Financial/life Wizardry - Debt/Mortgage Freedom, Life according to priorities, etc.

[caleb]

@davids I agree completely, although your point about capital gains is a good one. Putting more of the tax burden on capital instead of wages would seem to encourage more of what we want (wage growth) and less of what we don't want (enduring concentrations of capital leading to durable, intergenerational inequality).

Most of the games your friends are playing are also not as effective as they seem. Yeah, they can claim that stupid SUV they bought or the home office they built as a tax expense and partially offset the cost of the purchase. but they still made the purchase. A lot of people talk about tax deductions like they're tax credits.

This is a really clarifying response - thanks.

What you're describing is exactly what I'm seeing/hearing: people using some sort of small business front to hide a bunch of lifestyle expenditures. Not garden variety deductions like mortgage interest or charitable giving.

Some are legit small businesses with a generous interpretation of a business expense. But I also casually know guys who seem to have a side gig small business whose primary purpose appears to be serving as a front to launder their lifestyle expenses and make them business expenses. Fictitiously, but conceptually: Billy Bob likes bikes, so he opens Billy Bob's Bike Shop for which he and maybe his friends are the only customers. Clearly, this bike shop needs a company vehicle to drive for product testing at the mountain bike trails, which should probably be a new F150 or something. The shop also needs an office, which is located at Billy Bob's vacation home two hours away, so a significant chunk of the vacation property and the mileage back and forth all become business expenses. And on it goes. If the kids want a jet ski, the shop becomes Billy Bob's Bike and Jet Ski Shop. As is probably obvious, I have no idea how legal this stuff is, but it doesn't seem uncommon among a subset of the population, and I find the idea of it galling.

What I appreciate about your response is that none of this laundered lifestyle inflation is a path I want to go down.

[Bob Ross]

Fictitiously, but conceptually: ...[snip]... I have no idea how legal this stuff is

Having just recently spent a week serving as a juror on a criminal trial where the defendant did many of the things your hypothetical Billy Bob did, I can offer this: Where or how he originally got the money to open up that side business would (in part) determine what precisely he was guilty of. At the very least it seems like Tax Fraud. If outside investors helped put up the money for Billy Bob's Bike & Jet Ski Shop, it could also be Investor Fraud and/or Wire Fraud.

[j44ke]

Yes, these people have made choices that put them at the mercy of an IRS agent’s discretion.

[johnmdesigner]

Lots of good advice here - I would just add that you consider the care of parents/relatives in your calculations if you are going to be responsible for them.
Many parents are good at planning for their future. Mine were not.
Make sure their assets are protected. If you have siblings make sure everyone knows what their responsibilities are.
My father passed away suddenly and my mother was unable to care for herself. Despite my urging them to take care of their finances they made no plans for this kind of situation.
We were lucky in that we had no financial burden from this. But their estate went to the nursing home and my mother's care. There was nothing left. I lost my freelance business as I had to go back to take care of her. We were lucky that my wife had a good job.
I know people who were destroyed by the medical bills of a parent. Have a plan. Get them involved while they are still able. Then there will be no surprises.

[vertical_doug]

Having just recently spent a week serving as a juror on a criminal trial where the defendant did many of the things your hypothetical Billy Bob did, I can offer this: Where or how he originally got the money to open up that side business would (in part) determine what precisely he was guilty of. At the very least it seems like Tax Fraud. If outside investors helped put up the money for Billy Bob's Bike & Jet Ski Shop, it could also be Investor Fraud and/or Wire Fraud.

Forget this small piker stuff, you need to be a real estate developer. That's were all the real loopholes are.

[Peter Polack]

...What you're describing is exactly what I'm seeing/hearing: people using some sort of small business front to hide a bunch of lifestyle expenditures. Not garden variety deductions like mortgage interest or charitable giving...

This is exactly what one employer I'm familiar with is doing. They perform trivial company work at home, acting as a subcontractor for their own company, both billing the company for the work and taking a partial deduction for using part of their home for this work.

Another thing they do is purchase a vehicle privately then "lease" it to the company for more than they are paying for it.

[Peter Polack]

... But their estate went to the nursing home and my mother's care...

Isn't that the proper outcome? After all, her nursing home care has to be paid by SOMEONE.

[johnmdesigner]

Isn't that the proper outcome? After all, her nursing home care has to be paid by SOMEONE.

My point was if they had put their house into a trust it would not have to be liquidated to pay the bills.
Please, do you think the nursing home industry, the hospital industry, the insurance industry is suffering?

[robin3mj]

Please, do you think the nursing home industry, the hospital industry, the insurance industry is suffering?

Believe it or not, the answer to the first one is an unequivocal yes. And this predates Covid by years.

[johnmdesigner]

My mother’s nursing home billed for ridiculous therapy for 2 years.
My only point was to remind the original poster that there are perfectly legal means available to protect your parents assets.
I had 10 years experience with my mother and my uncle in the nursing home system. I have no respect for them at all.

[Peter Polack]

Believe it or not, the answer to the first one is an unequivocal yes. And this predates Covid by years.

Exactly. My observation is, many of the nursing homes rely heavily on government subsidies such as Title 19 to pay the bills, while the heirs try to "protect the assets" merely for their future benefit.

My mother was in one such non-profit nursing home.

[ides1056]

I spent about fifteen years acting as my aunt's executor and then trustee because I loved her and she asked.

My first concern was that she be able to stay in her home until she died. My second was that she not run out of assets in the meanwhile.

Her end was a moving target the entire time.

She was fortunate to die at home surrounded by those who loved her, blissful, her faith in humanity restored.

It was a win.

I am sure I am not alone in having to run this gauntlet, and it's facile to suggest that there's a substantial cohort who are out for their own gain in this process.

[caleb]

Bike-related 2020 in review...

I rode a bunch this year and spent almost nothing to do it, at least as far as I can remember.

Total bike-related costs
- 3 tires
- a couple of tubes
- two days of mountain bike rental
- a few nights of lodging while traveling to ride
- a couple tanks of gas
- some coffees and pastries on rides

So, maybe I spent four or five hundred bucks total this year to ride my bike for pleasure and transportation?

That seems like a bargain to me. The marginal cost of going for a ride is so darn low once you have the basics.

What a great sport.

[echappist]

Bike-related 2020 in review...

I rode a bunch this year and spent almost nothing to do it, at least as far as I can remember.

Total bike-related costs
- 3 tires
- a couple of tubes
- two days of mountain bike rental
- a few nights of lodging while traveling to ride
- a couple tanks of gas
- some coffees and pastries on rides

So, maybe I spent four or five hundred bucks total this year to ride my bike for pleasure and transportation?

That seems like a bargain to me. The marginal cost of going for a ride is so darn low once you have the basics.

What a great sport.

I applaud the frugality, but I don't think your experience carries through

Back when I raced, racing fees alone was ~$700/year, before gas and any lodging.

And since I mostly ride on Zwift, there's another $180/year.

I'm really hoping for a low cycling expenditure year this year (already bought new jacket/LS jersey, a secondary bike with Di2, new wheelset, etc last year), but I won't be surprised if I somehow spend another $2k...

[caleb]

I applaud the frugality, but I don't think your experience carries through

Back when I raced, racing fees alone was ~$700/year, before gas and any lodging.

And since I mostly ride on Zwift, there's another $180/year.

I'm really hoping for a low cycling expenditure year this year (already bought new jacket/LS jersey, a secondary bike with Di2, new wheelset, etc last year), but I won't be surprised if I somehow spend another $2k...

It goes in spurts for me. At this point, I have a closet full of wheels, and the last frame I bought is still unbuilt two or three years later. Maybe I've hit the saturation point with the "stuff" part of riding.

I'm tempted every summer to buy a new mountain bike, though. The only reason I didn't last summer was that everything I wanted was sold out by the time I was ready to bring one home. I'm sure a new FS mountain bike will initiate another spurt of expenses.

For now, I'm fine with what I've got.

[caleb]

The Lemond thread in the main forum prompted me to think about how my perspective on expensive bikes has changed over the past 15-20 years.

I remember when people like Sasha White first started posting their work online, and I probably would have given a body part to own a new Vanilla.

Somewhere along the way I realize now that I just stopped caring and became totally content to ride road bikes cobbled together for next to nothing bought out of the classifieds. The joy of riding is still there, but I'm totally happy with the experience I have on used stuff. My road bike lust has died, and I'm only now realizing it.

I'm still trying, years later, to buy a new mountain bike though. So far I've failed. We shall see what the supply chain brings this spring.

Oh, and to revisit the theme from upthread, 2021 was another <$500 riding year for me. Good times, low cost. I'm not really trying to avoid spending money on bike stuff, I'm just not.

[Saab2000]

I'm kind of with you on this. A few years ago something clicked in me and my burning desire to constantly try new things and get the latest and greatest bike stuff dimmed. My last big bike purchase was about 3-4 years ago when I took delivery of my Zanconato gravel bike that was actually ordered a decade or so ago but put on ice until he called me to get it done. Then there were the wheels and groupset for the bike, making it a pretty expensive toy, but since then it's been minimal in the acquisition dept. I want to enjoy what I have rather than enjoying getting new stuff. Becoming an adult? I hope not..... But over the past two years I've paid off my car, bought windows (windows are expensive... but hey, they're from Warroad, MN so I'm keeping that community alive), had a new HVAC system installed, etc. All boring adult stuff! But it's satisfying in its own way.

A part of me wants a new super bike from Specialized or Pinarello or (name a brand here) but a larger part of me doesn't care. I think we may not be alone in these sentiments.

Likely nothing big in the bike dept. for me for 2022. My Zanks and Looks will soldier on for at least another year. Probably many more than that.

[bigbill]

Throughout Covid, all my outside riding has been on a mountain bike. A $70 tire every 6-8 months and I've replaced one chain. Mountain biking is the most cost efficient around here with the bad pavement and all.

Debt/Mortgage/etc I'm looking for an exit but the supply chain is squashing my retirement homestead dreams for another 18 months. I'd like to quit working but I don't want to be stuck in this location so I work until we build our dream house.