Discussion in 'Miscellaneous [DB]' started by jazzbo, May 11, 2001.

  1. jazzbo


    Aug 25, 2000
    San Francisco, CA
    At the beginning of the year I did a nice budget that would have all my debt gone, the major portion being student loans, by the end of the year. Now a wrinkle has been thrown into things.

    Recently the department I worked for with Bank of America, was acquired by another company, whom I work for now. At the time that I was supposed to transfer over my 401K to the new program, I was on a business trip. As the Human Resources people at my office are inept, I was uninformed of the proper deadline, and missed the chance to rollover my 401K into the new company's program. Because of this, I have recently received a check, for $2700. That's net, taxes paid. It's mine.

    Choice #1: Give all money to debt. This helps me pay off loans sooner than I anticipated. I will be out of debt at the end of the year anyway, and with the arrangements I made with my student loan and credit cards, I'm really not saving anything significant in finance charges or interest by paying them off 4 or 5 months sooner.

    Choice #2: Roll over into a Roth-IRA, or other type of retirement product. I've missed the opportunity to roll it over into my new company's 401, which I would've done. The thing is, in a year to a year and a half, I'm entering into a 4 year doctorate program in psychology, and then starting my own practice. So, I won't be a part of a 401 program for some time. I'm 25 years old, and still have many many years of investing for my retirement left.

    Choice #3: Buy a Double Bass. This is what my heart tells me to do. My head is saying that it might not be the best idea. I could purchase a bass of my liking for on or under $2000, from the very little bit of shopping I've done in the last 6 months. The left over money could go to bills.

  2. john turner

    john turner You don't want to do that. Trust me. Staff Member Administrator

    Mar 14, 2000
    atlanta ga
    no dilemma ===>


    definitely my choice - go for it.
  3. I would say pay off the debt, but stick to the schedule you laid out, thus saving the same amount of money back again. I know you said that you won't be saving much in finance charges, but even that amount is still more money in your pocket and it looks damn good on your credit report to pay off your debts ahead of schedule. Every source I've read on personal finance says that consumer debt is like cancer and the sooner you can get rid of it, the better. There's many purchases (a better bass being among them) that I'm not making right now just so my wife and I can get rid of our debts.

    Perhaps mix a bit of both. Meaning that you go ahead with the bass, but then use the extra money to pay the debts a little bit ahead of schedule.
  4. pay off the debt, you will feel better if the bills are not stacking up on the kitchen table.
    a lot of people buy things because they feel it will not be there at a later date, this is what is called bull. basses will always be there and maybe when you have your debts payed you will find a greater bass than you hoped for.

    don't make me have my dad sent you an email. :D
  5. Chris Fitzgerald

    Chris Fitzgerald Student of Life Staff Member Administrator

    Oct 19, 2000
    Louisville, KY
    Yes, BUT.....I'm still paying student loans, and I shelled out $4000 for a new bass last November. I don't regret it at all. True, it has already paid for itself a couple of times over with gigs played on it, but more important than that is the pleasure it has brought me every time I touch it. I'd say follow your heart.
  6. dhosek


    May 25, 2000
    Los Angeles, CA
    The irresponsible part of me would be thinking, sure, let's buy the bass, but I think that you really need to just keep retirement money as retirement money or you'll be eating dog food in your old age.

    Get that money into an IRA account before it burns a hole in your pocket. You've likely already paid a big chunk of change in taxes and penalties, don't make it any worse than it has to.

    -dh (who hopes to retire young enough that he can actually ENJOY retirement)
  7. mpm


    May 10, 2001
    Los Angeles
    Jazzbo, Option #3. As you are probably already aware, the resultant feelings of unrequited (or poorly requited) needs is not a psychologically good place. Besides you'll need some major diversion by the time the dissertation comes around. That's when I got my first upright!!!
  8. rablack


    Mar 9, 2000
    Houston, Texas
    You can get a good instrument for the cash your talking and have some left over to pay down debt (or put into a RothIRA - lots of bang for the buck for a 25 yr. old). If you don't get it now how are you gonna buy a bass during grad school? When you are starting your own practice the decision might be "bass or food?" For your own mental health, and that of your patients/clients, you should have the bass before you enter your PhD. program.
    My $.02
  9. dhosek,

    Regardless of taxes, it's senseless to put money into an IRA with consumer debt still in the picture. If I have $1,000 in an IRA slowly accumulating tax-free interest and $1,000 in credit card debt for which I'm being charged 17% interest, I'm *losing* money, a lot of it, even though I think I'm being responsible and planning for my retirement early.

    Yes, you need to plan for your financial future (and 25 is a prime age to start doing it), and no, you can't eliminate all debt before you start to think about it, but putting money aside before paying off consumer debt (specifically credit cards and unsecured loans) is not good financial management.
  10. Looking back, if we had waited until we could 'afford it', we wouldn't have had two kids, or bought a house, or put them through college, plus a master's in business and a PhD in Clinical Psychology.
    I played total crap basses for 40 years. I shouldn't have. It rendered much of my playing a love-hate experience.
    P.S. - You must be mentally prepared for the PhD process to take more than 4 years. Things happen which will be beyond your control, as Dr. Laura Higdon found out.
  11. Exactly, and you have no idea of when you might have this kinda bread available for a bass again. You're plenty young, retirement is a way off and you can really begin saving for that when you get into your career. Your debt isn't going anywhere, is it? Debt is a fact of life. Besides you said you'd have it paid off by the end of the year. How much will you save by paying it off a half a year early? Probably not enough for a bass.

    Think of the bass as an investment. Besides the fact that most basses appreciate at a rate of about 10%/yr, if you don't buy the bass before entering your doctoral program, your grades will suffer as a result of being distracted all day long while you dream about buying a bass. Buy the bass and you'll not only do better in school because you won't be daydreaming about it, but because you have a great stress relief aid handy.
  12. Turock

    Turock Supporting Member

    Apr 30, 2000
    I think I would go for the IRA. Compound interest is a wonderful thing.
  13. dhosek


    May 25, 2000
    Los Angeles, CA
    But time makes such a HUGE difference. Waiting will make the difference between retiring at age 55 and retiring at age 75.

    Trust me on this, at the very least, getting $2k a year into a roth IRA will be a very very big deal. Had I signed up for the 401(k) when I was 22 rather than when I was 31, I'd be looking at being able to retire in 7 years rather than 22, and I wouldn't have to contribute 15% of my income to the 401(k) to meet my goals.

  14. Correct me if I'm wrong, but unless you started saving ten years ago, you're retiring rather early, no? Besides, there's plenty of money to be made for a retirement fund with a psychology practice. Even aside from that, I'm sure he has different long-term financial goals from you which could put him on a completely different investment schedule. I mean, if for some reason he wanted to open a restaurant in the next five to ten years, there's no sense in putting that money in an IRA when he'll be so heavily penalized for removing it when he really wants it. When to invest and how much to invest depends entirely on the person and their wants and needs.

    Again, I'm all for getting a jump on an IRA, but there's good reason to get rid of consumer debt (again, I'm not talking about the inevitable mortgage and secured auto loans but the high-interest stuff from which there is escape) and even invest in a quality instrument before putting money aside into those funds. After all, you don't want him spending the money on Carpal Tunnel surgery after killing his hands playing a cheap Korean bass now do you? ;)
  15. Chris Fitzgerald

    Chris Fitzgerald Student of Life Staff Member Administrator

    Oct 19, 2000
    Louisville, KY
    Not only that, but judging from the new threads popping up in the "Basses" forum, I'd say that the question is rapidly becoming moot.
  16. jazzbo


    Aug 25, 2000
    San Francisco, CA
    Alas, for a decision has been made.

    The money will go to an ICD. The reason I decided against an IRA (and I know, I'm losing money to taxes) is because I don't know how I would be able to contribute to an IRA for at least ten years. Also, all the money from the 401 came from a job I took just as a temporary thing to help pay for school, so if you read on, you'll see that that is what this money is going to do anyway!

    My plan is this: begin a 4-year docotorate program in psychology. At completion, establish my own practice, for 5 -10 years. Teach.

    Thank you everyone for your advice, it was invaluable. Something that made a lot of sense, was the fact that I won't be able to save money for a bass while in grad school, and when starting my own practice it will be nickel and dime for awhile. If there is a time to buy a bass, it's now.

    Reason for the CD, is that I will need all the money I can get to stay in school, and not be 200K in debt with school loans when I'm done. An extra $2700 can come in handy. I'll still be on schedule this year to be able to afford a bass within the next 6 months.

    So, I will be getting a bass, but not with this money, I'll save from other sources. Maybe I can look for some other gigs! :) How cool would it be to be able to buy a bass with gig money?!