a first-time home-buyer is very problematic in this circumstance.

In brief, it's apples and oranges, but it's all house - so people outside the business do not understand the full picture. Everyone is an arm-chair real estate expert these days, and that's part of the problem.

twenafeesh · 2012-05-24T21:26:13.333192+00:00

I'm not sure I'm comfortable with this analysis. The data is published by Zillow... referencing TransUnion's outstanding mortgage balance grid and comparing it to Zillow's own Zestimate calculation, then doing an over/under calculation by county. Here's why that's problematic:

Zestimates suck. They can be used as a rough value movement diagnostic, a "directional read", nothing more. Their valuation methodology is not a suitable proxy for an appraisal. From their website:

"The Zestimate is not an appraisal and you won't be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for."

The algorithm is proprietary, but one thing we CAN be certain of is that it factors in foreclosures, short sales, and other bank reacquisition methods. From a public database, there's no way to scrub these out. Yet it takes an actual appraisal to establish the value of the home for any meaningful transaction, and those foreclosures cannot be factored into the appraisal's comparable property reference formula. I.E. the Zestimate has a severe negative value component that would be removed from the variables considered in a traditional transaction. In short, Zestimates include foreclosures and short sales as comps, appraisals do not.

Furthermore, the Zestimate calculator does not always have elements of your house factored in properly. Lot size, condition of the house, improvements (or damages!), number of bedrooms, size... unless you've input the precise data for your home, and all homes being used in their Zestimate comparison have too, the value is based on, in short, a myriad of estimates.

Think of it this way if you prefer. Let's say they have 99% of the data for your home correct. And the Zestimate algorithm uses 10 comps, which are also all 99% correct. Is the value estimate 99% correct? No, because errors compound. 99% * 99% (10x, for the 10 estimates) is 90% accuracy. And that's assuming they have 99% of their data accurate, nationwide.

I get that a lot of people are underwater. Not gonna argue that for a second. But I'm seriously troubled by the sheer volume of stories that cite Zillow as their source, when their estimate tool has got major structural flaws.

In reality, a house is worth what someone will pay to buy it from you, no more, no less. Until you actually put it on the market, there's no way to be absolutely certain.

AngryHippy · 2012-05-24T20:31:10.675378+00:00

Fair enough, but re-watch his reviews for Lagavulin 16, Ardbeg Corryvreckan and Laphroaig Quarter Cask. Same score, 90.

Seriously, he liked them all equally? If the threshold for very good scotch started a bit lower, we might have some room to separate them a bit... go a point lower on the Lagavulin or whatever.

I almost wish we could all re-calibrate our scores a bit. 50 should be a break-point for "I would buy this again". Leaves a lot more room for differentiation.

AngryHippy · 2012-05-24T19:42:17.544802+00:00

I wish he used the range a bit more... I mean... not all scotches are 80-97 or so. It leaves so little room for differentiation.

PunPuncher · 2012-05-24T16:42:52.060093+00:00

By the same logic, couldn't the people of Syria, Egypt or Libya look at Occupy Wall Street and say the same thing? Because folks over here are protesting such a smaller, petty thing compared to the battle they fight.

No matter how big or small, you've got to fight injustice. Not saying I know a damned thing about the Quebec situation, but if they have a justified complaint, the magnitude of the injustice should be irrelevant. As a society, you have to draw the line somewhere - this far, no further.

disco_biscuit · 1 day

Confirming Batch # 30.

ExtrovertedSolipsist · 1 day

I tend to smoke aromatics and get a lot of moisture build up. I use a cleaner several times mid-smoke to absorb the moisture and dry the smoke back up. I simply find it easier to do this with my straight (and shorter) pipes. Simple personal preference, and it's a very small thing. I only notice because I do this at least three times per (full) bowl.

50plusfinance · 1 day

HELL NO. Is this a serious question?

There's a reason they tell you when staging a house to take down all your photos. It's because you want the buyer to see themselves in that house, and seeing the seller distracts from that - even in photos.

ExtrovertedSolipsist · 1 day

That first kit, given the price and the identification of Italian pipes... I'm guessing it's something from the Savinelli Duca Carlo line. Savinelli makes a lot of great, common, entry-level pipes -- this is how I got started. Totally legit stuff.

I would suggest a straight for a beginner, IMO they are just a tiny bit easier to clean and care for. $32 for that set is a steal, any proper briar should cost you that much alone.

The only way I think you could get a better deal would be a garage sale estate pipe and pick up some tins and other supplies on your own. But still, that's a ton of leg work and you'll still blow at least $20. Given that the kit includes tobacco, a pouch, a Czech tool, cleaners... that's everything you need to get started.

ShipleyBronuts · 1 day

The funny thing was, I picked up a Trevi 626 at the same time... and I'm shocked to be liking it slightly MORE (for now at least). I will never buy two at the same time again though, I'm a 3-4 bowls a week man, so the break-in is taking forever with TWO new pipes.

ShipleyBronuts · 1 day

I just picked up a Savinelli Quandale 626... my first long pipe, I'm only two bowls in. I'm trying not to sing it's praises too much before I get her fully broken-in, but so far it's been excellent.

archduke_of_awesome · 1 day

Wow really, that's it? $5,000 per year for two classes per year ($2,500 per class)? That seems lower than I thought professors made... mind if I ask what type of school it is, how you got hooked up into it?

texacer · 1 day

If you have to give up Scotch for the rest of your life, and only you can only have Bourbon or Irish Whiskey... which do you choose and why?
What do you think of Glenfiddich's Solara and the "remove a little, add a little" style of aging? Do you think it will become more common?
If you could add one distillery to the Classics lineup, who would you add any why?
Do you believe the addition of E150 is really necessary?
What are your favorite bottles that cost less than $100?
Has Johnnie Walker ever experimented with the idea of doing more heavily sherried or peated blends? I.E. the range of Red to Black to Blue and so on... it seems to be more of a quality progression than a style deviation - has this ever been considered?

Note: yes, I know I included some JW questions... we can put those in the parking lot for next time if Diageo prefers.

griffin_peter · 1 day

If you're a Republican, it's not that the pledge is a bad thing. Philosophically you want to identify yourself with lower taxes, smaller government.

The problem is... it ties your hands with an absolute. It is designed to push you into a corner where political contracts overrule compromise. And Grover is notorious for having a grass-roots outreach capable of destroying politicians who break ranks. Governing in absolutes is a dangerous thing.

bossman8 · 1 day

Wow really? My last three systems came from Dell and I've been pleased as shit. Never a problem, EVER. I had HP and Gateways prior to the Dells and did have issues.

That said, I like their products, not their stock.

scisrbeatpapr · 1 day

Agree 100% it looked like a strike to me. But camera angles can be deceptive, so I'm trying to play devil's advocate for the ump here.

scisrbeatpapr · 1 day

Umpires by definition do not have to respect players. As a fan, I love and respect Ruiz. As an ump, he's just another guy.

"I'm not trying to argue, but that was a strike" IS an argument. He was trying to argue. Ump said ball, Ruiz said strike - that IS an argument.

He was trying to be respectful, but he was arguing. Let's just be clear. I'm not saying he's wrong... it looked like a strike to me. But he was arguing balls and strikes.

scisrbeatpapr · 2 days

In the ump's defense, you can't argue balls and strikes. It's the golden rule of umpiring (I'm certified through college-D II). For any ump, as soon as a coach starts arguing balls and strikes... you're allowed to eject. Period. It's just a sign of respect to the ump... a line you don't cross unless you WANT to be ejected. It's like walking over the mound to a pitcher... there are just traditions of respect that everyone knows.

That said, it's normally a coach not a player (i.e. the ejection has less impact - another coach can take over, and it's usually later in the game), and you usually warn them first.

Halladay threw the SAME pitch earlier in the game, Ruiz held it there, looking for the strike. There's a little embellishment thing catchers do to signal to an ump when they are certain it should be a called strike - Ruiz did that, but didn't get the call.

My question would be... did Ruiz do the same thing on that earlier pitch? And if so, was he warned? If he said "that was a strike" and was warned "don't argue balls and strikes" - I defend the umpire. You don't argue that shit, and Ruiz was warned.

I'm trying to give the ump the benefit of the doubt here, but I don't think they exchanged any words the first time... which would make this a fairly dickish ejection even from a fellow umpire's standpoint.

EDIT: Very misleading post title. Not saying he deserved it, but he did more than just look at the ump. He might have deserved it. We need to know more.

Chaser892 · 2 days

This may come off a bit sexist at first, but I really do not mean it as such, and hope you'll bear with me...

Women are not just baby-makers and home-makers anymore, they are equals with educations and careers that often surpass our own. I'm not saying this like it's a bad thing, but I think having a child becomes harder because it sometimes feels like a step backwards. Modern women are raised to be our equals in all ways, as it should be. But I think that leaves them with an instinctual tug-of-war around children.

I'm not trying to sound sexist here, quite the opposite in fact. But being a modern woman puts career and education at odds with how we traditionally define family. It also puts us men in a role where we do more domestic work, and our wives do more bread-winning. It causes great tension, because our roles in providing for the family are bleeding together as equals, yet our instincts going back for centuries will defy this equality.

I guess my point is... it's natural. And it's SO hard for women at this stage. I think the best you can do is to be positive, give her time to feel like a regular person who is still connected to her career... but also reinforce what a good mother she is. She probably feels like she's doing both roles (career, mom) poorly right now. Or perhaps she feels like she's traded one for the other. I think the best thing you can do is make her feel like she's doing BOTH well. Be sure to make time for her to go out and do old routines. Did she have hobbies or guilty pleasures before? For example, my wife loves to get a pedicure, whereas I love the movies. We tried to trade off baby duty at least once a month to accommodate the other person. And once she got comfortable with having the baby out (and the baby's ability to sleep in the car seat), I started encouraging my wife to have lunch with professional friends. It was actually great for her professional networking skills, and led to a part-time job that gave her a connection to her career, but the step back she wanted to accommodate raising a family.

TL;DR - help her find outlets to feel connected to her old life and her new one. She probably feels like she needs to give up on career or child, and finding balance is hard.

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disco_biscuit

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