• tax brackets

    A Simple Explanation of How Tax Brackets Work

    There was a post I saw on Reddit this week. It was about a co-worker who turned down a $2,000 bonus because it put him into the next tax bracket. It spoke of a man who wouldn’t back down in his belief that he did the right thing. More importantly, it spoke to a gross misunderstanding as to how our tax brackets work. It’s a common mistake and I see it all the time. You’ll often even hear it in political discourse when someone suggests a higher tax rate on the rich. That mistake comes from a misconception of how tax brackets work. Let’s take a look at the 2019…

  • 401k contribution limits

    401k and IRA contributions limits for 2019 are going up!

    Our good pal, the IRS has issued guidance on contribution limits for 2019. The news is good for those already maxing out their tax-advantaged space or planning to do so next year. According to the IRS news release, 401k, 403b and most 457 plans are changing from an $18,500 max to $19,000 next year. That’s the second bump in a row after the IRS raised it $500 last year. The 2.7% bump in contribution limits is right in line with inflation. On the IRA front, the $5500 limit rises to $6000. It’s the first bump since 2013 which explains why the bump is larger at 9%. The IRS is just…

  • My Car Loan is Paid Off!

    My car loan is no more! It has ceased to be! I drove down to the credit union today and dropped my final car payment on them. I felt pretty good going in there with my early car loan payoff. They all probably thought I was super cool making sound financial decisions. It was in the form of a $94.11 check. The lady looked at me and told me I also owed 26 cents in accrued interest since that total posted. I mumbled something awkwardly then in lieu of writing a new check, I gave her a dollar bill and got 74 cents back. COINS! The original terms of the…

  • Most Vanguard ETF trades will soon be free

    The 56 Vanguard ETFs that are currently commission free are getting some new friends in August. Vanguard announced today that they will expand their commission free ETF lineup. This expansion will include ETFs from a variety of competitors. As a result, in August, nearly 1800 ETFs will be commission free on Vanguard. This won’t include certain ETFs that are not seen as long term investing vehicles like leveraged or inverse ETFs. That’s a big boost to the offerings today and another win for investors. Vanguard customers today pay nothing for Vanguard ETFs and mutual funds. Now, they will pay nothing for a variety of other ETFs from competitors. The full…

  • Rising mortgage rates, mortgage payments and home prices

    Rising mortgage rates are on my mind as a potential home buyer. When we first started looking for a home last year, rates were below 4%. Since then, they’ve risen to an average of 4.25% as of last week and have continued to rise this week. This doesn’t mean that rates will continue to rise. Rates have a tendency to move up and down rather quickly as evidenced by the graph below. Recent fed actions have taken the rates higher. The possibility exists that this doesn’t change anytime soon if the solid economic news is any indication. Mortgage rates are loosely tied to the 10 yr treasury rate and that…