nepa03focus wrote: What is this money you all speak of?
FTFY
nepa03focus wrote: What is this money you all speak of?
FTFY
Budget! Sit down and write out your monthly expenses to your best estimate. Then track what you actually spend for a month! Track everything! I kept a pocket note pad and wrote down everything as it happened and saw my spending change. I felt stupid when I was faced with writing down silly stuff like a pen with a laser on it or a Snickers bar that I really didn't need. Even the stuff that slides by this "stupid" filter will surprise you when added up on a monthly basis.
I highly recommend getting a Dave Ramsey book or even seeking out a local budget workshop to attend.
http://www.daveramsey.com/fpu/classfinder/#center=32.176215,-101.874863
Play to win or be poor!
Bruce
Duke wrote: On another note, how about this? Ignore your raise. Pretend you didn't get it. Figure out how much it is per month (take home), and start a savings account that automatically transfers that much into the long-term account every month.
^^This!! My wife started very early buying Savings Bonds which were taken out of her pay before she ever got it. $50 to buy a $100 savings bond every 2 weeks adds up when you do it for 36 years and don't cash any of them until they no longer are drawing interest.
Dr. Hess wrote: Many good suggestions above. I suggest Dave Ramsey's book(s) starting with the first one. It is written specifically for people like you. Available at Walmart. Pay cash for it.
Not a Dave Ramsey guy myself, but he has helped a lot of people.
I suggest borrowing it from the library. It's free 
Set aside cash from each paycheck until you have a sum that would cover your expenses for 1-6 months and let that be your emergency fund. Don't touch it for craigslist finds.
Then tackle your highest interest debt first. When that is paid, take the amount you were paying on it and apply it to the next high interest debt, and it snowballs from there. Once debt free, invest in retirement.
This is my plan anyway. So far I have managed to set aside a very small sum and not buy any cars off craigslist in over a year.
ECM, that's Dave's plan in 3 lines. Some people have to buy a book to tell them that, some don't. I disagree with him on a few points, but in general, he helps a lot of people who would be otherwise clueless their whole lives.
Do you have a 401k? Max that out. If you want help selecting the funds, I'd be happy to lend my worthless opinion.
Already maxed that out? Ok, now go into a Roth IRA (or Traditional, depending on your place now and in the future). Max that out. These should be taken directly out of your pay, or automatically set up so that they don't ever touch your checking account. Save early, save often.
While maxing out a 401k is generally very good advice, just keep in mind two things:
I have every bill on automatic payment from two bank accounts and they get allotments from my pay that almost exactly cover those bills plus my savings. What is left over from my paycheck, which varies with overtime and such, goes into a play money account with a debit card. That is the account I use for everything not already in the budget so I can pretty much fritter it away as I choose.
For me this process works best because when I run out of money I can't buy stuff, and if I have a lot of overtime I pay myself first so I don't feel like I am working for nothing.
The hardest part is figuring out how much each bill is going to be, including the utilities and such, to get the allotments right. I'm not sure what my electric company thinks of me, but depending on what month it is my payment is anywhere from 1/2 to 4x my actual bill since I send the same amount every month.
Lots of great advice here I'll add in first I would get together 1000 bucks as quick as you can(yes straight out of Dave Ramsey) that way when that car breaks (or appliance) you can use that cash to fix it instead of racking more money up on a credit card. Dave Ramsey is Christian based, if that's not your cup of tea ignore that stuff it's still excellent advice and it works. A big thing here is contentment. Be happy with what you have, you'll spend less. Also starting a budget is hard, it takes about three months to get decent with it, but it gets normalized after that and you'll wonder where all the extra money came from.
Old SNL skit that's pertinent 
https://www.youtube.com/watch?v=Qb8hTzUoI54
uhh, spend less money.
BoxheadTim wrote: While maxing out a 401k is generally very good advice, just keep in mind two things: - Please, please make sure that the fees are reasonable (low, in other words). Putting a lot of money in a high fee 401k is you screwing your future self. - If you don't have any savings, put at least $1000-$2000 in a regular savings account for emergencies or start putting money into a Roth IRA first (because you can always withdraw the contributions to a Roth IRA tax and penalty free)
All good advice as well, but I'm working under the assumption that the tax advantages will outweigh the costs of the funds unless they're something crazy.
I'm pretty annoyed, I just went from a company with a 401k cost of .07% to one that is .25% on top of every funds cost (which average about .08% each for the ones I'll be allocating to). So I'll be paying roughly .33%, or $3.30 for every thousand I have invested, even though they aren't actually doing anything.
I think my new strategy is to max out a 2014 Roth IRA first (I think I have til March?), then go max out the 2015 Roth, then start contributing to the 401k since I don't get the company match until I've been here a year.
mtn wrote:BoxheadTim wrote: While maxing out a 401k is generally very good advice, just keep in mind two things: - Please, please make sure that the fees are reasonable (low, in other words). Putting a lot of money in a high fee 401k is you screwing your future self. - If you don't have any savings, put at least $1000-$2000 in a regular savings account for emergencies or start putting money into a Roth IRA first (because you can always withdraw the contributions to a Roth IRA tax and penalty free)All good advice as well, but I'm working under the assumption that the tax advantages will outweigh the costs of the funds unless they're something crazy.
The problem is that the tax advantages (which are just a deferment) are essentially a one time event, whereas the fee structure of the fund and the 401k wrapped around it will affect the overall growth of your investment for decades. The impact of the fees is actually surprisingly large, but unfortunately I can't just post the charts that show this, at least not unless I can get permission from my employer to do so and I don't think I can get that.
However here's a link to a handy calculator to show that: http://buyupside.com/calculators/feesdec07.htm
I haven't verified the results but a quick glance suggests they're what I'd expect. The calculation isn't that hard 
. The impact is pretty impressive - with the 0.33% fee you mentioned and an average 5% annual return, you lower your overall return by about 3.5% over the course of ten years. Try a 2% fee and you're looking at an 18% lower return with the same assumptions. That's a pretty massive impact that a lot of people forget about (or have no choice if their employer only offers high cost plans).
mtn wrote: I'm pretty annoyed, I just went from a company with a 401k cost of .07% to one that is .25% on top of every funds cost (which average about .08% each for the ones I'll be allocating to). So I'll be paying roughly .33%, or $3.30 for every thousand I have invested, even though they aren't actually doing anything.
That's not that bad and not what I'd call high fees. There are a fair number of plan providers out there that happily charge you a couple of percent per annum.
Either way, less fees, mo' money down the road.
mtn wrote: I think my new strategy is to max out a 2014 Roth IRA first (I think I have til March?), then go max out the 2015 Roth, then start contributing to the 401k since I don't get the company match until I've been here a year.
IIRC you have until tax day to put in 2014 contributions, but I'm not a financial advisor or "tax dude" so I'd check a more reliable source.
I think its difficult for some people just not to keep up with the Jones'. You may say "But I drive a normal car?" Ok, is that a new car? Or a normal truck? Can you deal with driving a car?
I don't buy anything fancy, just a 42" flatscreen, a few video games every month, expensive microbrews. This attitude gets people in debt. You've gotta be a cheapskate and start to look at those pricetags.
My vice is food. I just can't help but get both quality and quantity. My grocery bill is steep. My car is cheap. My bicycles are kinda pricey, but they don't require insurance, inspections, etc.
Lately I've been successful in paying 4x my minimum payment on student loans (my only debt). If the wife gets a new job else-where that'll all go to waste if I can't find a job where we end up.
I go through a yearly freak out about budgeting and this damn thread came about just as it was happening this year. Thanks guys, now I HAVE to do something about it.
I have found that the best way to save money is to refrain from spending it. Naturally, this will make you the target of every corporation everywhere whose sole purpose is to extract all of your money. They are assisted by our society, which will mock you for carrying anything but the latest "smart phone" or driving a car older than three years. Resist these evil forces, and you will find yourself well on the way to prosperity.
1988RedT2 wrote: I have found that the best way to save money is to refrain from spending it. Naturally, this will make you the target of every corporation everywhere whose sole purpose is to extract all of your money. They are assisted by our society, which will mock you for carrying anything but the latest "smart phone" or driving a car older than three years. Resist these evil forces, and you will find yourself well on the way to prosperity.
+1,000,000 (get it? ) This is the right answer! I don't think corporations sole purpose is to extract money, but the rest is bang on.
Unfortunately, those same people who mock you for packing your lunch, not having new cars and phones and call you poor won't ever equate those life choices with saving money. Ah well.
Flynlow wrote:1988RedT2 wrote: I have found that the best way to save money is to refrain from spending it. Naturally, this will make you the target of every corporation everywhere whose sole purpose is to extract all of your money. They are assisted by our society, which will mock you for carrying anything but the latest "smart phone" or driving a car older than three years. Resist these evil forces, and you will find yourself well on the way to prosperity.+1,000,000 (get it?
QFT
(both posts)
In reply to Hungary Bill:
Agreed. Save by not spending. I'm currently at a strange point in my financial life. My house is paid off and I only have one real "debt" - my '08 Grand Caravan payment which doesn't amount to much. My regular expenses (utilities, insurance, etc) are roughly 30% of my take-home pay. This leaves me with a fair amount of expendable income - more than I've ever had in my life by far.
I have a number of projects I want/need to do: car repairs to the classics, tools I'd like to buy, house repairs, new bikes, guitar stuff, etc. I can easily afford to do any one or maybe two of them - but not all of them. I really want a new race bike for the 2015 season, but every day I get home and can't make the call to order the frame (about $2000). Since I can't decide what I want to do, I don't do anything... So my savings are now close to an all-time high. Then I get this odd feeling where I look at my bank balance and just want to see it keep increasing. I now understand how so many of the ultra-rich can turn into "stingy" types.
I always look at any new purchase and question if I "need" it or just "want" it. If it's a replacement for something I already own I question whether or not the old one is still functional. And then I'll dither over a decision for a long time. While I believe my behaviour is prudent ,others call me cheap. I don't care. My "system" works. I saved money every year but one from the day I graduated until I retired (at 56). The same people that would tease me are still working and will question me on how I managed to retire a decade ahead of them. Duh! I'm living off my pensions and savings, while still making a hefty mortgage payment. Three years from now the house will be paid off and I'll have $1500 a month extra ! And I'll probably just put it in savings.
Gearheadotaku wrote: If you can't pay cash, you can't afford it.
And this is great advice. Except for my first home, I have never bought anything that I couldn't write a cheque for.
my biggest expenses are food are my car, not performance wise just keeping it running... I need to budget my food better, I like to eat out a lot and that can add up very quickly. my car should be in good running condition now even though it has 210k, I am confident I just did all the major stuff in the past 2 months ( fuel pump, alternator, throttle body, front brakes. my cost on parts ~1500$... wholesale and my own labor-free) i bought a nice TV a while back, but thats it. never anything crazy, just food
You guys just have it all wrong. Here's how you save money: A 20% off sale at Dillards!!! You can get a $1000 purse for only $800 and save $200. Now that right there is saving money.
Eat at home. A LOT. My brother is a wonderful human being but stays flat broke. Why? One reason is he and his GF eat out ALL. THE. TIME. When lunch for two is $15-$20, dinner $25-$30 and you do this eight or more times a week man that is some serious scratch. Like this: $80 for 4 lunches, $120 for 4 dinners, that is $200 a week right there.
There is also self discipline needed and sometimes this is hardest of all, a little help is A Good Thing. For instance, I liked the idea of having $ go straight from my check to a savings account each week, that way I never saw it. The last company I worked for would match $10 a week for Christmas Club, the employee had to put in a minimum of $10 with no max. So I had HR take $50 a week, when I got the check at the end of the year that is what my dad used to call 'found' money and I'd deposit most of it in my savings account. Same with my tax refund and a couple times a year part of a larger than expected commission check. The ONLY time I touched that money was to pay my property taxes and insurance on the house and it got replaced the next year via the method outlined above. So when I got sick and couldn't work, I had a large sum to help with the bills. So far I have had to barely scratch it.
I finance my racing via buying/selling stuff, my savings and house bill money are OFF LIMITS. If I can't pay for a car part etc cash, well I just don't buy it. I have seen far too many people race on a credit card or take 'living' money to race, that's not good. A motorcycle racing buddy always had the latest and greatest, I was talking to his wife one day and mentioned that. She got this odd look on her face and said 'yeah but the couch springs poke you in the ass'. Hmmm... misplaced priorities, anyone?
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