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Old 08-29-2018, 09:45 AM
 
741 posts, read 173,771 times
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Quote:
Originally Posted by Themanwithnoname View Post
If you make $50k and stick $15k into your retirement funds does that mean your doing the same job as a $35k breadwinner?
How is that relevant? $15 k going into your retirement funds is part of your net. You end up with that money. The money going to taxes is not - that never accrues to you. How you choose to partition your net - into spending, savings, deferred savings etc is not relevant.
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Old 08-29-2018, 09:56 AM
 
Location: NJ
22,680 posts, read 28,576,098 times
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Quote:
Originally Posted by Themanwithnoname View Post
If you make $50k and stick $15k into your retirement funds does that mean your doing the same job as a $35k breadwinner?
im not sure what you mean by same job but it would seem to mean that you have about the same amount of cash available to pay for your car as that $35k breadwinner.
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Old 08-29-2018, 10:40 AM
 
Location: The Triad (NC)
26,855 posts, read 57,900,981 times
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Quote:
Originally Posted by gwynedd1 View Post
if da guberment bails out creditors it does not matter what number they use.
The point is about what level of debt we're willing to commit ourselves to.
Hint: choose a number much less than what the creditors will allow you to borrow;
which means base it on your NET and discount that too.
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Old 08-29-2018, 11:27 AM
 
17,749 posts, read 15,031,977 times
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Quote:
Originally Posted by MrRational View Post
The point is about what level of debt we're willing to commit ourselves to.
Hint: choose a number much less than what the creditors will allow you to borrow;
which means base it on your NET and discount that too.

No it isn't. It about the lender's return on their investment and always will be.
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Old 08-29-2018, 11:36 AM
 
17,626 posts, read 12,211,350 times
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Quote:
Originally Posted by Chint View Post
How is that relevant? $15 k going into your retirement funds is part of your net. You end up with that money. The money going to taxes is not - that never accrues to you. How you choose to partition your net - into spending, savings, deferred savings etc is not relevant.
Most people reference net pay would do so say after 401k contributions so if you are putting 1000+ a month aside voluntarily you could stop it if you needed extra cash flow to make a mortgage payment
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Old 08-29-2018, 11:50 AM
 
1,461 posts, read 332,233 times
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Quote:
Originally Posted by reed067 View Post
This might be in the wrong place but, why come tax season and when were buying a car, renting a apt/house.
Why do these people look at our gross income and not what we bring home?

Ive never understood this.
The bottom line number can be manipulated so easily by starting or stopping 401(k) contributions and tax allowances that it really means nothing by itself. Mortgage companies and auto lenders aren't in the business of dependent verification and spending hours poring over an application. They use top line (gross) and make their decision based off of that.

This is also why income must be three times rent when trying to qualify for an apartment. They've got a safety net built in the numbers.
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Old 08-29-2018, 12:36 PM
 
741 posts, read 173,771 times
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Quote:
Originally Posted by Lowexpectations View Post
Most people reference net pay would do so say after 401k contributions so if you are putting 1000+ a month aside voluntarily you could stop it if you needed extra cash flow to make a mortgage payment
So money going into your retirement savings is not part of your net?


How about money going into your kids 529 plan, your health savings account etc?




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Old 08-29-2018, 12:39 PM
 
3,545 posts, read 1,995,111 times
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I think you need to look at both gross and net income when making any decision around spending or investments. You should look at the proportional impact to both lines before making the correct strategy choice for yourself.

An example could be a job promotion and relocation to a different state. You might get say a +% increase in gross but end up with a -% decrease in net due to changes in effective tax rates. You would then want to look at the benefits from the changes in tax rates along with the quality of life changes from the old location to new to determine if the overall impact to gross and net are worth it.

Last edited by SWFL_Native; 08-29-2018 at 01:40 PM..
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Old 08-29-2018, 01:22 PM
 
Location: The Triad (NC)
26,855 posts, read 57,900,981 times
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Quote:
Originally Posted by Chint View Post
So money going into your retirement savings is not part of your net?
How about money going into your kids 529 plan, your health savings account etc?
Absent unique and likely desperate circumstance... do you intend to withdraw those deposits?
I'll assume not.

As these other amounts are no longer available... don't count them as if they were.
Buy the $275,000 home not the $400,000 choice. The Buick not the BMW.
And so forth.


Budget off your net.
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Old 08-29-2018, 01:31 PM
 
Location: Arizona
1,008 posts, read 2,625,658 times
Reputation: 364
Makes sense to me. There are a lot of variables that can change your take home pay, even from month to month. Gross most likely isn’t going to change for awhile.
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