OSULemon wrote: I've been saving like crazy for a car (don't believe in financing), and once I bought it, was going to divert that money into savings, investments, and other hobbies.
Once you go buy it, take the financing. Get a silly low rate like 1.5%, then let your money sit in an index fund and earn way more than that. Pay it off as slow as possible.
** Since we're talking about good financial decisions, buy a cheaper car :)
ProDarwin wrote:OSULemon wrote: I've been saving like crazy for a car (don't believe in financing), and once I bought it, was going to divert that money into savings, investments, and other hobbies.Once you go buy it, take the financing. Get a silly low rate like 1.5%, then let your money sit in an index fund and earn way more than that. Pay it off as slow as possible. ** Since we're talking about good financial decisions, buy a cheaper car :)
Shhh, I'm tricking myself into saving for a down payment on a house. Don't spoil the ruse.
0 in retirement 0% going in, because I suck at life.
In reply to OSULemon:
the real fun comes when the 10-ish% annual growth is big enough to do something with. i've got enough socked away now that when i see 1% monthly growth i think "there's two more challenge cars!"
also, remember your first house probably won't be your last house, so don't over-extend yourself. and as long as you're single, take in a roommate. put their rent into your house repair fund, or into mutual funds, or into paying off your mortgage early.
35 years old here.
Combined the wife and I are saving about 16% of gross into retirement accounts (Pension, 401K, Roth IRA). I think we need to up this amount.
Mortgage (Including taxes/insurance) is currently about 20% of gross combined income but should be paid off in 10 years.
I am 52 and I don't believe in saving. Social Security will be there to cover my retirement and make my car and house payments........hahahahaha. I don't even calculate SS into my planning.
I plan on leaving my job at 56 and find a "lifestyle" job where the amount of money made isn't the driving force. And if all stays even I won't have a house payment.
I strongly suggest following Dave Ramsey. The concepts are simple to follow, don't go into debt and save like crazy. The power of compound interest is awesome! That said I can't get my son to understand that if he took his college fund (which he won't be using) and invested it then he wouldn't have to work after 40. Being 20 I'm sure that must seem like forever.
AngryCorvair wrote: In reply to OSULemon: the real fun comes when the 10-ish% annual growth is big enough to do something with. i've got enough socked away now that when i see 1% monthly growth i think "there's two more challenge cars!"
I'm not quite there, although earlier this year I was looking at a quarterly statement and realized it was the first time interest growth was more than my contribution. That was a good "my money is working for me" moment.
Having started in the Financial Services industry in 1990 I have to say that there have been some very good additions to this thread. I would add: 1. Have cash at the ready when you retire to cover six months of current expenses. The time it will take to convert your retirement accounts and pensions into monthly cash flow will take much longer that you can believe. 2. All of your pre tax accounts will be taxable as income, anything you do after tax today will only be taxed at long term capitol gain's rate. Many of my older clients have grown to not like the effect of distributions from their IRA's. 3. No one can live on their projected 60% of current income, be honest.
Sultan wrote: That said I can't get my son to understand that if he took his college fund (which he won't be using) and invested it then he wouldn't have to work after 40. Being 20 I'm sure that must seem like forever.
I was extremely fortunate in life. My father is (well, was, he's retired now) an accountant and financial lessons were drilled into us at an early age.
I had a brokerage account when I was 14. I bought stock with my lawn mowing money. It was a joint account with my dad, since I was too young to have my own, but I used to call them and pretend to be my dad to make trades. When my dad found out he laughed.
I remember going to the library to research stocks in the big old paper binders. This was way pre-internet. Learned about earnings, taxes, debt, etc.
When I was born, my dad opened an IRA for me. They couldn't afford to put a lot into it for the first 10 years of my life, but there was always some money there, and it grew and compounded interest from the year I was born. I plan to do the same for my kids. berkeley saving for college. Save for retirement.
The biggest problem we have in this country is that many people don't have access to good, sound financial education. For every kid as lucky as I was to have a father well versed in this stuff, there's probably 10 kids who think an organ grinder monkey and a coffee can is a good retirement plan.
nocones wrote: For My wife and I we are 30, with ~25-30 years to retirement.
55 to 60 is early to retire IMO, unless you are pretty wealthy already and don't plan on taking on any more debt like kids or a house or a divorce. I had one kid after 30, a divorce, and another kid after 40. The plans I made at 30 are like a sad joke now. But you sound like you are on the right track, just avoid kids, don't sleep with your secretary, and you'll be fine.
And what are you going to do if you live to 100? 45 years is a long time to play golf or go fishing, even if you can afford it. Most financial planners will tell you to plan on staying active. Maybe start a business, or run some real-estate rentals, or be a consultant. I like the idea of a post-retirement career. Something you do because you love it, not for the money.
pinchvalve wrote:nocones wrote: For My wife and I we are 30, with ~25-30 years to retirement.And what are you going to do if you live to 100? 45 years is a long time to play golf or go fishing, even if you can afford it. Most financial planners will tell you to plan on staying active. Maybe start a business, or run some real-estate rentals, or be a consultant. I like the idea of a post-retirement career. Something you do because you love it, not for the money.
I think the idea is that the sooner you are financially independent, the sooner you can do whatever you want. Why not start doing what you love without the need for money at age 50? or 40? Why wait until 60?
You guys have all just made me feel very very poor.
jr02518 wrote: 3. No one can live on their projected 60% of current income, be honest.
This bears repeating, to let it sink in. I am planning on my living expenses in retirement to be 120-140% of my current expenses, not including inflation. Healthcare costs are awful, and like it or not, by retirement age we all will have to pay for a certain amount of it.
DILYSI Dave wrote:AngryCorvair wrote: In reply to OSULemon: the real fun comes when the 10-ish% annual growth is big enough to do something with. i've got enough socked away now that when i see 1% monthly growth i think "there's two more challenge cars!"I'm not quite there, although earlier this year I was looking at a quarterly statement and realized it was the first time interest growth was more than my contribution. That was a good "my money is working for me" moment.
That is a good feeling. 
tuna55 wrote: You guys have all just made me feel very very poor.
you have twice as many kids as i do, and you're younger than me.
and i don't have a project car, so in that respect you make me feel poor. ;-)
AngryCorvair wrote:tuna55 wrote: You guys have all just made me feel very very poor.you have twice as many kids as i do, and you're younger than me. and i don't have a project car, so in that respect you make me feel poor. ;-)
True enough, but that project car get a budget of $50 per month. Or two, or three. And that's if I am lucky, so when I see Mazdaduece and his $100/week threads I want to chuck it in a scrap metal yard.
And yeah, kids are crazy expensive. Don't have any of those if you want to be rich. We are potty training tunakid #3 this week, which is very challenging due to speech issues, but also very financially advantageous.
pinchvalve wrote:nocones wrote: For My wife and I we are 30, with ~25-30 years to retirement.And what are you going to do if you live to 100? 45 years is a long time to play golf or go fishing, even if you can afford it. Most financial planners will tell you to plan on staying active. Maybe start a business, or run some real-estate rentals, or be a consultant. I like the idea of a post-retirement career. Something you do because you love it, not for the money.
Lot of books to read. Lot of fish to catch, golf courses to see, hockey games to attend, races to watch/race in, race cars to build, grandkids to spoil, kids to nag on, coffee to drink... I plan on finding a job doing what I like. If I still have the physical ability, that will mean that I will still be reffing hockey. Other job options include working at an ice cream shop part time, working at a golf course, book store, library, hockey shop... stuff like that. The best gig would be working security at a corporate office type gig. Our guy is probably 70 years old, gets to talk to everyone, runs the shuttles when it is cold out... Basically he is getting paid to socialize. Not a bad gig. He also checks the parking lots to see how full they are, and I've seen him napping in the van before.
I put 6% into my 401K every paycheck and the company matches up to that 6%. Single income family at the moment while Mrs.Pigeon is going to college, otherwise I would put in more.
I also have a mutual fund that I've had for 16 years that is growing quite steadily. I did pull a big chunk of it out a few years ago to make a hefty down payment on my house, but now I don't plan on touching it until retirement. Barring any sort of financial emergency, or course.
jr02518 wrote: 3. No one can live on their projected 60% of current income, be honest.
While I expect my expenses to go way up, I am doing exactly that now... So... Uh, I kinda disagree, depending on what happens with SS and healthcare.
mtn wrote:jr02518 wrote: 3. No one can live on their projected 60% of current income, be honest.While I expect my expenses to go *way* up, I am doing exactly that now... So... Uh, I kinda disagree, depending on what happens with SS and healthcare.
I think you missed the point. Some people plan on retiring on 60% of their current spending.
Meaning you would need to retire on 0.6 * your current spending rate of 0.6 - so 35% of your income.
The point is to plan on being able to maintain your current spending rate when retiring.
gofastbobby wrote:jr02518 wrote: 3. No one can live on their projected 60% of current income, be honest.This bears repeating, to let it sink in. I am planning on my living expenses in retirement to be 120-140% of my current expenses, not including inflation. Healthcare costs are awful, and like it or not, by retirement age we all will have to pay for a certain amount of it.
Really?
Even with my current debt load I could still live on 65% of my current income. Once that is all taken care of, which it all will be (except the house) in the next 3-5 years, I could get by on even less, and then even less once the house is taken care of.
Then again we are DINK's that live in an 1100 sq ft home, so....
Isn't the medical expenses the thing you have to worry about?
z31maniac wrote:gofastbobby wrote:Really? Even with my current debt load I could still live on 65% of my current income. Once that is all taken care of, which it all will be (except the house) in the next 3-5 years, I could get by on even less, and then even less once the house is taken care of. Then again we are DINK's that live in an 1100 sq ft home, so....jr02518 wrote: 3. No one can live on their projected 60% of current income, be honest.This bears repeating, to let it sink in. I am planning on my living expenses in retirement to be 120-140% of my current expenses, not including inflation. Healthcare costs are awful, and like it or not, by retirement age we all will have to pay for a certain amount of it.
A coworker of mine, who is nearing retirement age, was explaining to me yesterday of how his affordable health insurance option for coverage of just his wife would cost him $480/mo. That included a deductible of $7500/year. Just one of his wife's medications she is on will take up all of that deductible in a years time. After that, he has to pay at 20% copay on everything. His out of pocket expenses if retired, would be over $1100/mo if she stays healthy throughout the year and there are no added visits/medications/illnesses. He is covered through the VA, otherwise he would have to pay a lot more for his own healthcare.
tuna55 wrote:AngryCorvair wrote:True enough, but that project car get a budget of $50 per month. Or two, or three. And that's if I am lucky, so when I see Mazdaduece and his $100/week threads I want to chuck it in a scrap metal yard. And yeah, kids are crazy expensive. Don't have any of those if you want to be rich. We are potty training tunakid #3 this week, which is very challenging due to speech issues, but also very financially advantageous.tuna55 wrote: You guys have all just made me feel very very poor.you have twice as many kids as i do, and you're younger than me. and i don't have a project car, so in that respect you make me feel poor. ;-)
Hold your head up tuna. Me spending $100 a week comes after the part of my life where I had a challenge car in the garage, a wife 5 months pregnant with #2 and I looked at the timing and cost and just parked it. For a decade. Three months after #2 was born I was going to sign up for an autocross and my wife asked me not to. She was tired and the $35 entry fee was significant. I hung my head and stayed at home. I let all of my car subscriptions lapse. I deleted the GRM bookmark in my browser and stopped posting. I had two more kids. I did nothing with cars for a decade.
You haven't quit cars. Around here that's something to be proud of. The rest of life will sort itself out through time.
There are four things we all do every day: 1. Turn on the lights. 2. Use the telephone, yes I'm old. 3. Put gas in the car, it's a metaphor. 4. Buy food.
These are the things you should be investing in.
And if your state of residence offers Tax free Municipal Bonds, start buying in a fund. You will be picking them off at increasing rates of return and in California they are State and Federally tax free.
Got to love tax free cash flow.
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