60 Minute Finance
CPA and Financial Counselor
Born and raised in Virginia, John passed the CPA exam before graduating from Virginia Commonwealth University and beginning his career at a “Big-8” accounting firm in 1987.
After two years in public accounting, he accepted employment with a client and rose through the ranks in private industry. Desiring to work in a more diversified environment, John started his own accounting practice in 2000 and added personal financial coaching services in 2013.
John resides in Hanover County, Virginia with his wife and children. He is active in his church, enjoys finishing a good run or workout at the gym, and leads personal finance classes in the community.
In addition to 60 Minute Finance, John is also the owner and president of Riverpine Services, Inc. Riverpine Services, Inc., provides freelance accounting services to a select number of small businesses throughout the region. In 2016, John moved to a part-time roll with Riverpine to focus his attention and energy on his personal financial education efforts.
BS, Accounting, Virginia Commonwealth University
The recommendations provided are educational in nature and not intended to be specific recommendations for any particular individual. The goal is to educate and inform readers of available options, with the ultimate decision being theirs. Please consult the appropriate tax, investment, insurance or financial planning expert before making any final decisions.
In general, I recommend to pay off non-mortgage debt prior to purchasing a home. Doing so in your case would reduce your $1,000,000 in savings to $550,000. Even if you used 100% of this amount (which I wouldn't recommend unless you had another account with a significant emergency fund), your mortgage would be for $825,000. Just your principal and interest payment on this amount (over 30 years at the interest rate you specified) would be about 40% of your GROSS monthly income. This is far too much of your income going toward housing. Your home mortgage should be no more than 25% of your NET monthly income.
If you put down more on the house to reduce your mortgage payment, you would still be left with all or a portion of your non-mortgage debt. Your total debt payments in this scenario would still be far too large of a percentage of your income.
Please reconsider purchasing a home that expensive! Your income can't support it. Being "house rich" and "cash poor" is no way to live! It would take only a small hiccup in your income to create significant financial problems.
Thanks for your question and good luck!
Yes, I would recommend that you file your previous years tax returns, in addition to your 2017 returns, as soon as possible. To do so, connect with a local tax professional who can prepare your prior year returns. If it's only been a couple of years (2016 and 2017 ??), the penalties and interest (on the 2016 return) would be minimal when compared to what they'll become in a few years if you don't address the issue. The sooner the better!
Best of luck and thanks for your questions.
What objective are you trying to meet by considering a whole life insurance policy? If you need additional death benefit for your children, buy more term insurance. It's much cheaper and the dollars saved could be redirected to more productive areas (ex. investing, building savings, paying off debt (if any)). If your goal is to use a whole life insurance policy as a way to build wealth, I would recommend that you don't do it! The insurance component - which you don't need if you're already adequately insured - is expensive. Generally speaking, the investment options are limited and expensive. As your children age and you build wealth, you may not need to have life insurance in place for your entire life.
Instead, buy enough term insurance to take care of your children should something happen to you before they are independent. Depending on their ages, this may mean a 20-year fixed premium term policy. For investing, follow a few simple fundamentals: keep expenses and taxes low, diversify and re-balance, use low-cost index fund (like at Vanguard, for example), keep investing in good and bad markets - stay the course, understand your risk profile to determine your asset allocation.
Thanks for your question and keep up the good work!
A conversion would have to be completed by December 31, 2017, to be included on the 2017 return. The April 18th deadline is for making a new contribution to a traditional or Roth IRA, not a conversion.
The amount of the conversion would be included in your income from that year and you'd receive a 1099 from the custodian showing the distribution from the traditional IRA.
Thanks for your questions!
Your wife can contribute $5,500 ($6,500 if 50 or older) to a non-deductible traditional IRA. It can then be converted to a Roth IRA. Of course, if she already has other traditional IRA balances, the basis of the new non-deductible contribution is spread over all of her traditional IRA balances. In other words, she can't choose to just convert the new non-deductible contribution if she has other traditional IRA balances.
Thanks for your question!