and another $5k in a company fund that I'll be vested in at some point if I don't leave the company.
My company does this and its incredibly obnoxious. Its one of their attempts at long term retention since they tend to pay the programmers a bit below market rate. I have 3 years in and I'm 20% vested. A certain amount is put in each year as part of profit sharing. As I understand it, I'd get 1500 if I left now because of that vesting. Its not nothing but nothing that important. Then I hear that people who have been here 10+ years pretty much all have a minimum of several hundred thousand dollars in this account and that people routinely hit the $1,000,000 cap and there's a staff person in our 3000 person company who specifically handles these arrangements as her primary job function (ed- as in she transfers the funds to IRAs/mutual funds/whatever as the staff member directs, but the staff members doesn't have access to 75% of these excess funds or something like that).
Meanwhile they don't offer a 401(k), matching, financial planning assistance etc.
So basically if I stay at my boring job that I don't really like for decades I should be OK. If the company doesn't go under. And if they don't change these policies substantially. Or get sold.
I went ahead and edited my income in. I guess it doesn't really matter if people know.
But now I'm jealous..
/cry for being the same age with half the income. Ahhh well. I did just graduate....
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YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
edited April 2010
Is there any problem with having both a 401k and an IRA? My company sponsors the 401k and I'm putting in their match limit. But if I want to put some more by and maybe even hopefully somebody retire a bit early, is that allowed?
Also, I'm looking into some (I guess) mid-term investments, about five years or so. We're in a condo now, but around then we'll probably be looking into getting a house if the real estate market isn't still on its ear. What would the internet experts here recommend?
What sites do people use to invest? I am intrigued by the OP, but I have no clue how I'd go about investigating or investing in a Roth IRA. If you have hard times or want to dip into your IRA to buy a house or anything, is it easy-ish to get your money out? economics is scary >_>
Assets
I'm 26. I make $63k a year. I have about $25k in my 401k, and another $5k in a company fund that I'll be vested in at some point if I don't leave the company. My company match on the 401k maxes out at 4% when I put in 8%, but I'm currently putting in 13% (for 17% total). I have about $2k in some stocks I was messing around with, and about $5k in checking accounts. I'm planning on getting out of those stocks, as I found out I'm not as interested in playing the market as I once thought. I own my car and my crap, but live in a rented apartment.
Have you been contributing 13% since you started? I just got a job with a 401k (TSP really, but I guess its close enough). If we contribute 5% that 5% gets matched 1:1, anything above that doesn't get matched. I have been contrubuting just the 5% and I'm not sure if contributing above the matching is a good idea, or if that extra money would be better invested elsewhere. If I did raise it to 13% I would have close to the 25k by 26, but i'm wondering if I'm better off just going with the 5% (10% after matching) and putting that extra 8% in some other form or retirement account.
/Has very little undestandings of 401ks and similar retirement plans.
Have you been contributing 13% since you started? I just got a job with a 401k (TSP really, but I guess its close enough). If we contribute 5% that 5% gets matched 1:1, anything above that doesn't get matched. I have been contrubuting just the 5% and I'm not sure if contributing above the matching is a good idea, or if that extra money would be better invested elsewhere. If I did raise it to 13% I would have close to the 25k by 26, but i'm wondering if I'm better off just going with the 5% (10% after matching) and putting that extra 8% in some other form or retirement account.
/Has very little undestandings of 401ks and similar retirement plans.
The generalized advice is;
401k to match
Roth IRA to max
401k to max
More complicated shit
Just go down that list until you run out of money. The reasoning is that your 401k match is essentially free money. After that, you invest in a Roth to diversify your post-retirement taxation. 401k money is untaxed when you contribute and taxed when you draw on it after retirement. Roth IRA money is taxed when you contribute (you pay into it from your post-tax earnings that is), and untaxed when you draw on it after retirement. So you are getting tax diversification by doing both.
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firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
What sites do people use to invest? I am intrigued by the OP, but I have no clue how I'd go about investigating or investing in a Roth IRA. If you have hard times or want to dip into your IRA to buy a house or anything, is it easy-ish to get your money out? economics is scary >_>
I use Schwab - for investing and banking actually. I could be wrong on this, but for a Roth, you can access up to what you've contributed without penalty, since you've already paid taxes on it. But you'll be penalized if you withdraw any gains - say from paid out dividends or whatever. Someone could probably put a finer point on it for you.
I was actually thinking about this recently. I've got a secure job that's currently paying me about $2800/mo. with odds good that my pay will double inside of twelve months. The stability is kind of unsure (it's a tech startup), but I've been able to work out a budget with some certain goals in mind:
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
To accomplish this goal, I have a very basic strategy (keep in mind, also, my income is as a contractor, so not taxed on payroll). I deposit my entire check to savings, and then transfer half of it to checking (for those counting, about $700). That half is all I have to work with until the next check.
2. Before investing significantly, make sure that emergency funds are also set up. I'm also building smaller accounts that will cover hospital costs (a fund with $2,000) and car maintenance costs ($1,000). Now, while I'm insured, given the state of insurance companies in America I find it prudent to not plan on getting covered. With a decent living wage, these sorts of funds can be built in around 3 months of scrupulous saving, potentially less.
3. Diversify your banks. My major accounts are spread across two banks: Chase, and a small credit union in my hometown in Ohio. With Chase, I see bigger returns on my savings accounts but there is the risk that, as a bigger bank, they'll cock everything up. When I need an exponential return quickly on money, I use that bank. I use the small credit union as a "lock box" of sorts, and that's where I'm building the year's income in savings. I won't use that account or checks/cards unless it's an absolute emergency (food or gas and my paycheck is late, is what happens).
4. Don't be afraid to be risky! This is the crux of why a large amount of savings is important, at least in my view. Once you've accomplished some financial goals, you can afford to be riskier with jobs. The position I work now, that's currently paying me so (relatively) well, I have because I was able to work for the company for about 5 months with no standard pay (the first 3 months I worked, they covered nothing, and the latter 2 months they could only cover my rent). Because I had the money to risk, I was able to basically get to my dream job years ahead of the "standard" timeline for it.
As to accruing wealth, I know this is heresy, but I'm not too concerned with it right now. Working at a startup has really redefined how I want to use my money. I'm actually using the 5 months' backpay they owe to get another division of the company started up, and once I've got my "I need this money saved up" taken care of, I'll be establishing a non-profit to help local game design contests attract people by offering cash prizes. To me, it's not about accruing wealth, it's about what I can do with my money. Not necessarily buying good cars or nice houses, but how can I use my wealth to further the goals of my career (namely, redefining how work's done in my industry and pushing the field of game design). I imagine that, in ten years or so, this will change dramatically.
Is there any problem with having both a 401k and an IRA? My company sponsors the 401k and I'm putting in their match limit. But if I want to put some more by and maybe even hopefully somebody retire a bit early, is that allowed?
I highly recommend having both. They are different vehicles for retirement investing, but ultimately reach the same goal. If you're young, you should have a Roth IRA instead of Traditional IRA.
The company 401k may not have the options or mutual funds that are best for you. Companies that have (host?) IRAs typically have many more funds to choose from. I have my Roth IRA through Vanguard, and they offer some interesting emerging markets funds that my 401k does not.
Also, unless you have a "Roth 401k", your 401k gets taxed like a Traditional IRA. You should definitely have a 401k for the company match since that is free money, but your growth will flourish tax-free in a Roth IRA. If you leave the company with a big vested 401k, you can always put $5,000 (yearly IRA limit) from that fund (as it grows) into the Roth IRA over time.
Assets
I'm 26. I make $63k a year. I have about $25k in my 401k, and another $5k in a company fund that I'll be vested in at some point if I don't leave the company. My company match on the 401k maxes out at 4% when I put in 8%, but I'm currently putting in 13% (for 17% total). I have about $2k in some stocks I was messing around with, and about $5k in checking accounts. I'm planning on getting out of those stocks, as I found out I'm not as interested in playing the market as I once thought. I own my car and my crap, but live in a rented apartment.
Have you been contributing 13% since you started? I just got a job with a 401k (TSP really, but I guess its close enough). If we contribute 5% that 5% gets matched 1:1, anything above that doesn't get matched. I have been contrubuting just the 5% and I'm not sure if contributing above the matching is a good idea, or if that extra money would be better invested elsewhere. If I did raise it to 13% I would have close to the 25k by 26, but i'm wondering if I'm better off just going with the 5% (10% after matching) and putting that extra 8% in some other form or retirement account.
/Has very little undestandings of 401ks and similar retirement plans.
This is mostly correct. Extra money in a 401k (that is not matched) is basically like a Traditional IRA with your company's limited choices.
But you should always take the free money. Any sort of match is kickass.
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
$64,000 question--
Where do you get that money?
I'll admit I don't quite understand the question. The money I had in savings, or the money I'm currently earning?
The shit hitting the fan statement was made in no small part because, well, up until recently I've not been able to maintain steady employment. I'm doing far, far better than my friends (and most of the people I went to college with), but I've learned to plan really only on a month by month basis. This has, I'll admit, negatively colored my perception of saving for the long-term especially right out of college. Frankly said, most of the people I know (including myself) don't have the resources for long-term savings and likely won't until late 20s or early 30s.
What sites do people use to invest? I am intrigued by the OP, but I have no clue how I'd go about investigating or investing in a Roth IRA. If you have hard times or want to dip into your IRA to buy a house or anything, is it easy-ish to get your money out? economics is scary >_>
No and this is a downside to a traditional IRA. Traditional IRAs big advantage is you put the money in pre-tax. However, withdrawing the money is taxed. And there are disincentives to doing it before retirement age.
In addition to the distribution being included as taxable income, the IRS will also assess a 10% early distribution penalty if the participant is under age 59½. The IRS will waive this penalty with some exceptions, including first time home purchase (up to $10,000), higher education expenses, death, disability, unreimbursed medical expenses, health insurance, annuity payments and payments of IRS levies, all of which must meet certain stipulations.
Its a good idea to have several months worth of income savings for rainy day stuff. That's what complicates the idea of saving huge chunks your income for retirement - its bad planning because you're ignoring all the things you need to save for in your regular life (unemployment, illness, college, buying a home, having kids, major repairs of home or car, etc)
amateurhourOne day I'll be professionalhourThe woods somewhere in TennesseeRegistered Userregular
edited April 2010
Just my .02
Everyone saying that a million dollars when you're 65 isn't as good as it used to be isn't considering all of the variables.
Most likely, at 65, you're on the tail end, if not fully paid off, of a 30 year mortgage. So you no longer have house payments. Your kids are most likely out of school if you were helping with that (and you should have had additional savings/investments to cover that anyway)
In addition to the retirement savings, you'll also have social security and company retirement (if applicable) which seperately are not much, but added together, and then added to your savings, make your golden years very comfortable.
I'm 26 and make ~50K a year. I put aside 8 percent into my 401 (matched at 4 percent) and a Roth. I haven't started additional savings yet because I actually am saving, but it's going towards a down payment on a house in two years so that I can try to have 20% down
After that I'll be putting aside $600 a month into an additional savings account, but I have no idea what yet. Probably a mutual fund or bonds.
edit: actually, before I start the investment, I'm going to save the $600 a month for a year to have several months of income in the bank in case I lose my job.
All of this is based solely on my salary. Should my wife enter the workforce full time, that will change things.
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
$64,000 question--
Where do you get that money?
I'll admit I don't quite understand the question. The money I had in savings, or the money I'm currently earning?
The shit hitting the fan statement was made in no small part because, well, up until recently I've not been able to maintain steady employment. I'm doing far, far better than my friends (and most of the people I went to college with), but I've learned to plan really only on a month by month basis. This has, I'll admit, negatively colored my perception of saving for the long-term especially right out of college. Frankly said, most of the people I know (including myself) don't have the resources for long-term savings and likely won't until late 20s or early 30s.
The money you had in savings. I cannot even maintain a rainy day fund of $3-5k at the moment because every time I have a few hundred dollars in savings, I have a minor emergency that costs, guess what? a few hundred dollars.
So I'm genuinely curious as to how to accumulate $15,000 in savings outside of not having any expenses or earning $texas.
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firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
edited April 2010
I need to learn me some bonds. I don't know shit about them. Have stuck with ETFs and a few blue chips so far.
But I need to reinvest my roth monies into something somewhat stable. Thinking short term bond fund, but lack the knowledge.
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YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
edited April 2010
What are some good financial institutions to open a Roth IRA with?
Everyone saying that a million dollars when you're 65 isn't as good as it used to be isn't considering all of the variables.
Most likely, at 65, you're on the tail end, if not fully paid off, of a 30 year mortgage. So you no longer have house payments. Your kids are most likely out of school if you were helping with that (and you should have had additional savings/investments to cover that anyway)
While this is true, being old introduces new costs, especially involving health. And inflation is compound interest too. Most of us are 35 years away from retirement give or take a decade. If we use the last 35 years as a basis, 1,000,000 today will be worth the equivalent of 200-250K in today's dollars then. That's not enough to live on comfortably for a decade or three even if you only have to pay property tax for shelter.
What are some good financial institutions to open a Roth IRA with?
I use Vanguard. No problems with them. Many choices to fit my investment style, and the interface is pretty easy. Lots of information and advice readily available.
It's such a common lifestyle to live on credit cards it's baffling. I don,t make a lot of money but I've recently managed to get rid of all my debts. it's been a few months now and so far I've managed to never purchase stuff I can't pay and always have some actual money available.
I'm not investing much yet (only 25$ a month) but after I move this summer my monthly bills will be drastically lower so I'll try to invest much more.
Yeah, I'm boggled at the living in California on 25k a year and saving $600 a month. What's their rent, $200? In which case, where are they living? Hemet or something? Sharing a place with 12 other people?
Probably living with their parents or relatives, which means they're not independent and any financial information about them is not comparable to an independent person.
It's the same deal with where I live. I make 'okay' money but am completely independent of my parents. Most of my friends still have their parents pay for their cars, insurance, live with their parents, etc. well into their mid and late 20's.
This kind of stuff drives me nuts. Its time to move away from the nest at some point. I have been completely independent from my parents since I was 17. Got married, we made it through college on our own and have careers now. Household income is going to be over 115k this year and we are 24. The feeling is so much better to have made it there on our own and even though we were pretty poor at the beginning of college, we still had tremendous fun and look back at those years fondly.
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MrMisterJesus dying on the cross in pain? Morally better than us. One has to go "all in".Registered Userregular
This kind of stuff drives me nuts. Its time to move away from the nest at some point. I have been completely independent from my parents since I was 17. Got married, we made it through college on our own and have careers now. Household income is going to be over 115k this year and we are 24. The feeling is so much better to have made it there on our own and even though we were pretty poor at the beginning of college, we still had tremendous fun and look back at those years fondly.
Congratulations?
Living at home makes a lot of financial sense. If everyone is happy with the arrangement, then there's no reason to sacrifice it on the altar of independence (tm).
This kind of stuff drives me nuts. Its time to move away from the nest at some point. I have been completely independent from my parents since I was 17. Got married, we made it through college on our own and have careers now. Household income is going to be over 115k this year and we are 24. The feeling is so much better to have made it there on our own and even though we were pretty poor at the beginning of college, we still had tremendous fun and look back at those years fondly.
Congratulations?
Living at home makes a lot of financial sense. If everyone is happy with the arrangement, then there's no reason to sacrifice it on the altar of independence (tm).
Pretty much. If you have the opportunity to live with your parents, you can save a LOT of money that way. If they don't mind it, why should you?
However you should educate yourself before investing. I suggest you pay 10-15 bucks to pick up the book I linked. Learn the basics, then cover your bases, then go from there.
Want to retire and be well off with lots of money in the bank? The key to this is never get married.
On a serious note, I'm married with two kids and we are doing ok...we have four months worth of our monthly expenses stashed in a savings account in case shit hits the fan. The wife has her 401k with the same company for about 9 years now and I have my pension waiting for me when I can retire at the young age of 45. Will we be millionaires at 65? Probably not, but we'll be able to live more than comfortable.
I think someone mentioned it earlier in the thread, but pay off your damn credit cards as soon as humanly possible. Once those are paid off, send an extra $100 or so to your car payments until they are paid off. This is the tricky part, once your car\s are paid off, don't trade it in for a new payment. Ride that bitch into the ground until you NEED a new car. With all that extra money you had going to credit cards and car payments, invest that shit.
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Deebaseron my way to work in a suit and a tieAhhhh...come on fucking guyRegistered Userregular
It's such a common lifestyle to live on credit cards it's baffling. I don,t make a lot of money but I've recently managed to get rid of all my debts. it's been a few months now and so far I've managed to never purchase stuff I can't pay and always have some actual money available.
I'm not investing much yet (only 25$ a month) but after I move this summer my monthly bills will be drastically lower so I'll try to invest much more.
Feels good to not have any debts.
Well what got me fucked is when I was an undergrad, credit was bountiful and no one cared about your ability to pay it back. They had banks giving out T shirts with pot leaves on them in exchange for filling out an application.
Finally out of credit card debt. Woot!
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Deebaseron my way to work in a suit and a tieAhhhh...come on fucking guyRegistered Userregular
Want to retire and be well off with lots of money in the bank? The key to this is never get married.
I've actually been doing a LOT better financially since my girlfriend moved in with the dual incomes and whatnot. What happens once you get married?
Before I got married, I lived in a cheap apartment with a friend and had only what we needed. When I got married, we wanted to have a nice life and bought nice things which we couldn't afford. Then two kids came along....daycare is ridiculous with how expensive it is. It took us quite a while to pay off our debt, but we are finally in a good situation now.
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YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
edited April 2010
Living with somebody else, not necessarily a spouse or parents, can save you a lot of money. Especially if you do meals together. Splitting utilities and rent/mortgage, and it doesn't cost 2x to feed two people. As long as you're both responsible.
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YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
Want to retire and be well off with lots of money in the bank? The key to this is never get married.
I've actually been doing a LOT better financially since my girlfriend moved in with the dual incomes and whatnot. What happens once you get married?
Before I got married, I lived in a cheap apartment with a friend and had only what we needed. When I got married, we wanted to have a nice life and bought nice things which we couldn't afford. Then two kids came along....daycare is ridiculous with how expensive it is. It took us quite a while to pay off our debt, but we are finally in a good situation now.
I think I see your problem. Please see my video on page 1.
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
$64,000 question--
Where do you get that money?
I'll admit I don't quite understand the question. The money I had in savings, or the money I'm currently earning?
The shit hitting the fan statement was made in no small part because, well, up until recently I've not been able to maintain steady employment. I'm doing far, far better than my friends (and most of the people I went to college with), but I've learned to plan really only on a month by month basis. This has, I'll admit, negatively colored my perception of saving for the long-term especially right out of college. Frankly said, most of the people I know (including myself) don't have the resources for long-term savings and likely won't until late 20s or early 30s.
The money you had in savings. I cannot even maintain a rainy day fund of $3-5k at the moment because every time I have a few hundred dollars in savings, I have a minor emergency that costs, guess what? a few hundred dollars.
So I'm genuinely curious as to how to accumulate $15,000 in savings outside of not having any expenses or earning $texas.
Winning the vaginal lottery, as Warren Buffet puts it. Only child of a mother who runs a $15 million/yr. non-profit, and the rest of my mom's side of the family is all entrepeneurs as well. I graduated college with no debt, and my mom had wisely made sure to save about 70% of the money I'd earned or was given. Also, when I was 14, I got $10,000 from an uncle.
So luck, plain and simple, is what led me to have no debts out of college and $15,000 in savings. I burned through most of it moving cross country and remaining unemployed for a while burned more, but it was pure providence that even enabled me to make these decisions. I fully recognize that not everyone can even get a shot at those circumstances.
What I'd recommend for you, though, is figuring out what these monthly expenses are. You mentioned that it's a consistent series of emergencies, well, what are they? Can they be put off for a month? Can you save money specifically for them? For instance, I was in a car accident in December and my car radio was stolen in the same month. Insurance would cover neither. It's only now, in mid-April, that I'm able to repair the damage, get new brakes, a new radio, and whatnot. I saw the need, I knew the damage wasn't crippling, but I adjusted my habits so I could save the money necessary to fix it. I ate out less, I bought fewer things (discovering youtube.com/movies is awesome), etc. Knowing your expenses and planning for them is pretty much 90% of the work.
Or a pension, which pays $X for the rest of your life.
Government (federal/state) job pensions are pretty omgwtf awesome, and military pensions can start after only 20 years of active duty. How would you like to retire in your 40s?
Currently my job still has a pension plan (we pay in 8.5% of our salary at 25 years we can retire at 65% pay or 30/70%) but of course every time a Republican gets into the office I have to start shitting my pants since in the last 20 years they've done nothing but try to deliberately underfund the system or paint me and my co-workers as leeches getting "rich" off the system.
Thank you Christine Todd Whitman and Chris Christie, I hope you're roommates in hell.
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The main expense I have right now is an unemployed fiance, a mortgage (the mortgage came before the unemployment, we're not that stupid), and $60k in student loans racked up by a silly silly me who once thought I could force myself to like anything if it paid enough in the end (I can't).
We have no credit card debt, we eat out maybe once a month, by which I mean Denny's or a take-out pizza for <$25.00. I do, however, have a uterus nobody can figure out but which doctors keep sending me to have ultrasounds and various tests to check out, to the tune of a few hundred every few months (the emergencies to which I referred, because I don't want to fuck with my health, 'cause that uterine shit can kill you fast if you don't keep on top of it).
Basically I wish I could go back in time and tell my high-school self to ignore everyone saying that engineering was the future and just go into musical theater like I wanted, because I could not possibly be using my education any less than I am now. But barring that, I guess just wait until my fiance gets his JD?
Want to retire and be well off with lots of money in the bank? The key to this is never get married.
I've actually been doing a LOT better financially since my girlfriend moved in with the dual incomes and whatnot. What happens once you get married?
Before I got married, I lived in a cheap apartment with a friend and had only what we needed. When I got married, we wanted to have a nice life and bought nice things which we couldn't afford. Then two kids came along....daycare is ridiculous with how expensive it is. It took us quite a while to pay off our debt, but we are finally in a good situation now.
I think I see your problem. Please see my video on page 1.
Hehe ya. When I watched that video I laughed and immediately realized that was our life. I took our mistakes and learned from them though. Haven't used a credit card in almost 3 years now. Do I get a coin or something for that?
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YamiNoSenshiA point called ZIn the complex planeRegistered Userregular
Want to retire and be well off with lots of money in the bank? The key to this is never get married.
I've actually been doing a LOT better financially since my girlfriend moved in with the dual incomes and whatnot. What happens once you get married?
Before I got married, I lived in a cheap apartment with a friend and had only what we needed. When I got married, we wanted to have a nice life and bought nice things which we couldn't afford. Then two kids came along....daycare is ridiculous with how expensive it is. It took us quite a while to pay off our debt, but we are finally in a good situation now.
I think I see your problem. Please see my video on page 1.
Hehe ya. When I watched that video I laughed and immediately realized that was our life. I took our mistakes and learned from them though. Haven't used a credit card in almost 3 years now. Do I get a coin or something for that?
Non-sarcastic:
Learning from your mistakes is good! But a note about credit cards.
Credit cards are not the super duper greatest evil thing in the world they're sometimes made out to be. In fact, they have several benefits that you can make work for you. (I sound like I'm selling something.) They're a good way to build credit early on. Just put a small purchase on it every month and pay it off as soon as you get the bill. That's the secret: don't carry a balance. If you have a card with a decent limit and some form of rewards, there's nothing wrong with putting everything on the card then paying it off before they charge interest. You get all those rewards with minimal drawback. Most cards also have some form of purchase protection on them. I always use mine when I'm getting something 'risky', like computer equipment.
And don't worry about the credit card company hating you for not carrying a balance. They get a little slice every time you use it at retail, so they're probably happier if you use it and pay it off.
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MrMisterJesus dying on the cross in pain? Morally better than us. One has to go "all in".Registered Userregular
edited April 2010
Credit cards are also good sources of emergency credit (unsurprisingly). If your car breaks down and you can't get to work, then you need to repair it right away, whether you have cash on hand or not.
It's best to have money put aside for that sort of thing, but it's second best to have credit put aside for it.
Just put a small purchase on it every month and pay it off as soon as you get the bill. That's the secret: don't carry a balance. If you have a card with a decent limit and some form of rewards, there's nothing wrong with putting everything on the card then paying it off before they charge interest. You get all those rewards with minimal drawback. Most cards also have some form of purchase protection on them. I always use mine when I'm getting something 'risky', like computer equipment.
This. There is zero wrong with using a credit card as long as you pay it off immediately or nearly immediately. Its convenient, its fast and you can get things in exchange for using it. Those are the tools CC companies use to get people to use credit cards but if you're not carrying a balance all you're doing it getting some stuff for free and building up your credit.
My 403b (essentially a 401k for teachers and people who work at non-profits; I haven't seen any substantial difference with a 401k) is with Vanguard, and I like them quite a bit.
I also signed up for Mint.com when I finished my taxes last month. I love it. It's a great tool for seeing my whole financial picture... which can be a little scary and eye-opening...
Anyways, we're talking primarily about investing and retirement savings, but there's a lot more to personal finance than that. I've read a couple of books recently that have changed my perspective on my financial world.
One is I Will Teach You to be Rich, which is primarily about spending and saving and automating your finances. There's lots of great advice in there. The author also has a blog of the same title, and there's a lot of interesting stuff there, too. He talks a lot about focusing on the "big wins" rather than saving a few pennies here and there. For example, what's the point of saving 5 bucks on a latte every once in a while if you have your A/C cranked all the time? You can probably save a lot more per month by turning up your thermostat when you leave the house (or getting an automated thermostat).
He also talks about prioritizing where you spend your money, and if it isn't really important or valuable to you, cut it out. For example, if you're not really a big movie buff, do you really need the 5 disc at a time plan from netflix, and the HBO package, and the Stars package? I got rid of my gamefly account 'cause the only game I've been playing lately has been Forza3, which I own, and I cut my netflix down to the 1 disc at a time because I primarily go for netflix streaming on my xbox...
The other is The 4 Hour Work Week, and the main question is... who's more rich? The guy working 80 hours a week for 400k a year, or the guy working 4 hours a week for 100k? There's a whole lot about automating the work you do, setting up side businesses that are mostly hands-off once you have them up and going, and basically freeing yourself from the 9-5 grind.
Both of these books focus on earning more money, almost more so than saving more money (although of course spending less than you make is vital). IWTYTBR pushes freelancing on the side as a great way to make extra money. The premise is that almost everyone has something they can do that they can charge others for. Set up computers for old ladies, be a part-time personal chef, freelance photography/videography (that's what I do), project management, etc... Even something as lame as walking dogs or babysitting... but hey, if you need the money...
So these two books have really changed my outlook on money and earning and how I spend my time. Outside of my normal job, I'm focusing on ramping up my freelance work (video, photography, and playing bass) and I'm developing some easy-for-me product ideas that should become some okay passive income once I've done all the up-front work. Fortunately, I love my day job, so I'm not really looking to quit any time soon. But it would be really, really cool to not need a day job.
I don't really have an investment question but it relates in a way.
I have two bank accounts right now with two different banks; Chase and Wells Fargo. My Chase account used to be my WaMu account and the only reason I got Wells Fargo is a long story that happened about a year ago involving some inheritance money and coercion from third parties.
I'm wondering if its smart to simply close the Wells Fargo account and combine my money into a single account. I'll be honest, I don't really use the Wells Fargo account for anything other than just checking up on it from time to time and the majority of the money is in the savings account. I believe I have something like $20 in the my checkings account. I don't want to close my Chase account because the bankers at my local branch tell me I'm "Grandfathered" into some cool checking account because of my previous account with WaMu.
Thoughts? Oh its not exuberant amount of money either after all I'm still going to college and working part-time.
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My company does this and its incredibly obnoxious. Its one of their attempts at long term retention since they tend to pay the programmers a bit below market rate. I have 3 years in and I'm 20% vested. A certain amount is put in each year as part of profit sharing. As I understand it, I'd get 1500 if I left now because of that vesting. Its not nothing but nothing that important. Then I hear that people who have been here 10+ years pretty much all have a minimum of several hundred thousand dollars in this account and that people routinely hit the $1,000,000 cap and there's a staff person in our 3000 person company who specifically handles these arrangements as her primary job function (ed- as in she transfers the funds to IRAs/mutual funds/whatever as the staff member directs, but the staff members doesn't have access to 75% of these excess funds or something like that).
Meanwhile they don't offer a 401(k), matching, financial planning assistance etc.
So basically if I stay at my boring job that I don't really like for decades I should be OK. If the company doesn't go under. And if they don't change these policies substantially. Or get sold.
QEDMF xbl: PantsB G+
feelin like a playa
(gonna spend it on a trip to belgium though because my parents never bothered to send me overseas, or on a plane actually)
some times you have t do something for yourself (before you become the most boring fucker alive)
But now I'm jealous..
/cry for being the same age with half the income. Ahhh well. I did just graduate....
Also, I'm looking into some (I guess) mid-term investments, about five years or so. We're in a condo now, but around then we'll probably be looking into getting a house if the real estate market isn't still on its ear. What would the internet experts here recommend?
Have you been contributing 13% since you started? I just got a job with a 401k (TSP really, but I guess its close enough). If we contribute 5% that 5% gets matched 1:1, anything above that doesn't get matched. I have been contrubuting just the 5% and I'm not sure if contributing above the matching is a good idea, or if that extra money would be better invested elsewhere. If I did raise it to 13% I would have close to the 25k by 26, but i'm wondering if I'm better off just going with the 5% (10% after matching) and putting that extra 8% in some other form or retirement account.
/Has very little undestandings of 401ks and similar retirement plans.
The generalized advice is;
Just go down that list until you run out of money. The reasoning is that your 401k match is essentially free money. After that, you invest in a Roth to diversify your post-retirement taxation. 401k money is untaxed when you contribute and taxed when you draw on it after retirement. Roth IRA money is taxed when you contribute (you pay into it from your post-tax earnings that is), and untaxed when you draw on it after retirement. So you are getting tax diversification by doing both.
I use Schwab - for investing and banking actually. I could be wrong on this, but for a Roth, you can access up to what you've contributed without penalty, since you've already paid taxes on it. But you'll be penalized if you withdraw any gains - say from paid out dividends or whatever. Someone could probably put a finer point on it for you.
Also, yay personal fiance thread!
1. Have a year's income in savings. In the current economy, no job is certain. My income for all of last year was about $6,000. The reason I'm still financially independent is that I had about $15,000 in savings heading into 2009, and that was down to about $5800 by January of this year (when I started making regular income). This was a powerful lesson to me: before starting a Roth IRA or doing any significant investment, make sure that if the shit hits the fan that you can take the financial hit.
To accomplish this goal, I have a very basic strategy (keep in mind, also, my income is as a contractor, so not taxed on payroll). I deposit my entire check to savings, and then transfer half of it to checking (for those counting, about $700). That half is all I have to work with until the next check.
2. Before investing significantly, make sure that emergency funds are also set up. I'm also building smaller accounts that will cover hospital costs (a fund with $2,000) and car maintenance costs ($1,000). Now, while I'm insured, given the state of insurance companies in America I find it prudent to not plan on getting covered. With a decent living wage, these sorts of funds can be built in around 3 months of scrupulous saving, potentially less.
3. Diversify your banks. My major accounts are spread across two banks: Chase, and a small credit union in my hometown in Ohio. With Chase, I see bigger returns on my savings accounts but there is the risk that, as a bigger bank, they'll cock everything up. When I need an exponential return quickly on money, I use that bank. I use the small credit union as a "lock box" of sorts, and that's where I'm building the year's income in savings. I won't use that account or checks/cards unless it's an absolute emergency (food or gas and my paycheck is late, is what happens).
4. Don't be afraid to be risky! This is the crux of why a large amount of savings is important, at least in my view. Once you've accomplished some financial goals, you can afford to be riskier with jobs. The position I work now, that's currently paying me so (relatively) well, I have because I was able to work for the company for about 5 months with no standard pay (the first 3 months I worked, they covered nothing, and the latter 2 months they could only cover my rent). Because I had the money to risk, I was able to basically get to my dream job years ahead of the "standard" timeline for it.
As to accruing wealth, I know this is heresy, but I'm not too concerned with it right now. Working at a startup has really redefined how I want to use my money. I'm actually using the 5 months' backpay they owe to get another division of the company started up, and once I've got my "I need this money saved up" taken care of, I'll be establishing a non-profit to help local game design contests attract people by offering cash prizes. To me, it's not about accruing wealth, it's about what I can do with my money. Not necessarily buying good cars or nice houses, but how can I use my wealth to further the goals of my career (namely, redefining how work's done in my industry and pushing the field of game design). I imagine that, in ten years or so, this will change dramatically.
I highly recommend having both. They are different vehicles for retirement investing, but ultimately reach the same goal. If you're young, you should have a Roth IRA instead of Traditional IRA.
The company 401k may not have the options or mutual funds that are best for you. Companies that have (host?) IRAs typically have many more funds to choose from. I have my Roth IRA through Vanguard, and they offer some interesting emerging markets funds that my 401k does not.
Also, unless you have a "Roth 401k", your 401k gets taxed like a Traditional IRA. You should definitely have a 401k for the company match since that is free money, but your growth will flourish tax-free in a Roth IRA. If you leave the company with a big vested 401k, you can always put $5,000 (yearly IRA limit) from that fund (as it grows) into the Roth IRA over time.
This is mostly correct. Extra money in a 401k (that is not matched) is basically like a Traditional IRA with your company's limited choices.
But you should always take the free money. Any sort of match is kickass.
Let 'em eat fucking pineapples!
$64,000 question--
Where do you get that money?
I'll admit I don't quite understand the question. The money I had in savings, or the money I'm currently earning?
The shit hitting the fan statement was made in no small part because, well, up until recently I've not been able to maintain steady employment. I'm doing far, far better than my friends (and most of the people I went to college with), but I've learned to plan really only on a month by month basis. This has, I'll admit, negatively colored my perception of saving for the long-term especially right out of college. Frankly said, most of the people I know (including myself) don't have the resources for long-term savings and likely won't until late 20s or early 30s.
No and this is a downside to a traditional IRA. Traditional IRAs big advantage is you put the money in pre-tax. However, withdrawing the money is taxed. And there are disincentives to doing it before retirement age.
Its a good idea to have several months worth of income savings for rainy day stuff. That's what complicates the idea of saving huge chunks your income for retirement - its bad planning because you're ignoring all the things you need to save for in your regular life (unemployment, illness, college, buying a home, having kids, major repairs of home or car, etc)
QEDMF xbl: PantsB G+
Everyone saying that a million dollars when you're 65 isn't as good as it used to be isn't considering all of the variables.
Most likely, at 65, you're on the tail end, if not fully paid off, of a 30 year mortgage. So you no longer have house payments. Your kids are most likely out of school if you were helping with that (and you should have had additional savings/investments to cover that anyway)
In addition to the retirement savings, you'll also have social security and company retirement (if applicable) which seperately are not much, but added together, and then added to your savings, make your golden years very comfortable.
I'm 26 and make ~50K a year. I put aside 8 percent into my 401 (matched at 4 percent) and a Roth. I haven't started additional savings yet because I actually am saving, but it's going towards a down payment on a house in two years so that I can try to have 20% down
After that I'll be putting aside $600 a month into an additional savings account, but I have no idea what yet. Probably a mutual fund or bonds.
edit: actually, before I start the investment, I'm going to save the $600 a month for a year to have several months of income in the bank in case I lose my job.
All of this is based solely on my salary. Should my wife enter the workforce full time, that will change things.
The money you had in savings. I cannot even maintain a rainy day fund of $3-5k at the moment because every time I have a few hundred dollars in savings, I have a minor emergency that costs, guess what? a few hundred dollars.
So I'm genuinely curious as to how to accumulate $15,000 in savings outside of not having any expenses or earning $texas.
But I need to reinvest my roth monies into something somewhat stable. Thinking short term bond fund, but lack the knowledge.
QEDMF xbl: PantsB G+
I use Vanguard. No problems with them. Many choices to fit my investment style, and the interface is pretty easy. Lots of information and advice readily available.
Let 'em eat fucking pineapples!
I'm not investing much yet (only 25$ a month) but after I move this summer my monthly bills will be drastically lower so I'll try to invest much more.
Feels good to not have any debts.
Battle.net: Fireflash#1425
Steam Friend code: 45386507
This kind of stuff drives me nuts. Its time to move away from the nest at some point. I have been completely independent from my parents since I was 17. Got married, we made it through college on our own and have careers now. Household income is going to be over 115k this year and we are 24. The feeling is so much better to have made it there on our own and even though we were pretty poor at the beginning of college, we still had tremendous fun and look back at those years fondly.
Congratulations?
Living at home makes a lot of financial sense. If everyone is happy with the arrangement, then there's no reason to sacrifice it on the altar of independence (tm).
Pretty much. If you have the opportunity to live with your parents, you can save a LOT of money that way. If they don't mind it, why should you?
I provided a link at the bottom of the OP:
http://cashmoneylife.com/2009/09/10/where-to-open-a-roth-ira-account/
However you should educate yourself before investing. I suggest you pay 10-15 bucks to pick up the book I linked. Learn the basics, then cover your bases, then go from there.
On a serious note, I'm married with two kids and we are doing ok...we have four months worth of our monthly expenses stashed in a savings account in case shit hits the fan. The wife has her 401k with the same company for about 9 years now and I have my pension waiting for me when I can retire at the young age of 45. Will we be millionaires at 65? Probably not, but we'll be able to live more than comfortable.
I think someone mentioned it earlier in the thread, but pay off your damn credit cards as soon as humanly possible. Once those are paid off, send an extra $100 or so to your car payments until they are paid off. This is the tricky part, once your car\s are paid off, don't trade it in for a new payment. Ride that bitch into the ground until you NEED a new car. With all that extra money you had going to credit cards and car payments, invest that shit.
Well what got me fucked is when I was an undergrad, credit was bountiful and no one cared about your ability to pay it back. They had banks giving out T shirts with pot leaves on them in exchange for filling out an application.
Finally out of credit card debt. Woot!
I've actually been doing a LOT better financially since my girlfriend moved in with the dual incomes and whatnot. What happens once you get married?
Before I got married, I lived in a cheap apartment with a friend and had only what we needed. When I got married, we wanted to have a nice life and bought nice things which we couldn't afford. Then two kids came along....daycare is ridiculous with how expensive it is. It took us quite a while to pay off our debt, but we are finally in a good situation now.
I think I see your problem. Please see my video on page 1.
Winning the vaginal lottery, as Warren Buffet puts it. Only child of a mother who runs a $15 million/yr. non-profit, and the rest of my mom's side of the family is all entrepeneurs as well. I graduated college with no debt, and my mom had wisely made sure to save about 70% of the money I'd earned or was given. Also, when I was 14, I got $10,000 from an uncle.
So luck, plain and simple, is what led me to have no debts out of college and $15,000 in savings. I burned through most of it moving cross country and remaining unemployed for a while burned more, but it was pure providence that even enabled me to make these decisions. I fully recognize that not everyone can even get a shot at those circumstances.
What I'd recommend for you, though, is figuring out what these monthly expenses are. You mentioned that it's a consistent series of emergencies, well, what are they? Can they be put off for a month? Can you save money specifically for them? For instance, I was in a car accident in December and my car radio was stolen in the same month. Insurance would cover neither. It's only now, in mid-April, that I'm able to repair the damage, get new brakes, a new radio, and whatnot. I saw the need, I knew the damage wasn't crippling, but I adjusted my habits so I could save the money necessary to fix it. I ate out less, I bought fewer things (discovering youtube.com/movies is awesome), etc. Knowing your expenses and planning for them is pretty much 90% of the work.
Currently my job still has a pension plan (we pay in 8.5% of our salary at 25 years we can retire at 65% pay or 30/70%) but of course every time a Republican gets into the office I have to start shitting my pants since in the last 20 years they've done nothing but try to deliberately underfund the system or paint me and my co-workers as leeches getting "rich" off the system.
Thank you Christine Todd Whitman and Chris Christie, I hope you're roommates in hell.
Come Overwatch with meeeee
We have no credit card debt, we eat out maybe once a month, by which I mean Denny's or a take-out pizza for <$25.00. I do, however, have a uterus nobody can figure out but which doctors keep sending me to have ultrasounds and various tests to check out, to the tune of a few hundred every few months (the emergencies to which I referred, because I don't want to fuck with my health, 'cause that uterine shit can kill you fast if you don't keep on top of it).
Basically I wish I could go back in time and tell my high-school self to ignore everyone saying that engineering was the future and just go into musical theater like I wanted, because I could not possibly be using my education any less than I am now. But barring that, I guess just wait until my fiance gets his JD?
Oh, and I make $40k.
Hehe ya. When I watched that video I laughed and immediately realized that was our life. I took our mistakes and learned from them though. Haven't used a credit card in almost 3 years now. Do I get a coin or something for that?
Non-sarcastic:
Learning from your mistakes is good! But a note about credit cards.
Credit cards are not the super duper greatest evil thing in the world they're sometimes made out to be. In fact, they have several benefits that you can make work for you. (I sound like I'm selling something.) They're a good way to build credit early on. Just put a small purchase on it every month and pay it off as soon as you get the bill. That's the secret: don't carry a balance. If you have a card with a decent limit and some form of rewards, there's nothing wrong with putting everything on the card then paying it off before they charge interest. You get all those rewards with minimal drawback. Most cards also have some form of purchase protection on them. I always use mine when I'm getting something 'risky', like computer equipment.
And don't worry about the credit card company hating you for not carrying a balance. They get a little slice every time you use it at retail, so they're probably happier if you use it and pay it off.
It's best to have money put aside for that sort of thing, but it's second best to have credit put aside for it.
This. There is zero wrong with using a credit card as long as you pay it off immediately or nearly immediately. Its convenient, its fast and you can get things in exchange for using it. Those are the tools CC companies use to get people to use credit cards but if you're not carrying a balance all you're doing it getting some stuff for free and building up your credit.
QEDMF xbl: PantsB G+
I also signed up for Mint.com when I finished my taxes last month. I love it. It's a great tool for seeing my whole financial picture... which can be a little scary and eye-opening...
Anyways, we're talking primarily about investing and retirement savings, but there's a lot more to personal finance than that. I've read a couple of books recently that have changed my perspective on my financial world.
One is I Will Teach You to be Rich, which is primarily about spending and saving and automating your finances. There's lots of great advice in there. The author also has a blog of the same title, and there's a lot of interesting stuff there, too. He talks a lot about focusing on the "big wins" rather than saving a few pennies here and there. For example, what's the point of saving 5 bucks on a latte every once in a while if you have your A/C cranked all the time? You can probably save a lot more per month by turning up your thermostat when you leave the house (or getting an automated thermostat).
He also talks about prioritizing where you spend your money, and if it isn't really important or valuable to you, cut it out. For example, if you're not really a big movie buff, do you really need the 5 disc at a time plan from netflix, and the HBO package, and the Stars package? I got rid of my gamefly account 'cause the only game I've been playing lately has been Forza3, which I own, and I cut my netflix down to the 1 disc at a time because I primarily go for netflix streaming on my xbox...
The other is The 4 Hour Work Week, and the main question is... who's more rich? The guy working 80 hours a week for 400k a year, or the guy working 4 hours a week for 100k? There's a whole lot about automating the work you do, setting up side businesses that are mostly hands-off once you have them up and going, and basically freeing yourself from the 9-5 grind.
Both of these books focus on earning more money, almost more so than saving more money (although of course spending less than you make is vital). IWTYTBR pushes freelancing on the side as a great way to make extra money. The premise is that almost everyone has something they can do that they can charge others for. Set up computers for old ladies, be a part-time personal chef, freelance photography/videography (that's what I do), project management, etc... Even something as lame as walking dogs or babysitting... but hey, if you need the money...
So these two books have really changed my outlook on money and earning and how I spend my time. Outside of my normal job, I'm focusing on ramping up my freelance work (video, photography, and playing bass) and I'm developing some easy-for-me product ideas that should become some okay passive income once I've done all the up-front work. Fortunately, I love my day job, so I'm not really looking to quit any time soon. But it would be really, really cool to not need a day job.
I have two bank accounts right now with two different banks; Chase and Wells Fargo. My Chase account used to be my WaMu account and the only reason I got Wells Fargo is a long story that happened about a year ago involving some inheritance money and coercion from third parties.
I'm wondering if its smart to simply close the Wells Fargo account and combine my money into a single account. I'll be honest, I don't really use the Wells Fargo account for anything other than just checking up on it from time to time and the majority of the money is in the savings account. I believe I have something like $20 in the my checkings account. I don't want to close my Chase account because the bankers at my local branch tell me I'm "Grandfathered" into some cool checking account because of my previous account with WaMu.
Thoughts? Oh its not exuberant amount of money either after all I'm still going to college and working part-time.
There. You still have two accounts, but they are consolidated in one bank so it's easier to manage them.