New Teachers and $$$

Discussion in 'General Education' started by Obadiah, Jun 12, 2018.

  1. Ima Teacher

    Ima Teacher Maven

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    Jun 17, 2018

    That’s a plus to living in my area. I bought my house in 2000. I was single and 29. Decent house in established neighborhood. Three bedroom, one bath, garage, brick, on 1.5 acres for $82,000. I paid $25,000 down. Needed cosmetic work, which I did within first few years for about $25,000. Got a 15 year mortgage.

    In 2016, I added a master suite, fencing, and two-car garage. Also did porch remodel, painted, and redid landscaping. Will still be able to pay house off before retirement.

    I don’t see how people afford some places.
     
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  2. futuremathsprof

    futuremathsprof Phenom

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    I’m envious of you... This feels so far off for me. What I don’t understand is why developers keep building expensive homes when 70% of California residents can’t afford to buy a home and the 2016 median household income is $67,739. I’m currently reading an article and it says 38% of California’s can afford buying a $440,000 condo, which is the median price for a condo, and that the annual income necessary to do so is $88,770 payment in order to make the $2,220 monthly payment.

    I don’t see why the state government is not getting involved. Why are only rich people the only people who matter? Screw working class people and middle-class people like myself, only rich people deserve to buy homes in California!

    Basically, you have two options in California: 1) put the plurality (more than 30%) of your money toward a house payment and have little to do much else besides paying bills, or 2) pay moderate rent if you’re lucky and be able to have a decent life with the rest of your money after bills, but you are constantly at the whims of your landlord.

    It’s just criminal what they are doing to the majority of Californians.
     
  3. a2z

    a2z Virtuoso

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    If the homes weren't being bought, builders wouldn't be building them.

    Land price is usually the reason for expensive housing costs. In one area I lived in, the land value of a tiny plot was more than the actual value of the home that was on the lot. This wasn't even a detached structure.

    Overpopulation of areas drive prices up. A lot of different criteria is examined when determining the type of structures that can be approved and built in an area. If the area is already over crowded and adding double the housing would inundate the transportation system or other services, zoning will only allow certain types of structures to be built. That could mean in order for the builder to make money the homes either have to be larger or with higher end finishes to drive up the prices.

    Those who purchase these units to rent will price them based on what the market will bear. Also, renters also pay property tax as part of their rental payment. So, as property tax rises for "home owners" it also rises for renters in their rent amount.

    Housing is a horrible problem in many places.
     
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  4. a2z

    a2z Virtuoso

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    Jun 18, 2018

    Watch it with the coffee comments! :p

    People can save tons of money by not eating out and bringing their own drinks or drinking tap water or their own filtered water. Most don't like to do the prep or the planning to make it happen. Our society changed from one where it was a necessity to bring your own to one where convenience is king. I'm not even talking about going to the lengths of baking your own bread rather than buying bread at $3.00/loaf.

    But planning, and for those with families, getting everyone involved in the weekly prep for food, could save people thousands and thousands a year.
     
  5. a2z

    a2z Virtuoso

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    What would you have them do?
     
  6. Ms.Holyoke

    Ms.Holyoke Connoisseur

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    Does anyone have experience/thoughts about saving for retirement with a Roth IRA vs. a 403b?
     
  7. Ms.Holyoke

    Ms.Holyoke Connoisseur

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    My other question is about teacher pensions. My state doesn't participate in Social Security but my school district has us pay 9% of our salary for our pensions. This seems like so much to me! Do teachers invest in a 403b in addition to pension contributions? This worries me because I'm in my early 20's and I am worried that teacher pensions will change when I retire. Can any Massachusetts teachers weigh in on this?
     
  8. futuremathsprof

    futuremathsprof Phenom

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    For starters, take away power from local communities in cities where they keep voting against housing development only to inflate the value of their homes. They have absolutely refused to allow any new homes to be built, even though several million are needed to keep up with population growth by 2025. I believe only 80,000 have been built each year across the entire state and they are short by 100,000 each year or something.

    Second, mandate that developers build homes in the 100k, 200k, 300k, and above ranges, not just homes that wealthy people can afford. They have ONLY been building homes starting in the 400k range, which is in violation of state law as it is mandated that 30% of all housing be diverted for low-income to lower-middle income individuals. That has not been happening.

    Third, ease the amount of time it takes to get permitting to build homes. 6 months to x number of years is ridiculous.
     
    Last edited: Jun 18, 2018
  9. futuremathsprof

    futuremathsprof Phenom

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    I’m not a teacher in Massachusetts, but your retirement system is similar to the pension system in CA in that public schoolteachers don’t pay into Social Security, but they pay into the state pension fund called CALSTRS.

    9% is actually not a lot, per se. Social Security is 6.2% of gross wages so you are only paying 2.8% more, and it is recommended by financial advisors that people put up to 15% of their total income into private pensions. However, they say it’s okay if they contribute 10-15%, so 9% seems reasonable to me.

    If you were able to contribute next to nothing into your retirement plan, then you would not be able to live off of it in retirement because you would have next to nothing.
     
    Last edited: Jun 18, 2018
  10. futuremathsprof

    futuremathsprof Phenom

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    I use a Vanguard Roth IRA and contribute the max amount every year (currently $5,500 per year). At this rate, I will have well over a million in retirement. Though, I am not contributing to a 403b because my employer match is so-so (1-3%), and so I have numerous investments in stocks, with annual returns of 10-12%. The key to doing well in the stock market is to invest in blue-chip stocks. That’s my hint to you. :D
     
    Last edited: Jun 18, 2018
  11. Ima Teacher

    Ima Teacher Maven

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    I’m in Kentucky, and we have been fighting about pensions for almost a year. We have a good retirement system, and they were trying to change it. The change will not matter to me because I am so close to retirement. However, the younger teachers will feel the pinch, and new teachers may be deterred. This year we had two young (under 10 and under 5 years) leave teaching because of the changes.

    We do not pay into social security, but we do pay into Medicare. We also pay into the teacher retirement system. In addition, I also pay into a mutual fund, and I have done traditional IRA contributions when I was younger.

    My DH and I are both teachers. We both retire at the same t8me, and our districts pay almost the exact same salary.
     
  12. joealee

    joealee Rookie

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    Jun 18, 2018

    I hate to judge based on appearance, but if someone came to an interview dressed like that I would question how much they care about the job.
     
  13. joealee

    joealee Rookie

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    Jun 18, 2018

    I'm not a big coffee fan, but need the caffeine to get me through the teaching day. Mind you, I can't see buying fancy coffee drinks/lattes etc., just 1 or 2 small house blend cups at my local convenience store. Cost is only $1.50 per cup.
     
  14. Been There

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    Over the course of my career, I conservatively estimate that I saved at least $30,000 by bringing my own lunch to work and drinking delicious mountain water from home. Was always disappointed in the food when I had to pay $10 just to join my colleagues for lunch on a PD day. I drink coffee, but would wait until I got home for a fresh brew.
     
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  15. futuremathsprof

    futuremathsprof Phenom

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    My 23andme and Promethase reports both say I have a rare gene that metabolizes caffeine incredibly fast and so caffeine has no effect on me. Also, I am a light sleeper and only need 1-3 hours of sleep per night to function.
     
  16. futuremathsprof

    futuremathsprof Phenom

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    At what age will you retire?
     
  17. jadorelafrance

    jadorelafrance Cohort

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    Jun 18, 2018

    This is exactly how I feel right now, and I’m close to the age you’re talking about. It really doesn’t get much better. I spent a good amount of time paying off debts and paid off my car to only have it totaled by an irresponsible driver. At some point you will just have to take the plunge even if you’re not financially ready, or you will just keep renting and making someone else richer. I’m looking into it now and I’m nowhere near financially ready but houses here are about the same in price as where you are. Maybe you can look into condos and eventually rent it out or build up real estate. There are options and there are affordable homes, it just takes a lot of time and research. The longer you save, the more expensive homes get and your money in your savings becomes worth less due to inflation.
     
  18. bella84

    bella84 Aficionado

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    I'm not in MA, so I can't speak for your system specifically. I am, however, in state where I do not pay SS and am required to pay 14.5% of my salary into the pension system. It is a lot, but it will be worth it someday (my state's pension system is very secure - likely the most secure in the entire country). I don't pay into a 403b. It's offered in my district, but there is no matching. I previously had money in several other pension systems, and I rolled all of those funds over into a Vanguard Roth IRA. I don't contribute to it regularly right now (I'm only gaining interest on the amount that I rolled over plus the investments I made with it), but I do plan to have some of my salary direct deposited into it next year, as long as I can find the right paperwork to make it happen. I'm by no means the most responsible with my money, but I do believe that putting a lot into retirement is prudent. I would recommend that you do as much as you possibly can. Of course, save some that you can easily access for emergencies, but put what is feasible into IRA (or 403b, if that's what you choose).
     
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  19. futuremathsprof

    futuremathsprof Phenom

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    These issues/factors have already been accounted for. The problem is that ANY housing development in MOST areas gets shot down, without a second thought about the necessity for it.
     
  20. whizkid

    whizkid Groupie

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    No experience with 403(b), but definitely go with a Roth. Started mine over 5 years ago. Tax free earnings if you own it for 5 taxable years, can always take out the principal (though I'd only do that in a dire situation), and there is no required minimum distribution as with a Traditional.
     
  21. jz3377

    jz3377 New Member

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    Jun 18, 2018

    I'm not a veteran teacher, but I am a veteran! I facilitate a class for money management at my agency. The best piece of advice I can give anyone is to get serious about budgeting. Money, like time, will slip away if you don't pay attention. Try to write down every penny you spend for a month. Every penny! You'll be surprised how much money you simply blow without paying attention. Once you do that, get a ledger (if you're old school like me) or look up an online budgeting tool. There's plenty of them. Find one that's free, and start a budget. It will take a few months to get it perfect, but I can promise you: you will feel like you got a raise.
     
  22. Ima Teacher

    Ima Teacher Maven

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    I have 23.7 years toward retirement, and I can retire with full benefits at 27 years, which puts me at age 50. However, I’ll get higher benefits if I wait until age 55 due to how calculations work. Right now I think I can go that long, but who knows.

    Last summer we went to the retirement office. They ran numbers for 27 years, 30 years, and age 55.
     
  23. Ms.Holyoke

    Ms.Holyoke Connoisseur

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    I also have a question about health insurance. Next year will be the first year that I will be off my parents' insurance and my school has 3 plans to choose between. The premiums per week are $74, $37, and $36 for one person and I think I have to decide by new teacher orientation. Does your school usually give you more detailed information about what each plan includes?
     
  24. Ima Teacher

    Ima Teacher Maven

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    Yes, you should be given a lot more information about health insurance.

    I pay something like $50 a month for my plan. It is a top single plan. DH carries the parent plus plan for himself and DSS (23). It was cheaper to do that than to get the family plan. DH never goes to the doctor, and DSS rarely goes. I go a lot due to chronic medical issues.

    There should be someone who can help you with the process of choosing a plan to suit your needs.
     
  25. whizkid

    whizkid Groupie

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    Yes, the insurance reps do.
     
  26. svassillion

    svassillion Companion

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    In regards to the Roth vs 403b, choose the Roth if you can. I have a 403b because my district does not offer a Roth IRA so they won't match any contributions if I choose to get one, but they do contribute to my 403b. I pay the 9% to the MTRS and then an additional 11% into my 403b. These reps were present at my new hire orientation and can sit down with you to discuss your options. Mine recommended that 20% of my income should be going into retirement which is how the 11% came to be, but it took me a couple years to be able to afford that so my first year I opted for less.

    For health insurance, is your district a member of GIC? If so you can find all the comparisons between insurer options on their website and definitely check to make sure your primary care physician accepts the insurer you choose so you pay less for doctors visits. I have Tufts Navigator and really like it. I don't remember health insurers or GIC being present at my orientation, but that would be a good question for HR.
     
  27. bella84

    bella84 Aficionado

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    Yes, you should be told what type of coverage each plan provides. I’d reach out to HR if I were you.
     
  28. futuremathsprof

    futuremathsprof Phenom

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    You put 20% into retirement?! Isn’t that kind of excessive? I say this because, nationally, most teachers fall under the 22% federal tax bracket and so you are paying either half or more of your total income between federal, state, and local taxes in addition to retirement. How are you living off of the rest?

    I am assuming you have a mortgage and teacher union dues, so how do you live off of your salary?
     
  29. Been There

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    FMP, I felt exactly the way you do when I was your age - I lived and worked in S.F. One thing I learned is to be patient - it comes with age. When I was a few years older than you, we couldn't afford to buy a house in the Bay Area, so we bought a condo in a city (Oakland) that we weren't crazy about (too much crime). A couple of years later, we sold the condo at a profit and relocated to the "north state" where houses were more attainable. My financial strategy was to work in a dysfunctional school district that paid comparatively well and live in a peaceful retirement community 50 miles away. I can't say that I enjoyed working in that toxic environment, but it enabled me to beat the escalating housing market! Bought our first real house in full at age 40. Something for you to think about.
     
  30. waterfall

    waterfall Virtuoso

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    If you know the names of the offered insurance plans, I'd look them up on your own first and try to do a bit of research if it's something you're concerned about. In the districts I've worked in, they might hand out a fact sheet offering a brief comparison between the plans or just ask if anyone has any questions, which isn't exactly helpful if you don't really know what questions to ask. When I started we only had one option, and then they started offering a second option a couple of years ago. No one really explained it to us, but perhaps they did a better job with new hires. I had to do my own research and figure out the pros/cons for myself.
     
  31. futuremathsprof

    futuremathsprof Phenom

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    The thing is, I don’t think I should have to wait until I’m 40 to buy a home. I’m currently 26 and refuse to wait 14 years before I enter into homeownership. It isn’t fair to young people that only the wealthy can afford to buy homes or people who bought homes when they were dirt cheap.

    Something needs to change.
     
  32. Been There

    Been There Habitué

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    While it may seem unfair, I believe this is what makes the dream of homeownership a distant but attainable goal for many people worldwide. I've noticed that even comfortable homes in developing countries have become quite pricey (check out House Hunters International on HGTV). I'm sure my uncle and aunt thought the $25,000 price tag on their SF home many years ago was way too high for their low salaries - that same house sold for half a million dollars years later. I don't think the economic law of supply and demand is likely to change any time soon.
     
    Last edited: Jun 29, 2018
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  33. futuremathsprof

    futuremathsprof Phenom

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    I’m not saying the Law of Supply and Demand needs to change. However, what I like that the California state government is FINALLY doing is removing control of local municipalities from vetoing EVERY new housing project that comes their way.
     
  34. geoteacher

    geoteacher Devotee

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    I agree 100% with this advice! When I was home raising my children, I realized that we were spending too much, and that was it! We immediately began a budget plan. I allocated money to categories, and we kept track of every penny (I’m not kidding!) that we spent. I still have the budgeting forms that I used, and they are fun to look back on. However, sticking to a budget did what we needed it to. We re-examined our spending and brought it in line with our income. We found that we didn’t need to eliminate everything, but we needed to be smart consumers. We paid off our house in 7 years, never got a car loan because I drove an Oldsmobile purchased for $2000, and we essentially stopped going out to eat until we could afford to do so. My family laughed at this one, but DH literally got $20 for discretionary spending each month (as did I). Was it tough? Sometimes, but it pays off in the long run. We no longer do a budget because we don’t have to.
     
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  35. Ms.Holyoke

    Ms.Holyoke Connoisseur

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    I found a bunch of sheets that they gave me about the different plans. It seems like the $37 plan has a 0 dollar deductable. I would honestly rather pay less for healthcare and have a higher deductable because I am healthy and I rarely need to go to the doctor.

    Does anyone know if the plans that I listed are "good" in terms of the cost? I know teachers supposedly have good benefits. It's all a little bit confusing because it's the first time that I am getting off my parents' insurance!
     
    Last edited: Jun 29, 2018
  36. bella84

    bella84 Aficionado

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    It doesn't make sense to me why one plan is $36 and the other is $37. Are you sure that those are the prices? Also, are you sure it's per week? Not per month or per paycheck? It also doesn't make sense that one of the cheaper plans would have the lowest ($0) deductible. Usually the cheaper the plan, the higher the deductible. Do you know if you will get an HSA (Health Savings Account) or HRA (Health Reimbursement Account) with any of the plans?

    Truthfully, you need to look through those sheets that they gave you in depth and determine what type of coverage you need for yourself. If you never go to the doctor, then you will need a different plan than someone who has chronic health conditions and goes to the doctor all the time - or vice versa. You have to make the decision that's right for your health and your finances. Can you have your parents look through the info with you to help you make a good choice? That's what I did when I was first getting off of my parents' insurance and starting off on my own. Now, after several years of being on my own health insurance, I know what to look for. But it really helps to have someone with experience look things over with you when you're first starting out. That's going to be difficult for us to do for you over the internet. We can't see your forms, and we don't know your personal health history or financial situation.
     
  37. Been There

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    Like many others, we're also seriously thinking of leaving California. The high cost of living (that goes up every year) and government policies designed to "spread the wealth" are effectively shaving thousands of dollars off of our hard-earned nest egg. :eek:
     
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  38. futuremathsprof

    futuremathsprof Phenom

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    You’ve got that right. I don’t understand the mindset of developers in the state. Young people are leaving CA in droves and I remember reading an article that projected that several hundreds of thousands (I think somewhere along the lines of 800,000 young people) will leave in 2018 alone. Who’s going to buy homes when the older generations die out or try to sell their homes to millennials?

    Herp derp.

    The solution? To construct more $500k+ homes.

    This model is obviously working!
     
  39. waterfall

    waterfall Virtuoso

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    I agree with all of this. Typically, high deductible plans make more sense for younger people who are generally healthy. Keep in mind that in an every day sense, a high deductible plan will almost be like not having insurance at all because most people will never reach the deductible. You will pay full price out of pocket any time you visit a doctor, full price for any medication, etc. Just walking in the door to a doctor's office in my area is a minimum of $250. It's basically catastrophe insurance- most likely the only way you'll ever reach the deductible and end up actually using the insurance is if you were to get into some sort of serious accident.

    In my district, employee-only insurance is covered completely by the district, so free to the employee (those with dependents do have to pay a lot to cover them). Since it's cheaper for the district to pay for high deductible plans, if you choose that option they put the difference into an HSA account for you each month. Right now it's something like $112 per month. Since I pretty much never go to the Dr. or need anything medical, I went with that option. Some districts will offer you an HSA for you to put your own pre-tax money in, even if they don't contribute. If you do with the high deductible option, I'd look into something like that and put in a small amount that you won't miss from each paycheck. If nothing like that is offered, you'll want to be sure you're saving up something on your own so you're never put in a position where you really need to go to the Dr. but can't afford it.

    On a traditional plan, you will pay more for the insurance coverage up front, but will pay significantly less for medications and office visits. When I was younger, I took several acne medications and had to stay on the traditional plan because of that. I paid $15-25 for each of my medications; without insurance they were over $200 each. A Dr.'s visit was also typically around $20.
     
  40. futuremathsprof

    futuremathsprof Phenom

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    This is a pretty good deal insurance wise. I have a similar plan and am completely covered by my employer, except I have a low deductible plan. What is your deductible for yours? Mine is like $500, I think. In the surrounding schools in my area, teachers have to pay higher deductibles like $1,000-$1,500, which is ridiculous.
     

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