Who here is good with money?

And how did you get that way?

Another thread got me thinking about something I think about all the time. Money. You see growing up we didn't have a lot. My Dad was disabled by the time I was born and my Mom by the time I was five. My youngest sister was eighteen and joined the Marines before I was one so it was just the three of us. We lived off of whatever disability they got. The house was paid for and we got by.

In my mind money didn't really mean anything. It was never something I aspired to or strove for. I was never taught about it at home and certainly not at our wonderful public schools.

I started working when I was fourteen so I could buy a car when I turned sixteen. I saved enough and convinced my parents to let me use the little bit they had saved for my college to help get my first car. So for $1200 I bought a 1980 Trans Am that was rusted out and had a 301 with cracked heads. Bought it when I was fifteen and had it running great by the time I got my license at sixteen. From that point on and working two jobs through high school I spent every dime I made on cars. Buying, selling, fixing up and just generally blowing money left and right as fast as I got it on cars. Until I met my future wife that is. My Mom would say occasionally " I don't know why you blow all that money on those cars" I'd say "You know what I'd do if I had all that money back?" "What?" she would say " spend it all on cars". And I didn't really know I was doing anything wrong.

Never really had much debt until I got married and again didn't really know I was doing anything wrong. I very seriously doubt I would have went in debt at all if I wasn't trying to impress my wife who's family has money. Even though it wasn't the case, in my mind I was attempting to keep her happy by trying to keep her close to the lifestyle I thought she was accustomed to.

Any way I feel like I'm starting to get a hold of my finances and sometimes I wish I could go back and teach myself how important this stuff is. Especially now that I have a son.

I feel like I'm starting fifteen years too late. I wonder what it would be like if I had the understanding then I do now.

So when did financial maturity kick in for you?

Who taught you how to handle money?

What are some of the lessons you think every young person should know about money?

For me at least, money has been something I've had to learn to manage the hard way. My mother in particular is pretty poor at fiscal discipline, and despite having two parents working full-time as kids we never seemed to have a bunch of money.

I've made my own mistakes and learned from them as a result. I wish I had never said "yes" to that credit card when I was a sophomore in College. I wish I had the foresight to see teaching was a lousy career choice, rather than spend an additional 6 years figuring that out the hard way.

All that said, I feel my wife and I are beginning to be in a good place now. We have a good amount of savings, we are saving for retirement, and we are paying back our monstrous school loans and mortgage. We are both in reasonably well-paying jobs with a good employment outlook. Being debt-free in the next 10 years really is not in the cards unfortunately, but we'll get there.

Perhaps the number one thing I think everybody needs to learn, is that spending money on things will not make you as happy as spending time on living. What if we all quit spending money on iPads, cable TV, smartphones, new cars, giant houses? What if, instead, we spent some time together with our friends and families?

Of course this is all coming from the guy thinking of plunking thousands of dollars down on a Citroen, so take it all with a grain or two of salt.

Disclaimer: I'm only 22. I don't own a house, I am not married, I have no kids. I'm 2 months graduated from college and thankfully have a job.

I'd like to think I'm good with money. I remember when I was about 10 or 11, I really wanted a CD. Dad paid me 10 cents a week; I went out and 2 hours later had enough weeds to buy my CD. I've had a job since I was 13-22 caddying, and since 18, been an ice hockey referee. I'm not sure when financial maturity kicked in--probably about the age of 15 when I was looking at the cost of college.

My dad told me early on that I had to save 90% of what I earned. After that, he picked up what I couldn't for college. Nowadays I obviously can't save 90%. It is closer to 55%, and soon will be less than that as I move into a nicer place. I'm not saving for college, I'm saving for a house and retirement. In any case, I'm saving as much as I can for as long as I can. That is my advice--save.

That being said, I don't live a boring life--I basically have it set up so that after my paycheck divides into savings and living expenses, I'm living more or less paycheck to paycheck. The reffing money is just gravy--that is my entertainment budget.

Other things I've learned: Don't go into [much] debt for a depreciating asset. An appreciating asset? Sure, as long as you aren't biting off more than you can chew. Also, note that this does not mean "don't take out loans". If you can do better on the stock market (either in dividends or simply growth) than the loan rate, you should take the loan.

Now, I'm not stupid here. I realize that I'm extremely lucky. My dad paid for whatever college I couldn't, he paid for my car, he still pays for a lot of my expenses (that is slowly being phased out). His dad did the same for him; I'll do the same for my kids--so long as they put forth the effort. I could go off on a long rant about this, but I won't--I'll just say that if you are able, and if your kids work hard, there is really no reason not to help them out.

Oh, one thing I'd recommend doing: Start tracking where your money goes. Every. Single. Cent. If you know where it is going, you know where you can curtail your spending habits.

mtn wrote: Oh, one thing I'd recommend doing: Start tracking where your money goes. Every. Single. Cent. If you know where it is going, you know where you can curtail your spending habits.

And this has never been easier. We recently signed up for a Mint.com account. Just the simple act of figuring out exactly how much you are bringing in, and how much you are spending on what, will instantly make you a better money manager.

i'm really good at using money for what it was invented for- spending..

Pay yourself first.

You pay rent/mortgage, insurance. You pay the government before you see a dime. You pay the electric bill, cable, gas, sewer, trash, phone, groceries. Do you pay yourself?

Set up a savings account, or a fireproof safe with cash.

Pay yourself first. Let the other a$$holes fight over who gets paid next. (I'd go for shelter, then food, then creature comforts. A private jet ride for a politician is way down the line.)

The most important, number one lesson? If you don't have it, don't spend it. Say no to crack... I mean consumer credit. That $8 meal at McDonald's or that new TV, bought with a Master Card at 15-20% interest, is not wise spending. Credit has it's place, but buying junk isn't it. Use it wisely. That lesson was taught to me by my father and reinforced by a credit card when I was 20.

After that, it's more about what you are comfortable with as far as investing and saving. Personally, I haven't had any money in the markets since '06. I thankfully pulled it all to start a business and after the crash I never put it back. I'm staying invested in myself and more tangible assets. Personally the stock market is too much like a shell game for me. I'm probably wrong, and many people would call me crazy.

My current and future investing is going to be in property. Not for the increase in value, but for rental income. I have one rental house now and will add to that as funds become available. The rental generates enough income to pay for itself and then some. I'm in the process of saving and planning for the next one. (This, to me, constitutes a wise use of credit) The master plan is for the rental units to be paid off about the time I'm ready to retire. If I can average $1000/month rent and have 10-12 rentals...you do the math.

Disclaimer: I'm not, in any way, shape or form, a financial genius. This is the internet, any advice given is worth exactly what you paid for it.

Oh, and set aside some fun money. It doesn't have to be much, but it needs to have your name on it and yours alone. Set aside some for the wife too. That's the grease that makes cash in the bank, stay in the bank.

I've always been a saver. I'd say I inherited this from my parents. My brother, on the other hand, didn't. He has always been a spender. My father says he has one son that was born with a closed fist and one that was born with an open one. Having both been brought up in the same family, it is hard to say why we're so different.

While I have been accused of being cheap on occasion (deservedly so, at least at times), I have never regretted not being a spender, whereas my brother most certainly has. Especially when he has had to borrow money from my parents to provide for his kids. I don't see him ever retiring, while I think I have a shot.

I can't tell you what I've done, particularly, I don't have a method. I'll tell you one thing NOT to do if at possible, and that is to get divorced. That was the single greatest financial hit I've taken. Fortunately I got it done when I was young enough to repair some of the damage.

Remember above all that time is only your friend when you have a lot of it. Although it is harder to save when you are young, every dollar you put aside early is worth several you won't have to put aside later.

I learned the concept of "deferred gratification" early on and am much better off for it.

I like to think of myself as 'thrifty' vs 'cheap'.

As I begin to see 50 on the age horizon, a few things I've learned: You can't start a retirement account soon enough. Don't buy more house than you need. Don't buy stuff to impress people you don't know or like. Don't borrow money or use credit except for a home or (rarely) a car. If it's the latter, don't borrow more than 50% of it's value so that you are never 'upside down' in case it gets totaled or you have to sell it. Learn to do things for yourself instead of just stroking checks to others, but also know your limitations. No sense trying to install a water heater if you can't sweat pipes (I can't). Make a budget, and allow yourself a play money account for things like racing. And then stick to it. I may only race a few times a year, but when I do it's never financially painful, which makes the enjoyment much richer. Marry someone who has the same financial outlook as you (or don't, and live with the inevitable disaster). And, buy or borrow this book:

Best advice I ever got: buy the best house you can afford and drive the cheapest car you can get by with. Why should you care what the neighbors think about what you drive?

Also tear up all those damn credit card offers. It's nearly impossible to get by in life without a CC, but having several is just stupid. I got my tail in a crack with those damn things about 15 years ago, thankfully my house had jumped enough in value to pay that off when I sold it. That was my wake up call that it was time to be more sensible.

If you get a windfall, even a fairly small one, put it aside.

Everyone rails on credit cards and credit.

But they are not evil, and can save you hundreds of thousands if you properly manage them.

How? Credit score.

I get the feeling that very few people really run the numbers when they get a mortgage- if they did, it's a very simple excersize to see that good planning and work can save you 10's if not 100's of thousands of dollars.

One key to that is to have really good credit- so besides paying your bills all on time, you manage credit cards really well. That results in getting access to better finacing when you really need it (as has been posted otherwise).

while it's been posted many, many times about multiple principle payments, it is sometimes lost that it's also important to reduce your required payments as much as you can- which means the lowest interest rate you can get. Pay off as much as you can- sure. But if an emergency happens, it's good to know that you can peel a few hundred off of your home bill for as long as you need to.

And IF you need to finance a car- which can work in your favor if you DO THE MATH- you get access to the best numbers. The 0% offers are not given to everyone (as an example).

Other than that, the best I can suggest is to have a large amount of fixed $$ that go to a savings account, and live off the rest. As you get used to it, you'll find ways to live off that better, and may be save more.

But the best of the best- do your math. know exactly where your money goes. You don't need a website to do that, and you don't even need a spreadsheet- just a piece of paper and elementary math skills. If you know that, you'll know where you can save. You may also find that some areas that you think are important really are not (for me, it's gas- even though I drive 60 miles a day, the cost of gas, even at $4/gal, isn't that large of a user- especially with my wife biking).

Excellent advice there ddavidv, and I follow most of it except the credit thing. Which has me where I don't want to be, so I will be picking up that book. My only comment is that sweating pipes is incredibly easy! You should give it a try. Also, there are SharkBite connectors that eliminate the need for sweating, and copper expoy that can be used in place of solder. If you can change you own oil or tires, you can swap out a water heater. The hardest part is getting rid of the old one.

Curmudgeon wrote: Best advice I ever got: buy the best house you can afford and drive the cheapest car you can get by with. Why should you care what the neighbors think about what you drive? Also tear up all those damn credit card offers. It's nearly impossible to get by in life without a CC, but having several is just stupid. I got my tail in a crack with those damn things about 15 years ago, thankfully my house had jumped enough in value to pay that off when I sold it. That was my wake up call that it was time to be more sensible. If you get a windfall, even a fairly small one, put it aside.

Actually, I slightly disagree with that. Unless you really need it, I say that if you get a windfall, put 75% of it away. Enjoy a little bit of it. Of course, that is assuming you're in a position that allows for it.

I somehow figured out how to get great at MS Excel...so I built myself a spreadsheet for a 5 week budget - I can see what bills are due when, and move spending around the different weeks to make sure things are paid in time. I can manage how much is left over for Dining out on the weekend or catching a movie. My version works for me, and has kept me pretty safe for about 3 years now. There are other templates available online if youre not computer savvy - I would feel lost without mine. Yes its a crutch, but I get by without any CC use at all in the 3 years that Ive been using it, and maybe 3 total overdrafts in that 3 years (Ive lost entire paychecks to overdraft fees before - I was stupid in my 20's).

Toyman01 wrote: My current and future investing is going to be in property. Not for the increase in value, but for rental income. I have one rental house now and will add to that as funds become available. The rental generates enough income to pay for itself and then some. I'm in the process of saving and planning for the next one. (This, to me, constitutes a wise use of credit) The master plan is for the rental units to be paid off about the time I'm ready to retire. If I can average $1000/month rent and have 10-12 rentals...you do the math.

Feel free to make a rental property thread as I think this will be my next venture.

For me, it was a combination of things. My mother is fairly conservitive financially - she lives well below her means. My father, on the other hand, has the financially responsibility of a 12 year old (at best...). Growing up, I fell somewhere in between.

I've had credit cards since I was 22 and had a balance for a good portion of that time up until about 8 years ago when I managed to pay them off and keep it that way. Sometimes the debt was worse than others. Instant gratification is an addictive drug. It's easy to say "don't do it" but I've been there and I know how easy it is to whip out the plastic when you see something you think you need. Being older and more financially secure now (I make more money than I used to), I am able to splurge more without borrowing, so the debt risk is a lot lower. I still use credit cars a lot and have 4 active ones for different reasons, but all are paid off each month.

Tracking, planning and online bill-pay have helped me a lot. Especially online bill-pay. When I get paid, I enter the payments for all of my bills allocated from that paycheck into a spreadsheet to know exactly how much money I have left for fun and saving. I usually schedule these payments as soon as I get the bill, actually. Some bills like my mortgage may be scheduled online a month or more in advance.

I track where I spend money on an old Excel spreadsheet I started back in 2001 that is basically not much more than a glorified and expanded check-book ledger. I balance this "checkbook" almost daily. I've thought about using something like Quicken, but I'm used to this and it works for me. I use past data to plan for when bills will be due and make sure to budget for those. For example, April is historically a "heavy bill month" with a number of annual bills due, so I'm sure to limit my spending leading up to that so I have the funds to pay them without dipping into savings. My insurance bills can be paid either all at once - which is the cheapest option - or quarterly or monthly - with a $5 fee added to the additional payments. I always try to make sure to pay the whole bill at once. My big one - home insurance - is due in April.

I still borrow money and go into the debt from time to time, but in a more controlled and planned manner. I'll go for 0% financing deals when I can get them. I borrowed money to buy my GT6 and replace the g/f's garage doors (my fault), but paid off the loan within a year. The idea of a car loan doesn't bother me too much, although I don't like the idea of anything more than a 4 year term.

In the end, a number of factors have influenced my current habits. My g/f is more responsible - although I really have no idea how she manages to pay her bills - we don't really discuss money very much. The lessons from my own problems with credit card debt, although they were minor compared to some stories I hear. My father's more serious debt problems and inability to manage money which eventualy led to his downfall. The memory of all the money I inherited from my grandparents and how I have so little to show for it. The general tendancy to be more conservative as one ages. Lastly, the realization that the warm, fuzzy feeling you get from looking at a bank balance and knowing all the bills are paid is much longer lasting and better feeling than instant gratification followed shortly by the "how will I pay for this??" dread.

Keven wrote:

Toyman01 wrote: My current and future investing is going to be in property. Not for the increase in value, but for rental income. I have one rental house now and will add to that as funds become available. The rental generates enough income to pay for itself and then some. I'm in the process of saving and planning for the next one. (This, to me, constitutes a wise use of credit) The master plan is for the rental units to be paid off about the time I'm ready to retire. If I can average $1000/month rent and have 10-12 rentals...you do the math.

Feel free to make a rental property thread as I think this will be my next venture.

Do your math.

The info I see about rental properties- the income is not very high, relative to what is owed. It's great that you can get a property, and earn some money, but unless you do a great job in the property, you are not going to make much of a living just owning rental properties. To have 10-12 units to rent means you start with a LOT of money to get into that game.

While you will build equity, many states have 2nd property rules for taxes that make them very, very high on your non-home property.

To me, money is like horsepower: I think I'm good with it but I'm not sure because I've never had a meaningful amount to manage

I can say it isn't my wife. I probably am not much better, but I can at least see what is upcoming to be paid instead of doing the "Oh E36 M3. I need money now to pay this!" BS that normally happens with her.

About windfalls: I used a windfall to basically pay cash for my house, which needed a lot of work. That pretty much soaked up all my liquid cash, so I used two credit cards to buy the materials etc to fix the house. For various reasons, since I paid cash I have to wait one year before I can refi the house, when I do the higher interest credit cards will be paid off with a much lower rate mortgage and I will keep the smaller limit card of the two. That means I will have a house with an enormous amount of equity and a credit card/home equity line for emergencies.

The rest of it: since I currently do not have a house payment I am paying higher than minimums on the cards and also socking away cash. I have a goal to have a sizeable liquid cash cash reserve by the end of the year.

I can't join the 401k program here just yet, but I have a rollover IRA. I am working on a direct deposit to park $50 a week in the IRA.

EDIT: Future plans include a retirement home somewhere near the mountains. The equity line will also make it possible to buy a piece of property and get started on a house, then sell this one.

It all boils down to spending less than you make.

I used to be terrible, just about pulled myself out of debt exluding student loans (which at $119month at 1.9% is not worth trying to pay off early) and our inexpensive house payment.

I have a car payment, but only because even with it, I can still put 24% of my take home in savings and still put 4% in my 401k with a match from my employer.

In another 12 months I'll have my savings account where I REALLY want it, and I'll cut down what I put in savings and up my 401k contribution. Then we will likely start making double payments on the house, or saving up for the wife to open up her own place vs working for someone else.

Working on it... down to 1 car payment, 1 student loan payment and a mortgage between my wife and me. We really need to refinance the mortgage.

As has been said, much of it is simply discipline, and possibly "gamifying" your budget. By that, I mean, set a goal, eg being debt free, and constantly evaluate your actions against that goal. That way, you can always track your progress towards that goal.

There's a lot of freedom in being debt free.

scardeal wrote: There's a lot of freedom in being debt free.

trOOf. That's my goal; debt freedom. That's one good thing to do with a windfall, pay off debt. Particularly high interest CC debt.

Other than medical emergencies, this is the kind of stuff that gets more people in trouble than anything else:

http://www.luckymag.com/

For guys, it's race cars.