Fixed-Rate or Adjustable-Rate Mortgage: Which is Right for You?


New neighbors Bob and Sam moved onto a quiet block in South Minneapolis around the same time in 2004. Their homes, which sit across the street from one another, are close in value—each sold for about $200,000—and both Bob and Sam made a 10% down payment.

About ten years after moving in, Bob and Sam began chatting about their homes at a neighborhood barbecue. The subject of mortgage payments came up, and Bob was floored to learn that Sam’s were considerably less. In fact, after punching in a few numbers on his calculator, Bob realized that over the course of the last decade, he had paid almost $24,000 more than Sam on interest and principal payments.

How did Sam get so lucky? When he bought his home in 2004, he opted for an Adjustable-Rate Mortgage (ARM) instead of the standard fixed-rate mortgage. This meant that his interest rate varied over … Read More

Dipping into an IRA without Paying a Penalty


Typically, withdrawing from a traditional IRA before you reach 59 ½ will earn you a 10% penalty fee, and for good reason—that money is tucked away for retirement, and anything you withdraw loses its ability to make investment gains before you reach a ripe age. In some ways the IRS penalty policy on early withdrawals is meant as a slap on the wrist to steer you from temptation that may jeopardize your financial future.

But life is often unpredictable, and sometimes you need to tap your non-Roth IRA early. Luckily, there are a number of exceptions to the 10% penalty rule.

Many life emergencies allow for an exception:

* If you become permanently disabled and are unable to do substantial gainful activity, you can tap your IRA with no worries about fees.

* High medical bills can be paid with IRA withdrawals if the expenses are not reimbursed by insurance … Read More

Tax Planning: What You Need to Know

At Rapacki + Co., we offer both wealth planning and tax planning. What’s the difference, you ask?

With wealth planning (also called financial planning), we work with you to achieve your long-term financial goals, such as establishing a trust for your child’s college tuition, saving for retirement, or making investment decisions.

Tax planning is a little more fun—that’s where we help you avoid taxes as much as possible. It requires in-depth knowledge of IRS policies, mixed with a dash of creative thinking.

There are simple ways that wealth planning and tax planning can work together. For example, contributing more to your retirement plan through your employer will effectively lower your income—this means you’re paying less taxes, while at the same time dedicating money to the post-career future you’ve been dreaming about.

The truth is that there are many tax-planning strategies you can take advantage of if you know where to look, … Read More