All Forum Posts by: Daniel Murphy

Another option I forgot about was to just cash the policy out. Call your company and ask for your cost basis (unless it is listed on a statement).  If your cost basis is more than your cash value, you could cash the policy out & just use the cash for other things.  

A 1035 exchange needs to be a "like kind" exchange. The most likely options are exchanging:

• Life insurance for life insurance
• Life insurance for endowment
• Life insurance for non-qualified annuity

Personally, I would first determine what type of exchange you want to do.  I'd say the best options will be focusing on the endowment, or non qualified annuity. 

LI to endowment - You could exchange this into a fully paid up policy. This is a good deal because you can have insurance that is fully paid up with no more premiums.  It won't be as much death benefit as you have now, but it's better than losing the money completely.  

LI to a nonqualified annuity is another "good" option. Based on your age & needs, you could consider a variable annuity (stock market) vs a fixed or deferred annuity (more like a long term CD).  The key with this is if you want to look into annuities (variable specifically) you'll want to find one that is lowest cost possible. Google something similar to "low cost commission free variable annuity".  A fair warning, you'll be wading through complicated info.  

Once you decide which type of exchange you want to do, you could then narrow down your product / company.  If you use a salesman, they will take care of all of the paperwork for you. If you do the "do it yourself" route, you'll have to navigate your own paperwork.  

It sounds complicated but it's not as bad as it seems.  I spent 6 years at a company that very inappropriately sold insurance (in my opinion). It gave me a passion for helping steer people in the right direction with insurance. 

Feel free to reach out with more questions.  For what it's worth, I'm no longer insurance licensed since I took my practice fee only. So I'm not "fishing" for anything... :) 

Okay, so this is a rabbit trail post but... 

I'm going through a divorce & looking for options to pay my soon-to-be ex out.  I may be forced to sell my primary home as I can't get a line of credit large enough to pay her out.  If I sell, I likely won't have enough money for a down payment on the next house. 

But... My 3 kids (15, 17 & 19) each have a large enough chunk of money that if we put it all together, we could make it happen.  I just don't know how it would work to structure the ownership & finances.  

Hypothetically, they would have the money to put down, but I would be paying the mortgage & doing all improvements.  So how would I account for their share of appreciation in the future? Ownership structure etc.? 
Rabbit trail, for sure.  Feel free to tell me all the ways why this is a stupid idea.  

Hey all, last year I used TurboTax desktop version to do my own taxes. I'm quite comfortable with tax law (financial planner by profession).  But, my taxes are starting to get a bit too complicated for my spreadsheets.  

Is there a software that can help plan/project for 2023 taxes? I have S corp (W2) income, Schedule E etc. income. 

I understand hiring a professional to help me, but I really prefer to do it myself as my income fluctuates and I really like to understand the tax code. 

Thanks in advance! 

We're not 100% satisfied with our cleaner for our STR. We know a lot of other people in the area that are feeling the same way.

My experience so far is that my cleaners are great cleaners, but not so much at running a business and preserving quality control as their business expands.  

Does anyone have any experience in creating a cleaning company that is systematized? Or an example of a good cleaning crew, with the systems they use for work flows, owner requests & quality control? 

@Tom Murphy, I can't personally speak to options 1 & 2 but I can to 3 & 4.  

#3 - buying a vacation rental. I have one in Cape Coral FL with the same idea. Investment plus vacation. Our house was fully flipped (and done well) just prior to our purchase. I have been to the property 8 times since we purchased it a year & a half ago and I have never yet had a vacation. A STR is a different animal. Guests don't treat it as well and you want it to stay in top shape so it's a lot of upkeep. It may be a good investment, but likely not going to be the "stress reliever" that you're looking for.

#4 - Be extra dilligent with private placement REITS.  I started my financial advising career at a company that sold a lot of these that went underwater.  I'm definitely biased because I know they can be good investments. But when they go bad, they normally go really bad. And we're currently in one of those home market environments where we don't really know if things will go up, or down.  
The stock market is always a good default idea.  You mentioned that you max out your 401k and you have $400k in stocks.  Are these stocks outside of a retirement account, ie in a taxable account? 
If so, building up this account is an INCREDIBLE idea for the long term.  

You can use it to leverage partial Roth conversions post retirement.  Or, because it's liquid you could be in a position to use it as a sinking fund to pay off your mortgages or buy another house.  A taxable account gives you incredible flexibility.  

Lastly, you may have "meh" power. This is an idea I talk about with my clients. When you've done all the right things & built up enough wealth you eventually get to the "meh" zone. 

As in, you don't need to make perfect financial decisions. You'll be wealthy no matter what you do. At some point in your investing career, you may look at options 1-4 & eventually say "Meh, this one sounds the easiest", "Meh, this one just feels the best for me", "Meh, (fill in the blank).  

Follow you gut, it seems to have led you to good places already. 

I'm a fee only independent planner. Been in the business for 15 years.  Feel free to reach out with any questions.  

@Jack Abbott

This is a tough decision. In my experience, you both want to have a deep discussion(s) about your end goal and hopes for the RE investing. As well as what your expectations are of day-to-day / short-term goals.  From my personal experience, I would dedicate a semi-annual (or other REGULAR intervals) to revisit these goals. 

Goals & expectations are great, but they rarely jive with reality.  Meaning, your balance may be way better or way worse than expected.  

I spent ~10 years building up a business & lifestyle that allowed me a lot more personal freedom for that work/life balance.  Unfortunately, my (ex) wife didn't jive with the same expectations. 

Now that I'm in my early 40s with teenagers, I absolutely love having the increased flexibility to drive them to school, be present mid-day for anything or just having the overall flexibility to be present for who ever needs me, whenever they need me. Looking back though, I could have taken my foot off of the gas earlier.  Worked less hours & would potentially had the same outcome, but possibly a few years later than I expected. But also possibly not dealing with a blended family either. 

All this is to say. Be intentional. Be open to hearing your future wife's concerns, both spoken & unspoken. And be prepared that both of your goals & expectations will likely change along the way. 

If you have a faith based background, you may want to consider a healthcare sharing option.  Samaratins Ministries, Christian Healthcare Ministries or Medi-Share. 

These are definitely "outside of the box" options but they work great for people in the right scenario. We have a family of 6 & pay around $600 / mo.  Plus we've literally racked up tens of thousands of dollars on our credit card (generating rewards) in recent years.  All paid for through our health sharing plan. 

First of all, congrats on putting yourself in such a positive financial position! Second, since you are new to real estate, realize that these recommendations (and your needs) will shift with time as you gain more knowledge & comfort.  

Generally, I would not recommend you to pay your house off quicker than anticipated. Especially if you're on this forum, you are likely interested in buying more real estate.  

Based on your post, My guess is that you have ample reserves set aside in the high yield savings.  Generally, I would recommend 

1) save enough in your company plan to get your employer match (free money)

2) next save enough to max out your Roth if you still qualify.  (note - I would NOT do a backdoor Roth conversion unless you have someone deeply review your income/tax situation)

3-4 months of emergency reserves should be sufficient.  As you gain more knowledge / experience, you will likely want to adjust this. Too much cash = potentially losing out on investing opportunities.  Too little cash = possibly exposing yourself to a surprise when something needs repairs.  

As you build up various financial "buckets", you can normally scale down your savings amount as you have access to other funds in emergencies (401k loan, home equity line of credit or other short term debt options).

If you're building up all of these & still have cash leftover, I would consider a taxable brokerage account & using a broad based index fund.  The market is depressed right now. If you don't plan to move or buy another property for a year or more, you could put yourself in a good position by buying stocks that are low.