Author Topic: What kind of professional advice am I looking for?  (Read 6612 times)

rocksinmyhead

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What kind of professional advice am I looking for?
« on: April 10, 2014, 11:22:11 AM »
Sorry if this has been asked before... it seems like it would have been but I tried searching for several different things and no luck.

My boyfriend has been badgering me to see a "financial adviser" for a while, mostly because I went from making ~$20k in 2011 to ~$120k (pretax) in 2013 and have no idea what I'm doing. I have resisted because I don't think I want a "financial adviser," but more and more lately (especially since this board has opened my eyes to a few things... and since I did my 2013 taxes and realized I paid almost twice what it would have cost to buy my car new in cash) I've been thinking I would like a little professional advice. This board is amazing, but I feel like I just want to run my choices past someone in real life with ALL the numbers.

I don't want investment advice (I am comfortable with the "low-cost index funds + some bonds" advice given here) and I don't want to waste a bunch of money on exorbitant fees. Mostly I just want to make sure I am optimizing my taxes.

So what would I look for/what is this called? Do I just want a tax accountant? Some people on here have joked (or not joked) about starting a side gig as a "Mustachian financial planner," but seriously, I want that! :)

golfer44

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Re: What kind of professional advice am I looking for?
« Reply #1 on: April 10, 2014, 11:54:49 AM »
I think there's enough information online to self-educate.

If you do, though, choose a financial adviser, I'd suggest getting one that charges on an hourly basis. If not, they'll most likely try to sell you their funds and then charge you a % on top of that. You want advice, not products.

Exflyboy

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Re: What kind of professional advice am I looking for?
« Reply #2 on: April 10, 2014, 12:07:32 PM »
Two pieces of low hanging fruit for you.

1) MAx out your 401k contributions.. That will reduce your income by $17,500
2) Contribute $5,500to a traditional IRA ( I am not sure if you earn too much to be allowed to do this or not.. check out the Vanguard site.. buy Vanguard funds which have the lowest fees in the insdustry.. put the money in ETF type stock investments).


That is the easiest thing to do and you just wiped $23k off your taxable income and used the money to grow your stash tax free

Frank

NinetyFour

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Re: What kind of professional advice am I looking for?
« Reply #3 on: April 10, 2014, 12:08:05 PM »
If I were you, I would post a case study on this forum (with as much detail as you are comfortable with), see what ideas you get, and then proceed from there.  There seem to be some folks on here who are very knowledgeable about taxes.  They also might be able to tell you how much a tax professional will charge you, should you decide to go that route.

rocksinmyhead

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Re: What kind of professional advice am I looking for?
« Reply #4 on: April 10, 2014, 12:21:20 PM »
yes, I'm thinking maybe I just need to make a post with more detail. it makes me nervous for some reason but it will be more helpful than just continuing to ask questions! because basically what I want is to see if I'm on the right track or if there's anything I'm missing.

frankh, thank you! it actually was this forum that led me to start maxing out my 401k this year instead of paying off my student loans faster. I had figured that since my interest rates were >5% it made sense to pay off the loans as fast as possible, but I hadn't thought about the tax consequences until some people here pointed it out. seems so obvious in retrospect but it wasn't to me, and it makes a big difference!

if I am interpreting this page correctly, then I wouldn't get tax benefits from a traditional IRA because my AGI is >$69k, is that right?

arebelspy

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Re: What kind of professional advice am I looking for?
« Reply #5 on: April 10, 2014, 12:29:02 PM »
If you get a financial planner, make sure they are fee only.  I.e. you pay them a flat fee.  Make sure they get no commission or referrals or any sort of payment from any of their recommendations.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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Exflyboy

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Re: What kind of professional advice am I looking for?
« Reply #6 on: April 10, 2014, 12:34:40 PM »
yes, I'm thinking maybe I just need to make a post with more detail. it makes me nervous for some reason but it will be more helpful than just continuing to ask questions! because basically what I want is to see if I'm on the right track or if there's anything I'm missing.

frankh, thank you! it actually was this forum that led me to start maxing out my 401k this year instead of paying off my student loans faster. I had figured that since my interest rates were >5% it made sense to pay off the loans as fast as possible, but I hadn't thought about the tax consequences until some people here pointed it out. seems so obvious in retrospect but it wasn't to me, and it makes a big difference!

if I am interpreting this page correctly, then I wouldn't get tax benefits from a traditional IRA because my AGI is >$69k, is that right?

Sadly that does appear to be the case... Now even though there are no income tax reduction tax benefits, you can still put $5500 into a Roth IRA... which is not deductable from your income.. BUT the Roth IRA stash then grows tax free.. i.e when you get to pull it out there will be no taxes to pay on the growth!

socaso

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Re: What kind of professional advice am I looking for?
« Reply #7 on: April 10, 2014, 12:36:50 PM »
Since you say you don't want investment advice at this stage I wonder if you want a financial advisor. I believe that investments are their main function. Perhaps you just want someone to help you create a budget and go over what you are currently spending? You can post your financial info here and people will chime in with advice and that can be helpful, you could also link all your accounts to Mint to get an overview of where your money is going. Another thing you could do is sit down with a friend or family member who is good at budgets and get them to help you. I've done this for a few friends and helped them find ways to save money. A final recommendation, I found the book "America's Cheapest Family get you right on the money" useful when planning my budget.

lb

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Re: What kind of professional advice am I looking for?
« Reply #8 on: April 10, 2014, 12:50:51 PM »
If you get a financial planner, make sure they are fee only.  I.e. you pay them a flat fee.  Make sure they get no commission or referrals or any sort of payment from any of their recommendations.

Most financial advisers do NOT have your best interests in mind. Their job is to turn your money into as much of their money as they can. They do this by charging a percentage on all the transactions they manage for you. You want a financial planner who charges you a flat fee. Those ones have a fiduciary responsibility to you and your money.

Exflyboy

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MissPeach

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Re: What kind of professional advice am I looking for?
« Reply #10 on: April 10, 2014, 01:09:44 PM »
I would make plans to tackle these 4 areas. I think you can do most of it yourself if you want.

1. Identifying and maximizing ways to save for day to day things - housing, food, transportation, etc. Ways to increase income (assets versus liabilities). Identifying financial goals (i.e. FIRE, house, etc.)

This is good link for some thinking:
http://retireby40.org/secret-wealth-buy-assets/
The book Your Money or Your Life


2. Reducing taxes - This will be tough as a single filer. Buying houses and other things for the tax deduction don't always make sense financially. If you don't want to do the research yourself a CPA might be good to consult.

3. Investing the surplus. The Boggleheads books are a good start here if you want to not think about investing much and get good returns on your money. If you want to be more involved and take on more risk then I would read up on Finance or hire a fee-based financial consultant for this. Hiring a professional here is not necessary IMO and the Bogglehead books shows how it may actually hurt your returns.

4. Legal stuff - Protect your assets with proper insurance. Set up and wills or trusts that may be needed. I'm assuming you don't have dependents but still a good one to think about and have. You can hire an insurance agent or attorney if you need help in things here. If you don't yet have a lot in assets or dependents you may decide you don't need much help here.
« Last Edit: April 10, 2014, 01:12:08 PM by MissPeach »

NinetyFour

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Re: What kind of professional advice am I looking for?
« Reply #11 on: April 10, 2014, 01:19:01 PM »
I am a single filer, and my gross income was about $73K last year.  I went to a CPA for the first time in many years, and he helped me get a $3500 tax refund, when I had thought I would come out about even.  I pay a LOT of interest on my mortgage so that has been a huge deduction for me for the past 6 years.  Also, I rent out my house and live in my Accessory Dwelling Unit--so I am able to deduct a lot of stuff associated with the rental.  (That's the part the CPA really helped with.)

Though my CPA is not a financial planner, he did encourage me to increase my (pre-tax) contributions to my retirement fund.  I am following that advice and should be able to max out for the first time ever ($23,000 for me since I am old seasoned).

So maybe you just need to find a good CPA?

Emg03063

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Re: What kind of professional advice am I looking for?
« Reply #12 on: April 10, 2014, 09:44:22 PM »
Fee only financial planner.

Joel

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Re: What kind of professional advice am I looking for?
« Reply #13 on: April 10, 2014, 09:50:46 PM »
Max out your 401k. And then pay off those student loans with any excess. What more is there to get advice on?

mlipps

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Re: What kind of professional advice am I looking for?
« Reply #14 on: April 10, 2014, 10:12:01 PM »
If you don't own your home, aren't in school, don't own your own business, and don't have kids, there's nothing magic you can do to reduce your taxes. Honestly. I promise. 

mxt0133

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Re: What kind of professional advice am I looking for?
« Reply #15 on: April 11, 2014, 02:21:25 AM »
As others have pointed out a certified financial planner (CFP) provides more than investment advice, those that only provide investment advice are probably just investment brokers or sales people.  Financial advisers that are fee based and that do not get sales commission can give you advice on tax planning, estate planning, and help guide you to reach your financial goals.

Given your income level it would not hurt to go see one if you are not up to the task of doing your own research.  Although the advice on this forum will be more than enough for a lot of people.

I'm very interested to know how you increased your income so dramatically?  Did you just graduate from grad school or did you work your way up to a 600% increase on hard work and grit?


rocksinmyhead

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Re: What kind of professional advice am I looking for?
« Reply #16 on: April 11, 2014, 07:27:46 AM »
ha, okay, maybe I'm just dumb. or need an excessive amount of hand-holding and reassurance. actually, I probably just need to post a case study. I swear to god I'm not that lazy and I've done a shit ton of research, but somehow the "max out your 401k instead of paying off student loans faster" thing DID NOT occur to me at all, so I'm just worried there's something else like that I've missed.

the income increase was just from finishing grad school and getting a real job... not that much hard work and grit here :)

TomTX

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Re: What kind of professional advice am I looking for?
« Reply #17 on: April 12, 2014, 05:46:29 AM »
ha, okay, maybe I'm just dumb. or need an excessive amount of hand-holding and reassurance. actually, I probably just need to post a case study. I swear to god I'm not that lazy and I've done a shit ton of research, but somehow the "max out your 401k instead of paying off student loans faster" thing DID NOT occur to me at all, so I'm just worried there's something else like that I've missed.

the income increase was just from finishing grad school and getting a real job... not that much hard work and grit here :)

On Monday, go to HR and max out your 401(k). Then ask them if there are any other retirement savings vehicles - I can (in theory) max out both a 401(k) and a 457 plan, and an IRA. If I didn't have a house payment, etc.

On Monday, call up Vanguard and tell them you want to set up a Roth IRA with a 2013 contribution. Hopefully your AGI is below where the phaseout starts ($114k) and you can contribute the whole $5,500. If not, tell them your 2013 AGI and they will let you know the limit.

Post a case study.

arebelspy

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Re: What kind of professional advice am I looking for?
« Reply #18 on: April 12, 2014, 09:01:09 AM »
On Monday, go to HR and max out your 401(k). Then ask them if there are any other retirement savings vehicles - I can (in theory) max out both a 401(k) and a 457 plan, and an IRA.

Weird, usually 457s come with 403s, not 401s.  Either way, hope you're maxing the 457 first (after any minimum amount needed to get your full 401k match, if any) if you aren't maxing both!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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arebelspy

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Re: What kind of professional advice am I looking for?
« Reply #19 on: April 12, 2014, 12:15:48 PM »
Neat, thanks.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

chasesfish

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Re: What kind of professional advice am I looking for?
« Reply #20 on: April 12, 2014, 01:03:27 PM »
Rocks - you'll be just fine, take the advice about the 401k and student loans, then use handy tax software.  You can also poke around the board for what to do with investments after you payoff the loans.

Good luck!

anisotropy

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Re: What kind of professional advice am I looking for?
« Reply #21 on: April 12, 2014, 01:31:30 PM »
rocks, i am going to guess you are a geo :)

I believe in passive investing (vanguard, etc, i trade, but only with play-money), so to me, the biggest value a financial advisor can provide is in the tax area.

Just relax and set up your investments with the goal of paying as little tax as possible in mind, you should be fine.

TomTX

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Re: What kind of professional advice am I looking for?
« Reply #22 on: April 13, 2014, 06:45:53 AM »
On Monday, go to HR and max out your 401(k). Then ask them if there are any other retirement savings vehicles - I can (in theory) max out both a 401(k) and a 457 plan, and an IRA.

Weird, usually 457s come with 403s, not 401s.  Either way, hope you're maxing the 457 first (after any minimum amount needed to get your full 401k match, if any) if you aren't maxing both!

Yep, it's 401 and 457, not 403 and 457. Government entity, not a school.

No matching on either, and yes - 457 comes first. Temporary suspension right now due to a lot of unavoidable expenses.

I'm considering whether to stay suspended long enough that I can max out both for a year and get ~$3k from the EITC.

rocksinmyhead

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Re: What kind of professional advice am I looking for?
« Reply #23 on: April 13, 2014, 11:27:21 AM »
rocks, i am going to guess you are a geo :)

haha, what gave it away? :)

I remembered another thing I have a bunch of tax questions on... company stock. both stuff I bought through an ESPP and bonuses. I guess I'll just do some research and post some questions here, and if I still am not certain I'll try to find a tax professional. I just don't want to throw a bunch of money away because I was too cheap to have someone double-check my work.