Its a lot easier with a higher income. That isn't meant as a flex, its just true because of how percentages work. You don't live of a percentage, you live off a certain number of dollars per month. Just because I start making more doesn't mean I'm going to lose my mind and start just throwing money away for no reason.

I've watched the Money Guy Show before by the way and I think they give solid advice and are some of the better personalities out there for financial advice so not trying to dunk on them. Pretty sure they would agree actually.

I know you aren't talking specifically to me but just as part of the community I will say I don't dislike dividend stocks in a retirement account. I do dislike them in a taxable account just because they provide an unneeded tax drag on the investment as well as an increase to your AGI.

Also I think the asset class you are refering to is more typically called Value than Dividend. Yes a lot of companies that are in the Value class offer dividends but that isn't really what defines them right. Really you are talking just about large companies that have been around a while have a big market cap and don't reinvest all of their returns into themselves as growth because they just dont have that much to gain from growth anymore. Those companies do tend to be more stable yeah so overall they are going to dip less (and subsequently rise less).

The idea that avoiding volitility in a retirement account where you are regularly contributing and are still young though not sure if that is 100% the best strategy. Lets say you are in largely growth stocks and they dip 25% in value while the Value stocks only drop 5%. That is great for the Value stock holder if they are about to cash out...but if they are 30 years from retirement well, that 25% drop in share price represents additional shares that they can purchase before the inevitable rebound over that 30 years. Its not like that lower drop in the Value share price means that the Value shares will be 20% ahead from there on out, that isn't how it works.

I'm pro value funds in holdings and pro say even a 60-40 mix, but when you are in your 50s and a substantial market downturn could actually negatively affect your retirement. Then yeah it makes sense. But for a 20 year old putting their first $1k into a Roth IRA? Nah.

I am not understanding why dividends would be a hedge against inflation. What is your reasoning there? In what way do dividends hedge inflation?

I'm guessing you might just be misunderstanding what dividends are. A dividend fund is going to have stock holdings in companies that provide a dividend or they are going to hold stock and then artificially generate a dividend from those holdings by doing things like covered calls. In either case these are still stock holdings, they can still very much go down. There isn't anything about dividends that is risk free in some way nor is it at all related to the inflation rate.

Imagine you had two funds. Both of these funds invested in companies within a sector that perform exactly the same in terms of their performance. Fund A invests in companies that do not provide a dividend, Fund B invests in companies that do. You invest $1000 in each.

Fund A gives a 10% return which is realized in growth. You end up with $1100.Fund B gives a 10% return which is realized in 6% growth and a 4% dividend. You end up with $1100.

When a company issues a dividend it comes out of their value. If there valuation has their total return at 10% and they issue a 4% dividend that means that their returns came 6% from growth and 4% from the dividend. The 4% isn't on top of the 10%, its part of it. You can see this in stock valuation. If a companys stock is valued at $100/share and it issues a 4% dividend then its stock valuation will drop to $96/share.

Within your three fund portfolio are going to be companies that issue dividends and thus those funds (at least the non-bond funds) will give you a dividend as part of their total return. Selecting a dividend fund would just mean that more of the return is in the form of a dividend, not that the return is higher.

Exactly...so you do understand why percentages don't fit all incomes then.

>I don't think they have ever said that the rules they have set apply to X income and up.

But yet it obviously is based on income. I mean you seem like a smart person, take some time to think about it. What would that percentage budget mean for someone making 30k versus 300k.

When gurus like this give advice they HAVE to give generic advice because they aren't talking to you, they are talking to literally anyone who watches them. So their advice is given to fit with the mean basically, so that in a random set the advice will be decent for most people. That doens't mean its good for everyone. The concepts are sound, but never just blindly apply percentages to your savings or budgets,

Percentages are good for rules of thumb but often crap for individual circumstances. Why?

If I told someone who made $40k a year that they had to put 25% of pay into investments, 25% into a house and 8% into a car (gross income) leaving them with only 43% of their pay for all their other expenses and whatever else they wanted they would quickly realize that would mean. $833 on a house a month, $833 into investments a month, $267 into a car a month and after taxes that would only leave them with $1120 a month for literally everything else. That wouldn't really work for them.

If I said the same thing to someone making $400k a year I'd basically be telling them they would have to live on only $11,200 a month at which point well yeah no problem.

Its not the same thing. That doesn't make Money Guys wrong, they are trying to give advice to a broad group of people whose incomes range all over the place...but that advice only actually fits the mean income, everyone else its going to be a bit off and further out its going to be really really off. So don't follow it blindly, if it seems off to you...its probably just off.

I mean if I tell you the percentages my budget breaks down to I bet you would have a pretty good guess at what my income is if you think about it.

I'm 14% housing, 2% car, 40% investment leaving about 44% of gross left over (which of course the net would be after tax)

I should qualify my answer to say you actually may well get 16k in cash out, but that will come with a hefty tax bill at the end of the year. IE you wouldnt pay the taxes on withdrawl, but you would OWE the taxes in your next filing.

You aren;t getting 16k out if you cash out. I think you are only considering the penalty and NOT the taxes you would owe. If you pull out 6.5k from a trad IRA you owe income tax on ALL of that. I dont know how much that is going to be as I dont know your tax bracket but it is going to be more than you are thinking. If you pull out of the Roth you dont get the tax shelter so you would owe capital gains on any gains in there as well.

I mean this is a very personal question. Not everything is about money. Obviously on the money side yes the new job pays more so the new job is better. Everything else is subjective and only you can tell you what you think. I can say that I don't think its crazy to pass up a job that offers 11% more money just for the sake of comfort or security though.

More than salary I would consider if the move in company is a good move for your career or not.

I live in Seattle. Can give you some prices for you to compare.

Our 1600 square foot house at the edge of the city peaked on Zillow 6 months ago at 1.1 million.

We put our twin daughters in daycare (not an expensive one) and it coats $2800 a month for 3 days a week.

We almost never eat out and spend $1200/mo on groceries and house supplies.

Gas right now is about $5 a gallon.

Sales tax is 10.5%

We make about 280 pretax and feel pretty middle class. We have two cars (2005 with 150k miles and a 2019 with 15k), the house and thats about it. We do groceries and cook, we dont get out that much neither of us have expensive hobbies and our kids are in public school. We spend 9k a month.

Making 225k pretax you may find it actually a bit challenging to find a house with current mortgage rates.

4k a month and be inside the city? No. Redmond and Bellvue are actually more expensive suburbs. Rent an apartment in the suburbs? I dont know like $2600 for a 1 bedroom. Thats a guess can just look on Zillow.

I mean you absolutely can live in Seattle or Bellvue or Redmond making 225k....just not at 4k a month.

Another way to think about it is minimum wage in Seattle is $15/hr. Two 19 year olds working a first job in Taco Bell and living together would have more than $4k/mo to cover expenses. Meanwhile the 25 year old coding for Amazon or Microsoft (both headquartered out here) will be pulling in more than you and your wife combined. That is your competition.

$4000 is the underpay and $250 a month is the increase. The $600 a month is to pay $350 towards that $4k every month while covering the $250 increase. Having a $4k underpay off a $250 increase would suggest that the increase happened 16 months ago and the escrow company only now caught it.

A $250 a month increase from prop tax and insurance is not at all outside of normal but yet does seem to suprise first time himebuyers. Yes, the cost of your house will go up over time.

escrow account is insurance and property tax. Those went up, for a while you were paying the old rate with your payments and now the escrow company is correcting that by upping your monthly payment to not only account for the higher taxes and insurance but also to pay back all the payments where you had underpaid prior.

If you check you are married and your wife works you would check box 2C and then in the additional jobs section put her income.

If you dont do that but you do fill in sectiom 3 that you have dependants witholding would be calculated assuming your income alone covered your entire family.

Or, alternatively, if both your wife AND you filled out section 3 that could cause an issue. Lets say you had 2 children and you filled out section 3 that is $4k less on your combined taxes. If your wife also filled it out that would be a second 4k off which would mean you were claiming 8k off your taxes. If your total taxes were 7k then you would have zero witholding.

That is what the checkbox on the W4 for married means, it means younhave a household and are the sole earner of that household. If you are married and both of you have income you dont check married on your W4 or you fill out the dual earner section...that is in the instructions.

In general dont take counteroffers. You have labelled yourself a flight risk and if you accept the offer you will be on the high end of their payscale. With that combination they would actually be kind of dumb if they didnt look to replace you.

Not saying everytime but counteroffers can be an attempt to get you to stay until they find someone else to fill your role then lay you off rather than risk you leaving again.

I mean id guess this is just because its a holiday weekend. Give it until next week. Id it isnt sorted by tuesday can call. But you added these funds on Thanksgiving and now its Sunday. This is like a bank, they have days off.

Where is the "there" that you put money into? The settlement account of the IRA or somewhere else?

Longterm investment? Stock market, broad based index funds covering multiple industries/sectors.

ibonds are for like if you want to buy a car in 2 years and you want your money to maintain its value with zero risk of loss. Hence the name..Savings bonds.

Oh okay. You dont really want to do ibonds for longterm investing they arent particularly good for it. They match inflation, they will never grow beyond inflation. They are designed to maintain value, not increase value. They are fir sabings for basically a purchase, not investment.

If you insist then to answer your question doesnt really matter because longterm what happens over 6 months is not particularly significant.

but what is the money for? Are you planning on buying something with it on a year? Is this meant to be a longterm investment? Why ibonds?

That is not a thing. But also not sure why you care at all about a hard pull if your credit is 820+

Depends what you want ibonds for.

Hard to say because I have no idea what gets you to your after tax income or what your income is.. Someone asking this question making 180k gross but after maxing out their 401k, child-dependant FSA and HSA would be very different from someone aaking this making 100k with no pre-tax contributions whatsoever.

Thats why typically you should give percentage of gross, its more comparable.

I mean id put it in your checking now and figure out where to move it from there later rather than careting around a paper check while you think about what to do with it.

Okay you need to stop taking investment advice from 20-something year old youtubers who recently discovered the existance of dividends and think they are some magic way of generating "passive income" a phrase that is constantly misused.

I will do my best to explain what dividends actually are.

So as you likely understand when you buy stock you are buying shares of a company and when you buy shares in a fund that fund manager is distributing that among stock buys in companies or other assets.

As companies make profits they have a choice about what to do with that profit. They can reinvest it in themselves to grow the company...buy more equipment, hire more people etc...or they could distribute that profit to their shareholders (a distribution). The value of the company translates directly to its share value. If a company decides to invest all of its profits into itself then all of the profits are included in the share value. If the company decides to distribute them to share holders in the form of a dividend then those profits are NOT included in the share value and therefore the share value does not increase.

People seem to think dividends are on top of growth, they are not...growth and dividends are just two ways of handling total return.

Small companies tend to be growth focused, they tend to put all their monry into themselves and rarely issue a dividend. They have the highest chance og return (picture investing in Microsoft when it was a startup) but also the highest risk. Huge companies that have been around a long time tend to have lrss they can do to grow so they are more likely to issue dividends (think like AT&T) because if they reinvest all of their profits into thrmselves it wont lead to that much growth and thus it could be seen by shareholders as wasteful. These companies also tend to be fairly low risk (as an aggregate, puttimg all your money in 1 company would still be risky).

Dividend funds tend to just have their holdings be these companies that issue their profits as dividends to shareholders. There are also funds like QYLD that artificially generate dividends with covered calls but not going to get into that.

So what does this mean. If AT&T srock price is $100 anf it sees 10% return in its value and issues a 5% dividend what that would mean is that effectively its return would make the stock price $110 if all of that was growth but with the 5% dividend the stock price ends up being $105 and the shareholders get a check for that 5% in the form of a distribution...a dividend. If you own shares of AT&T outside of a tax-sheltered account like a 401k then that dividend is considered to be income and is taxed accordingly. Thats not a good thing. If instead your investment was in a company that also saw 10% return but did not issue a dividend you would still have made the same return but it would all be realized in the share value and not taxed. This is why seeking out dividends for "passive income" as a way of making money does not make sense.

Compabies that issue dividends tend to tey to keep theie dividend "yield" steady, so yhat investors who want that income stream can rely on it. What that means though is they will issue a dividend even if the share value goes doen which will just drive the share value down even further. If AT&T share value was $100 and in the year they saw a negative 10% return their stock woukd be $90 a share...but they would also still issue a 5% dividend which would mean it would drop even further to $85 a share.

This is the issue. Yes you csn find funds that regulaely distribute a 6% dividend yield...but you have to understand that value is coming from the value of the funds holdings. Its basically like withdrawing money from your bank every month for some extra cash. Is that income?

So what are dividends good for? Well they are just a part of a companies overall return and a lot of solid performing large bluechip type companies issue dividends ad part of their value to shareholders...and thats fine.

But they arent something to try to maximize or seek out. If you are a multimillionaire it might make sense to invest more heavily in a broad base of relatively solid companies that ossue dividends and use those dividends as a source of income at the cost if having less growth (but also less risk) But as an invester who is just starting choosing dividend yielding funds and compabies exclusively is a terrible strategy that will majoy hamstring the growth potential of your investmebts especially if your holdings are not tax sheltered.