People get caught all the time.

When employees discover they can't rent an apartment or get a car loan because they have no documented income, they'll come to Reddit and ask what to do. People can be very helpful here...lol.

In addition to not having documented income, your employee won't be earning any social security credits (unless they are legit self-employed and pay the required taxes) and won't be able to contribute to an IRA (unless they have other earned income they pay tax on).

P.S. The employer share of social security and medicare tax is 7.65%, not 15.3%.

If you're paying a nanny or something similar, all it takes is them filing an SS-8 with the IRS if you somehow slight or wrong them. Then comes the pain train

The IRS audit isn't the highest risk actually. Unemployment claims in the biggest one, followed by workers comp, and then wage board claims. Then after that it's when the employee realizes they can get more tax credits, disability, social security by properly reporting the income. They file and report the income, which involves a form turning in the employer. There is no statute of limitations on this.

I don't have stories for you, but also consider that going legit will help your employee be able to qualify for apartments and loans and receive social security later in life.

APY is calculated over the term of thw loan. Since money towards principal reduces the balance, the interest payments are front loaded (more money towards interest early in the loan and less at the end). Amoritization calculaters visualize this effect.

Just cancel or go to an insurance company that will work with suspending

I did this a few years ago. I sold right as the pandemic swept through, March- April 2020. The pros for me were: rental was actually slightly less than my mortgage, as were utilities, so there was some immediate savings - probably on par or slightly more than I got in equity from the principal portion of my mortgage payment each month. I also didn’t need a sale contingency on my offers - no worrying about the daisy chain of selling and buying simultaneously. I almost had an issue with my previous sale where the buyer quit his job right before settlement and his mortgage company did an income verification and almost pulled mortgage until his father co-signed. That spooked me

I also did a 6 month lease, not a year, with the expectation that I would find something in that time period and then could go month to month without a penalty for breaking lease if I didn’t. It ended up working out for me because I found something and had a month left on my lease after settlement to paint, update, and move in slowly.

Really the only con was moving twice in a short period of time and needing a storage unit @ 100 a month for a few months.

I don’t see any financial reason why this doesn’t make sense personally if it’s worth your peace of mind.

You need to go to legal services on your base and get them to use the Service Members Civil Relief Act to lower any of your preservice interest rates. Also talk to a financial counselor at the service center on base to get advice on retirement and your TSP as mentioned. I would use USAA or Navy Fed as a bank as well.

the interest rate is per year and there is a simple interest formula everyone uses to calculate it based on the rate, time and accrual

> At a 5.5% interest rate - why is 15% of my monthly payment going to interest? Why shouldn't it be... 5.5%?

Because that's not how that works. 5.5% means that you pay 5.5% of your current balance in interest. A basic example:

You have a $12,000 car payment. Every month, you owe interest. 5.5% of $12,000 is $660. This is an annualized number, so dividing it by 12 gets us the monthly number. Which is $55.

Now, your monthly payment might be $100, of which $55 is interest. It might be $200, of which $55 is interest. That doesn't matter. The 5.5% is 5.5% of the balance; it's not a proportion of the payment.

5.5% is how much the loan costs you annually. (Really, its more like Balance * 1/365 * 5.5% per day)

The 'split' between principal and interest is called amortization

https://en.wikipedia.org/wiki/Amortization

https://en.wikipedia.org/wiki/Amortizing_loan

Its why your payment doesn't change for the life of the loan

Good advice on the car. But you need to reconsider the ring. You are currently bit financially stable. Getting married without stable finances could be a bad decision.

I was encouraged to do so when I purchased a home a few years back. The market wasn't as crazy at it's been the last couple of years but it was still competitive and starting to tip towards sellers with a lot of cash buyers around, so it was seen as an edge.

Just transfer money from your savings to your checking. You might have an overdraft fee you will need to pay.

Make sure you keep enough in your checking to cover your day to day needs.

If the timing wasn’t so short notice, you could get a lease and put that negative equity onto the lease and turn it in when you get orders under SCRA.

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No, but you are close and doing most things pretty well.

The general recommendation is to save at least 15% to retirement. With your income you should aim for maxing out your tax advantaged accounts before taxably investing. Your close on your 401k before the match but not quite there and this doesn't bring you to 15%. Many people are suggesting this 15% number be bumped up to 20% these day too.

The other general recommendation is to have 1 years income saved by the age of 30. So you are behind, but I'm guessing you haven't been making $178k for 5+ years either, so this isn't unheard of at this age. The important part is to catch up and keep lifestyle inflation in check.

You should probably look at doing a traditional IRA (no income limit) to increase your tax-advantaged accounts before taxably investing. You maybe able to convert this to a backdoor roth IRA too.

How did you come up with the $25k need for an emergency fund?

I would redirect your taxable investing to tax deferred accounts until those are maxed out, and take a look at your fun spending each month to divert some of it into increasing your ability to invest. The prime directive in the wiki has a great flowchart you should follow for the order of operations on your money.

How long have you been earning $178k? If you've been >$100k for several years, you're behind on retirement savings. If you went from $70k to $178k in the last 90 days, it's not that bad.

>I Contribute about 12% to 401k- goal is to max out this year

At $178k income, maxing it out shouldn't be a "goal" it should just be a given. Same with an IRA, which I don't see listed as a monthly expense.

>Allowance/Fun Spending $2000

That's quite a bit of fun for an incomplete emergency fund and someone concerned about retirement savings.

Where can you store the car, is it in a private garage or is it on the street?

If it's in a private garage, in many states you can file an Affidavit of Non-Use with the DMV, so you do not have to maintain registration and insurance on the vehicle. Then you can contact the insurance company and cancel the insurance policy. Leave the loan payment on AutoPay, and you're good to go.

Not buying a new car, ever. With few exceptions buying a new car is a waste of money. You eat all the depreciation. If you sold that car tomorrow it will have cost you $7000 + paid interest. Even in this market you could have found a used car for $10k that will run for years with minimal maintenance.

Buy used. Let someone else pay the depreciation. A new car is an unnecessary luxury.

Typically any lapse in insurance will cause a rate hike.

I don't know when you can join USAA, but I'd try them. Because they work with service members they can probably get you a better deal, also look at refinancing through them, I think you mentioned a 14% rate? They might be able to beat that, and knowing that you'll have stable income for the next few years makes a difference in rates.

Sounds like they are attempting to collect the debt from anyone remotely associated. Because if you ever pay them a dime, it’s like assuming the debt responsibility and too many people don’t know this. Tell them your were a minor at that address and not responsible then or now for that debt. And they need to remove your name from their list. By law, they have to stop calling you.

My car is not insured from these cases. I have only liability insurance.

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