Financial tips for 2007

[winneythepooh7]

What are yours?

I just read an article that says if you are paid twice a month, you receive 26 paychecks per year.

In most months, you receive 2 checks (this is how I budget for myself, based on getting paid twice a month) or 24 paychecks.

However, if you look at a calendar and see where you get that "extra check" you can use this to stash away for savings, or pay off a debt.

I just did this. I am getting paid 3x in March and again in August. Woo hoo! Found money to look forward to!!

[red]

yes, i LOVE those months when you get three paychecks! if only that happened every month.

this year i am going to meet with a financial adviser and try to come up with a better plan for our future. i want to put more money into my 401k this year too.

also if you can pay an extra bit on your car loan every month it shortens the length of the loan and you end up paying less in interest.

my fave tip of all is brown bagging it and keeping a box of tea in my desk. even my husband makes his own coffee now. those trips to dunkin' donuts can really add up.

[redav]

I, too, am on the bi-weekly schedule, and those "extra" payments are a good thing. Sometimes you will see mortgage companies offering to switch you to a biweekly schedule because it saves you a ton of interest. Indeed it does (7 years on a 30 yr loan), but be wary, they usually conceal a hefty fee (I've had a couple offers that would cost ~$5k) which is pointless since you can do it yourself for free.

As I've mentioned before, I'm a big fan of direct deposit. I have moneys going to various accounts for various purposes (insurance, escrow, IRA, Christmas, etc). If you are ambitious, you can set up an account for your recurring charges, and deposit the right amount into the account so that your bills automatically get paid. My dad goes so far as calculating rolling 12-month averages (I do this, too) and diverts that amount into his "bills" account (I don't do that). That way, he doesn't get hit with seasonal variations in his electric, gas, water, etc bills.

To do that last point, you need a budget. If you don't have one, this should probably be the most important thing you do. As you track where your money goes, it can be a real eye-opener.

Check your credit. You can get one free copy per year from each of the three major companies. The score is not included in the deal. I check one every four months. Go to http://www.annualcreditreport.com

I currently have a goal to set up a 12-month CD ladder. I buy CDs such that one will mature each month. This will be my emergency cash reserves. If I find myself in a bind (e.g. disabled, laid-off), I can tap a CD each month to cover expenses. So far I have five maturing throughout the year. I still have a few years to go on this goal.

When I get a raise, I usually put a third to a half directly into my 401(k); I increase my direct deposit to savings; and what's left I enjoy. Typically, that amount is good for one luxury like joining a gym. The end result is that each year when I get a raise, my standard of living doesn't change much, but my savings and my future security go up, and for me right now, that's more important.

I have a mortgage, so the biggest part of my house costs don't change. When I was in an apt, I was used to rent increasing a bit each year. So I've carried the practice over. Each Jan, I increase my "rent" payment by some small amount. The schedule I have currently will cut my mortgage from 30 yrs to 22.

Another thing about paying down debt. Some installment loans (my car loan was like this, and so is my 2nd lien on my house) really want you to pay all the interest. To do this, they have a sneaky trick. Any amount you overpay, they deduct from the next month's required payment. For example, my car payment was about $327/mo. If I paid an extra $100 one month, the next month's statement would say I only needed to pay $227. After several months of overpaying, I was getting bills for $0. And those zeros stacked up. Right now, I don't HAVE to make a payment on my 2nd lien until June. In some ways, this can be considered a form of savings, since it frees up future income. For example, if I was paying $427/mo (327 + 100 extra) on my car, and was getting $0 bills, and I had a sudden emergency that required $400 that I couldn't come up with, I could skip that month's car payment, and the only penalty is the extra interest it would accrue that month.

(Wow, this is a long post. I hope it gives you some ideas.)

Edit:

One more thing. I will disagree with a lot of people on these boards and say that I'm not a fan of Financial Planners. There is plenty of great info to be had out there, and a FP won't give you a whole lot more. They do have tools, like Monte Carlo simulations and data & contacts that aren't readily available, but I've found their real benefit is in assuring you that you are making correct decisions. If you feel that you need to have independent eyes looking over your decisions and plans to ensure you're not wandering off along dangerous roads, then they have merit to you. If you are confident in your decisions, then you don't really need them.

[yankeeyosh]

Get a cheaper apartment. No one in their right mind is paying $1,100/month for housing on my income level.

[pisces2473]

Get a cheaper apartment. No one in their right mind is paying $1,100/month for housing on my income level.
Jeez Mark, C and I don't make a lot of money and we're paying $1000. Hope you don't think I'm not in my right mind. :rolleyes:

[yankeeyosh]

Jeez Mark, C and I don't make a lot of money and we're paying $1000. Hope you don't think I'm not in my right mind. :rolleyes:

Yeah, but you're doing it on two incomes...not one.

[ocean24]

1,000/m. for a one-bedroom where I live would be a great deal...needless to say, I'm back at home for awhile.

[PenforPrez]

Two words: Energy prices. Watch energy prices carefully, especially futures in crude oil and natural gas.

We may hit it lucky on natural gas this winter, due to mild weather and adequate supplies. Natural gas closed on Friday at $6.64 per million BTU's (and spot markets are lower); last winter, it surged to over $15 due to a wide variety of factors. My belief is that if we've not seen a price spike to this point in the cold weather season, then we likely won't.

Crude oil is a gigantic question mark, and will continue to be so in 2007. The NYMEX crude oil future is at $62.41 per barrel right now. The current expectation is that crude oil will decline modestly if warm weather continues.

The magic number for crude oil is $80 a barrel. The chance of recession increases greatly if crude oil hits $80; the highest it hit this year was $78.xx. Most analysts do not expect that; the current average of estimates for 2007 is where it is now: the lower $60s. I think that's too low; my very unscientific guess is $68-$70 on average next year.

Some have suggested we'll see $100 a barrel by next summer; I disagree with that too. I think we'll see a price spike at some point, probably to the $75-$80 range. It depends mainly on the situations with Iran, Iraq, Nigeria and the next hurricane season. Iran is the show to watch; oil traders are going to be nervous with that, and have been all of this year. If there's ANY indication of a possible military confrontation with Iran, head for the gas station!

I'm no expert on these things; I just read up as much as I can on what's going on with this and why. But watch the news, and watch the weather, and you can make a decent guess on gas. :)

Paul

[yankeeyosh]

1,000/m. for a one-bedroom where I live would be a great deal...needless to say, I'm back at home for awhile.

Not in a somewhat economically depressed suburb of boston...in a neighborhood with limited public transportation.

[yankeeyosh]

Some have suggested we'll see $100 a barrel by next summer; I disagree with that too. I think we'll see a price spike at some point, probably to the $75-$80 range. It depends mainly on the situations with Iran, Iraq, Nigeria and the next hurricane season. Iran is the show to watch; oil traders are going to be nervous with that, and have been all of this year. If there's ANY indication of a possible military confrontation with Iran, head for the gas station!


I think the Hurricane will be a major factor. I thought that when Hurricane 'Ernesto' was progged to move into the Gulf this summer that it would push oil prices to over $100. Fortunately, it fizzled, and it never affected the Gulf region. But after the 'Katrinas' and 'Ritas' and 'Ivans' of past seasons, oil prices have been shown to be strongly triggered by natural phenomena. I do think, however, there is some speculation in the market, and that has been driving prices up and down...seems we might be in an upswing as we speak, although the magnitude of it is still questionable. Nevertheless, I doubt it will hit $80 sans Hurricane...I don't think we will have any crises with Iran or Nigeria over the next year.

[mishl982]

Yes! This thread is great because in 2007 I really have to buckle down and save so that I can buy my own place mid-2008.

Things I am planning on doing in the new year:

- Depositing $100 more (on top of what I"m already depositing) from each paycheck into my savings account
- limit/stop splurges. That means no vacations, no trips, no shopping sprees, etc unless absolutely necessary
- find out what grocery stores do double coupons! :P
- work even harder at current job to get a good raise and more excellence awards (bonuses)
- just live like a poor person. Buy generic, no more shopping at high-end stores, eating out a lot etc. Just act like I don't have extra money that way it can go into savings. My roommates are on the same plan as I so we dubbed next year "Poor '07!!"

[yankeeyosh]

Yes! This thread is great because in 2007 I really have to buckle down and save so that I can buy my own place mid-2008.

Things I am planning on doing in the new year:

- Depositing $100 more (on top of what I"m already depositing) from each paycheck into my savings account
- limit/stop splurges. That means no vacations, no trips, no shopping sprees, etc unless absolutely necessary
- find out what grocery stores do double coupons! :P
- work even harder at current job to get a good raise and more excellence awards (bonuses)
- just live like a poor person. Buy generic, no more shopping at high-end stores, eating out a lot etc. Just act like I don't have extra money that way it can go into savings. My roommates are on the same plan as I so we dubbed next year "Poor '07!!"

I just don't understand why this generation is so gung-ho about buying property, and they are killing themselves to buy a place. You realize the down payment is just the tip of the iceberg. The mortgage is everything. It's hard to afford a place in the BOS-Wash area on one income unless you're making a substantial salary. You can come up with a 10% downpayment, but you still have 90% to go. Yes, owning property is an excellent investment, but only if you can afford it without hardship. If you're making a moderate income, there is almost no way you can afford a place on you own in this part of the country.

If you want to argue this, go ahead. I just don't care anymore. I'm mad over something that happened the other day on this site, so I'm very frustrated.

[pisces2473]

Yeah, but you're doing it on two incomes...not one.
Does that really matter?

Yes, we both work, but you made a general statement about people spending that much money on rent. That's sort of offensive, since you don't know how much we make. You can't just generalize things like this. If I told you how much money we make, you would probably think we're flushing our money down the drain.

What if I told you that we don't make very much more than you do with one income? Does that make us fools?

[winneythepooh7]

Does that really matter?

Yes, we both work, but you made a general statement about people spending that much money on rent. That's sort of offensive, since you don't know how much we make. You can't just generalize things like this. If I told you how much money we make, you would probably think we're flushing our money down the drain.

What if I told you that we don't make very much more than you do with one income? Does that make us fools?


Thanks Jen. I live in a costly apartment, but we split the rent. And sorry to burst your bubble Mark, but we DO NOT have "two incomes". We are both still responsible for a lot of bills ourselves. In fact, my rent and commuting costs have gone up since I moved here. But I can't really do much about that. It's the area (everything in NYC and the surrounding area is at least 1K a month for rent), and my fiance has his business here. It's not like I can just up and move to bumblefuckville to cut costs. I am getting really offended by your sweeping generalizations. First you call social workers and teachers entitled, and now this. When is it going to end? I understand you have Aspergers, but I don't think that is an excuse. You are really starting to alienate a lot of people. And it's been pointed out before: if this site makes you that mad, why are you here, besides to take out your frustration on everyone? I'm also sorry that you think so many people are horrible for having goals and dreams, like owning a home one day. I also didn't know we had to seek the approval of Mark to have dreams and goals.

[winneythepooh7]

What are your financial tips for 2007??

[pisces2473]

Thanks Jen. I live in a costly apartment, but we split the rent. And sorry to burst your bubble Mark, but we DO NOT have "two incomes". We are both still responsible for a lot of bills ourselves. In fact, my rent and commuting costs have gone up since I moved here. But I can't really do much about that. It's the area (everything in NYC and the surrounding area is at least 1K a month for rent), and my fiance has his business here. It's not like I can just up and move to bumblefuckville to cut costs. I am getting really offended by your sweeping generalizations. First you call social workers and teachers entitled, and now this. When is it going to end? I understand you have Aspergers, but I don't think that is an excuse. You are really starting to alienate a lot of people. And it's been pointed out before: if this site makes you that mad, why are you here, besides to take out your frustration on everyone? I'm also sorry that you think so many people are horrible for having goals and dreams, like owning a home one day. I also didn't know we had to seek the approval of Mark to have dreams and goals.
No, thank YOU, Allison. Yeah, we don't have "two incomes" either--in this area, most people our ages make alone what C and I make COMBINED. I'm sure Mark would think that $1000/month is excessive in our cases, but that is CHEAP here.

So anywhoo, back to the topic...I think I'm going to take a certain amount of money out of my paycheck and put it into my Roth. I just don't know how much yet. Even if it's $50, that's about $1200/year.

[WorkInProgress]

Yes! This thread is great because in 2007 I really have to buckle down and save so that I can buy my own place mid-2008.

Things I am planning on doing in the new year:

- Depositing $100 more (on top of what I"m already depositing) from each paycheck into my savings account
- limit/stop splurges. That means no vacations, no trips, no shopping sprees, etc unless absolutely necessary
- find out what grocery stores do double coupons! :P
- work even harder at current job to get a good raise and more excellence awards (bonuses)
- just live like a poor person. Buy generic, no more shopping at high-end stores, eating out a lot etc. Just act like I don't have extra money that way it can go into savings. My roommates are on the same plan as I so we dubbed next year "Poor '07!!"

Yeah, I need to do the same. I'm hoping to jumpstart it by not touching my year-end bonus this year.

[WorkInProgress]

I just don't understand why this generation is so gung-ho about buying property, and they are killing themselves to buy a place. You realize the down payment is just the tip of the iceberg. The mortgage is everything. It's hard to afford a place in the BOS-Wash area on one income unless you're making a substantial salary. You can come up with a 10% downpayment, but you still have 90% to go. Yes, owning property is an excellent investment, but only if you can afford it without hardship. If you're making a moderate income, there is almost no way you can afford a place on you own in this part of the country.

If you want to argue this, go ahead. I just don't care anymore. I'm mad over something that happened the other day on this site, so I'm very frustrated.

I think few of us understand why those who can't afford it are trying so desperately to do it. I think you may be overreacting and not really know mishl's situation.

And if you're still angry over something days ago, perhaps it would be a good time to try and let it go. This is so not worth screwing up even one day, let alone several.

[winneythepooh7]

So anywhoo, back to the topic...I think I'm going to take a certain amount of money out of my paycheck and put it into my Roth. I just don't know how much yet. Even if it's $50, that's about $1200/year.

I started having $50.00 per paycheck deposited into my ING account. I figure I will also tackle one major debt at a time. Once I get ahead in those areas, or if I come across extra cash, I will try to stash it into my savings that I vow not to touch.

I am thinking of trying to pay my car off completely first. I figure if I can do that, I could always try to sell it down the road and make some $$$ from that. My CC, it seems as soon as I pay it off, boom, another emergency happens and there's more debt.........

[biodork]

I'm not sure if I'm going to be able to save up for anything anytime soon, especially if I get into a PhD program. I'm going to be living off nothing for at least 5 years. I'll have my bf with me, which will be good, but still, we both have our own bills. Only thing shared would be the utilities. Part of me is hoping my mom will follow through with helping me buy a place. Since I'm going to be somewhere for at least 5 years, I think it would make sense, providing I can get the right mortgage payment.

And right now my extra money is going to my COBRA payments, so yeah. Hopefully I can get hired by my job soon!

[Winter Storm]

I just don't understand why this generation is so gung-ho about buying property...

If you don't understand why someone else has chosen to do certain things, then JUST DROP IT. There is no need in gating all bent out of shape over the whys and why-nots.

If you want to argue this, go ahead. I just don't care anymore. I'm mad over something that happened the other day on this site, so I'm very frustrated.

If you really didn't care, you wouldn't be bringing this up over and over. And if you are mad about something else, don't take your frustration on that onto something else.

It's the holidays, Mark. Why don't you find something else to do today besides obsess over QLC crap. Try to enjoy your holiday.

[AshleyJordan]

If you don't understand why someone else has chosen to do certain things, then JUST DROP IT. There is no need in gating all bent out of shape over the whys and why-nots.



If you really didn't care, you wouldn't be bringing this up over and over. And if you are mad about something else, don't take your frustration on that onto something else.


Thank you! I really hope the tone of some of these threads starts to improve in 2007! As I've gone to great lengths to mention before, I appreciate a range of constructive ideas/critiques. . . but a lot of this is just kvetching and attacking other people's choices that are not hurting other posters at all. Anyhoo, sorry, rant over. To answer the original question:

To increase my contributions to my 403 (b) by another 2 or 3 %; and,
:eek: to buy a condo

[winneythepooh7]

I'd like to point out that the house threads annoy me too sometimes, but something I think needs to be said, is that for any goal (whether it's buying a house, wanting a job you are not qualified for, etc), if it's not realistic, most people aren't going to reach that goal. At least not right away. People are also welcome to have long-term goals, which I think especially in terms of owning a home, is a long-term goal for many. Lastly, I don't think anyone on here has magical powers to know every poster's real-life situation.

Another tip I have for 2007: Don't compare your financial situation to others! There's probably a lot you don't know about others personal lives.

[spokes]

i read a tip from a so called "expert" - if you want to save money - spend less.

[LaFille]

i have a change jar. i put all my spare change in there a couple of times a week (not including pennies.) i've been doing it since the summer and i have probably $70 saved up... of course it's not a ton of money, but once i save enough, i'm going to buy myself a highly unnecessary, utterly impractical pair of shoes... it's a fun way to treat yourself without making major sacrafices each week.

...of course if you always use plastic, this won't work :0

[wordsmith]

Same as they are every year...spend less, save more. Not rocket science; simple strategies are best for me.

[nikorock28]

get higher deductibles on your insurance, especially car. i don't think there is a reason to have a deductible less than $1,000 for your car. this could save you hundreds of dollars a year.

as another poster suggested, use double coupons. also, use manufacturers coupons with store coupons and ONLY buy items that are on sale. you can get items free doing this. when there is a huge sale on frozen chicken, buy as much as you can fit in your freezer.

never buy beverages when you get take out, go to a restaurant, etc. always have gallons of water with you at work to keep you from hitting the vending machine.

pay down your highest interest credit card, loan, etc. first. this sounds obvious but many people don't do it. they may make extra car payments, student loan payments, while they have balances with 20% rates on it.

always contribute enough to get a match on your 401k or retirement plan. if you don't, you are just throwing money away.

if you have a low income you could potentially get a $1,000 TAX REFUND via the savers credit. if you have any money in savings, open a Roth IRA and put money in it at the end of the year (now would be a PERFECT time). this contribution will be reflected on your taxes and you might be eligible for the tax savers credit. for example, if you are married and filing jointly, you get a tax credit of 50% up to $1,000 if your adjusted gross income is $30k or less. if you have money in savings, just put it in a Roth IRA at the end of the year to get the credit, then withdraw it in the new year. free $1,000.

[vxmike]

Drive slower and make sure your tires are properly inflated. These factors will contribute to noticably improved fuel economy.

[coll214]

Well i'm one of those that actually owns my place-- granted, yes w/ my sister but as Jen pointed out, it was actually CHEAPER for us to do this than rent an apartment. Hell if i was looking now, we wouldn't have been able to afford this place. But anywho--

I plan on trying like hell to pay off a couple CC's (i'm already putting between $300-600) towards it every month. Though a lot of that debt is from neccessary expenses (car repairs, school tuition, books, etc). Also to get a student loan so i'm not putting that on CC anymore and just stay within my means. I usually do pretty well, but then have a month where i get a little shopping happy. But i'm not gonna sweat it. Shit happens after all.

[redsail]

If you are good about using your credit cards, get a cash back card like theAmex Blue Cash (https://www124.americanexpress.com/cards/loyalty.do?page=bluecash) or Citi Dividend (http://hhonorscard.com/us/cards/cardserv/divplat/index.jsp). Both give better cash back then Discover (up to 5% on the Amex).

To echo the coupons a previous poster mentioned, especially for those with perpetually hungry kids, check out The Grocery Game (http://www.thegrocerygame.com/). Its a pay site (10 bucks a year?) but can save you a lot of money by maximizing your coupon use with the pricing cycles in the grocery industry. We don't personally use the site (my wife was doing the same thing on her own) but have had friends cut hundreds per month off their family grocery bill with it.

Pay yourself first.

[cheshrcarol]

One thing I think I'm going to try is to only use cash for my non-bill spending. I've realized that if I only have cash on me, it's more difficult for me to part with it. When I strictly use my debit card, the spending has no meaning. So I think I will budget an amt of money for me to spend, whether it's every week or month or whatever, and then when it's done it's done. Of course, if you're really into tracking your expenses it won't work for you.

[SpaceMonkey]

My 2007 goals:

1. Maintain my current 403(b) contribution.
2. Max out my Roth IRA
3. Get an unsecured credit card with no annual fee -- I went through college without loans, and without getting a credit card, so I graduated in 2005 with no credit history whatsoever. I had to start with a secured credit card with a $30 annual fee in May of last year.
4. Use some of the cash I have accumulated in my ING Direct account to set up a 12 month CD ladder similar to what an earlier poster described.
5. Create a new budget by the fall that might allow me to rent my own place (studio apartment) -- I'm sick of living with roommates.

[spiritedaway]

My 2007 goals are:
1. Continue to save a good portion of my income for downpayment like I've been for the past few years
2. Continue to do house shopping (realistically, I am looking to buy in 2007 or 2008). I have been pre-approved for a mortgage, now it's only a matter of location and timing.
3. Continue to contribute to my 401K and (my employer will begin matching next year). Max out whatever percentage my employer is willing to match.
4. With a few exception of a few high ticket items, I am going to focus on spending less, with the exception of budgeting for 1 family vacation in 2007.
5. Continue to charge EVERYTHING on my rewards credit card and pay off balance at the end of the month. I already earned a free roundtrip for anywhere in the continguous US and on my way to the second one. Since I love travelling, it complements my goals.

Financially, I am at a good place and I can't complain, although for the month of December, I could not manage to save due to a few budgeted expenses (holiday shopping for friends and family, eye doctor's appt - $400+ for exam and 1 year supply of contact lenses, recurring bills, etc).

I am actually very disappointed my progress has been slow this month (first time I spent more than I make), but I remind myself that I don't spend much throughout the year anyway so it's a justified splurge. I am planning to put aside my annual bonus for 2006 into the family trip and savings.

[mishl982]

If you want to argue this, go ahead. I just don't care anymore. I'm mad over something that happened the other day on this site, so I'm very frustrated.
I"m not going to argue with what you posted in reply, but do not poo on my goals. I am not an idiot and it's not like I'm going into this with blind eyes. You don't know anything about what I have saved, what I have researched, and what my plans are.

And if you're frustrated with something else on this it is not fair to take it out on me.

[EmberMae]

First of all, I plan to put another $2,000 in emergency savings. This will give us roughly 3 months bills in emergency savings.

Second, pay off my fiance's car so that we can have the title in our hands by mid December. The car is in his father's name, gotten with his father's shitty credit, so the interest rate is 8.75%. except we are paying for it. :rolleyes:
If we are able to follow my strategy it will be paid off over 3 years early by October. That strategy involves putting all the money we are saving now towards the car since we're only earning 5% on our savings. After we are married and the car is in his name we will be able to share an insurance policy which will hopefully save money.

Third goal is to begin contributing to fiance's 401k, which his company matches 100% on the first 5% of his salary so we plan to contribute the whole 5% starting on his elligibility date in June.

There are some challenges to achieving these goals. We would like to move closer to work which will most likely mean a large rent increase & that scares me somewhat. We will save on gas but unless gas prices go up very high we will still be paying more overall. But it seems like such a waste spending almost 2 hours a day in our cars. I hope for January and February to be pretty lean months as far as spending goes. December was out of control. I'm hoping that my company will finally make good on offering me a fulltime, permanent position, which should involve a slight raise. We'll see.

[slimjim]

[QUOTE=SpaceMonkey]My 2007 goals:
4. Use some of the cash I have accumulated in my ING Direct account to set up a 12 month CD ladder similar to what an earlier poster described.
QUOTE]

Why would anyone between the ages of 20-75 ever buy a CD... especially a ladder of CDs????

[redav]

Why would anyone between the ages of 20-75 ever buy a CD... especially a ladder of CDs????
Different financial products are available because people need to do different things with their money. Think diversification.

To quote the earlier post SpaceMonkey was referring to:
I buy CDs such that one will mature each month. This will be my emergency cash reserves. If I find myself in a bind (e.g. disabled, laid-off), I can tap a CD each month to cover expenses.
It is wise to have cash reserves. These are called cash reserves because they need to be in a principle protected vehicle (savings acct, money market, CD) so that when the next 9/11 happens, the stock market crashes, you loose your job, & need the funds, they will still have their full value. Savings pay too little interest. Money markets are more liquid than CDs, but CDs will pay more. Setting up a CD ladder is one way to overcome the liquidity problem of CDs. This is just one reason to have a CD ladder; there are others.

[slimjim]

you can get 5.5-6% in 7 day paper, no need to buy CDs.

and with the amount of capital that people on here are probably investing in CDs, the few dollars worth of extra intrest that they will give you over a MMA isn't worth tying your money up for.

[nikorock28]

you can get 5.5-6% in 7 day paper, no need to buy CDs.

and with the amount of capital that people on here are probably investing in CDs, the few dollars worth of extra intrest that they will give you over a MMA isn't worth tying your money up for.

and where do you get this magical 5.5-6% at???
CD's are also an excellent investment for some people for the very reason that you state: the money is tied up. once money is tied up, people are unable to leak it away on purchases, impulse buying, the nicer car, etc. i think this is a HUGE benefit of CD's as opposed to money market accounts.

[vxmike]

and where do you get this magical 5.5-6% at???
CD's are also an excellent investment for some people for the very reason that you state: the money is tied up. once money is tied up, people are unable to leak it away on purchases, impulse buying, the nicer car, etc. i think this is a HUGE benefit of CD's as opposed to money market accounts.

I would love to know where to get 6% on essentially liquid money. The best I know of is 5.50% at http://www.superiorsavings.com/

I bought a nine month CD at 6% last summer that matures in May. It's been a great investment since I've yet to see a higher rate for short term cash.

[slimjim]

I would love to know where to get 6% on essentially liquid money. The best I know of is 5.50% at http://www.superiorsavings.com/

I bought a nine month CD at 6% last summer that matures in May. It's been a great investment since I've yet to see a higher rate for short term cash.

you can't just go through some hole-in-the wall bank that throws some teaser rate out there. You need to go through a brokerage house.

[slimjim]

CD's are also an excellent investment for some people for the very reason that you state: the money is tied up. once money is tied up, people are unable to leak it away on purchases, impulse buying, the nicer car, etc. i think this is a HUGE benefit of CD's as opposed to money market accounts.

let me take a moment to paraphrase your comment "we are a society that has no will power. Lives on a give it to me now, I'll pay later basis. Basically, the common citizen is an idoit"

If you (the collective you, not you in particular) have the problem of impulse buying, getting the nicer car, etc .... my bet is that you don't have any extra money to buy CDs anyhow.

[slimjim]

I bought a nine month CD at 6% last summer that matures in May. It's been a great investment since I've yet to see a higher rate for short term cash.

Keep in mind that a 9 month 6% CD is not paying you 6%. 6% APY is for 12 months. So lets say you put $1,000 in a 9 month 6% CD. You would get $45 at the end of 9 months.

A whopping 4.5%. You just made $45 on a $1,000 investment and had to tie up your money for 9 months.

[nikorock28]

let me take a moment to paraphrase your comment "we are a society that has no will power. Lives on a give it to me now, I'll pay later basis. Basically, the common citizen is an idoit"

If you (the collective you, not you in particular) have the problem of impulse buying, getting the nicer car, etc .... my bet is that you don't have any extra money to buy CDs anyhow.

i am just saying that it is harder to spend money when it is tied up as opposed to when it is sitting in an account. why do you think that people cut up their credit cards? it is the same logic. not everyone has your discipline.

[pisces2473]

Slimjim, welcome to QLC. I'm one of the moderators, along with Wordsmith and And1grad.

I've noticed that your posts are very informative, but only in certain situations, for certain types of individuals. I'd like you to think before you post, not everyone has the opportunity to save as you have, which I think has been pointed out by enough people already.

Please do not be so judgmental. We welcome your input, but please be respectful of others.

Thanks.




As for CDs vs playing the market--a lot of people are intimidated by the market and are scared that they might lose their money. I know I am.

[winneythepooh7]

Slimjim, welcome to QLC. I'm one of the moderators, along with Wordsmith and And1grad.

I've noticed that your posts are very informative, but only in certain situations, for certain types of individuals. I'd like you to think before you post, not everyone has the opportunity to save as you have, which I think has been pointed out by enough people already.

Please do not be so judgmental. We welcome your input, but please be respectful of others.

Thanks.




As for CDs vs playing the market--a lot of people are intimidated by the market and are scared that they might lose their money. I know I am.

God, thank you Pisces. I think it's common sense that many of us are living on modest salaries, and are just looking for HELPFUL tips to stretch that. I think if anyone has money for really big-time investing, they're not going to be on QLC looking for financial planning advice. They probably can afford to hire someone to do that.

Since I started this thread, I'd like to remind everyone not to be so condescending. Just share simple things that help you save $$$.

[slimjim]

Slimjim, welcome to QLC. I'm one of the moderators, along with Wordsmith and And1grad.

I've noticed that your posts are very informative, but only in certain situations, for certain types of individuals. I'd like you to think before you post, not everyone has the opportunity to save as you have, which I think has been pointed out by enough people already.

Please do not be so judgmental. We welcome your input, but please be respectful of others.

Thanks.


As for CDs vs playing the market--a lot of people are intimidated by the market and are scared that they might lose their money. I know I am.

I didn't mean to come off the wrong way, and I appologize. Thanks for welcoming me aboard. I just believe that you are taking more risk by being conservative than the actual risk you take by doing something you believe to be "risky". With 3% inflation a 6% CD is earning a real return of 3%, which after taxes on the interest ends up being next to nothing. If you are in the 20-40 age bracket, you should be risk adverse. If you are saving for an "emergency" fund, it should be liquid and be in a MMA. The 50-100 basis point differential below a CD (in my opinion) is acceptable for the liquidity that you get in not having to tie up your money. Also, with the current slope of the yield curve, the last thing that you wnat right now is to be locked in with long durations. If you are going to be in CDs, at least go with short maturity CDs.

My belief is that you should save somewhere between 2-6 months living expenses in liquid cash. This is dependent upon your personal situation (what other assets you have, how quickly you think you can get a new job, etc). Then, once that is in place, you dump the rest of your cash into the market. Personally, I believe in individual stocks, but this is not best for most people. If you buy a high yielding index fund (one that tracks dividend paying stocks) or an ETF you are much better than a CD.

For example, take BDJ. Its an ETF that holds solid companies with good dividends and sells covered calls against the positions to garner income. It pays an 8% Dividend, which is paid out monthly. Not only do you get dividend income, you get capital appreciation. Now there is risk as you can get capital depreciation, but without risk there is no reward. Maybe this example is a little complex (at least the internal workings of this particular ETF), but my point is that there are so many ways to make your money work for you and I believe that CDs are one of the worst.

[pisces2473]

I think people who don't have a lot to initially invest are scared about losing what little they have. That's why people don't want to take huge risks even if the return is great.

Anyone can correct me if I'm wrong!

[slimjim]

I think people who don't have a lot to initially invest are scared about losing what little they have. That's why people don't want to take huge risks even if the return is great.

Anyone can correct me if I'm wrong!

no doubt you are 100% correct in your assumption. However, I think that people need to understand that their "perceived" risk is generally much greater than the "real" risk and also that there really is just as much financial risk in being extremely conservative as there is in being completely aggressive.

I'm still amazed that people fear the market crash. It was purely do to speculation and history has shown that when there is speculation, there will always be some type of correction. However, if you are not a speculator, I believe you are relatively safe. Most investors who went through the dotcom crash are generally doing very well today.

With that said, if you don't first have a free cash, you shouldn't be investing. Once you have a little cash buffer, the only way to make your money truely work for you is to invest in the market.

[winneythepooh7]

With that said, if you don't first have a free cash, you shouldn't be investing. Once you have a little cash buffer, the only way to make your money truely work for you is to invest in the market.


Again, this is still someone's personal choice. I am sure there are other ways to make one's money work, besides investing.

[pisces2473]

Winney, what do you mean? 401Ks, IRAs, and the like are still investments...the companies just do it for you.

[winneythepooh7]

Winney, what do you mean? 401Ks, IRAs, and the like are still investments...the companies just do it for you.

From the way I was reading Slimjim's posts, I got a vibe he was talking about something a little "bigger" though. I personally don't think I am ever going to be in a financial position where I will have enough of a buffer to play the stock market.

401K or IRA, sure. We will actually be starting an IRA when we get married.

[capella]

I don't know if this is a tip or not but here goes...

My biggest bill each month, by far, is my mortgage payment. To make this seem like a smaller chunk I split it into 4's and put each 1/4 into another account until it's time to pay the mortgage. It really helps me not freak out over having a large bill due. And I always know the money is there.

I do this with every paycheck (if my husband and I are paid the same week then I put 1/2 the mortgage aside. 4 checks a month... 4 payments into the account. I am also a week or two ahead on it (it used to be a month ahead, but I had to pull some of the money for a car repair and I had to put it back in a later check, which put me 2 weeks behind... but it's still ahead... does that make sense at all? Like right now in the account I have 1/4 of Feb's mort. payment set aside. January was paid already right before Christmas. Next week will be the 2nd and 3rd 1/4 of Feb.'s payment (we get paid on the same week). I know it sounds a little confusing, but it really helps a lot. I don't even notice the huge bill since it's just 4 little ones now.

Also, I decided to take one large debt that I have and instead of stressing over it make a pain free plan to pay it off. I will take what I pay on it and then what I owe on it and then figure out how much I have to add to what I pay now to have it done at the end of the year. I can only do one at a time, but I should have some chunks of money left to help put a dent in some other ones.

[pisces2473]

From the way I was reading Slimjim's posts, I got a vibe he was talking about something a little "bigger" though. I personally don't think I am ever going to be in a financial position where I will have enough of a buffer to play the stock market.

401K or IRA, sure. We will actually be starting an IRA when we get married.
Ah, yeah...I also thought he was talking more about playing the market individually, rather than a company doing it for you.

I'm on my IRA's website now, trying to figure out how to make my money work better for me.

[winneythepooh7]

I don't know if this is a tip or not but here goes...

My biggest bill each month, by far, is my mortgage payment. To make this seem like a smaller chunk I split it into 4's and put each 1/4 into another account until it's time to pay the mortgage. It really helps me not freak out over having a large bill due. And I always know the money is there.

I do this with every paycheck (if my husband and I are paid the same week then I put 1/2 the mortgage aside. 4 checks a month... 4 payments into the account. I am also a week or two ahead on it (it used to be a month ahead, but I had to pull some of the money for a car repair and I had to put it back in a later check, which put me 2 weeks behind... but it's still ahead... does that make sense at all? Like right now in the account I have 1/4 of Feb's mort. payment set aside. January was paid already right before Christmas. Next week will be the 2nd and 3rd 1/4 of Feb.'s payment (we get paid on the same week). I know it sounds a little confusing, but it really helps a lot. I don't even notice the huge bill since it's just 4 little ones now.

Also, I decided to take one large debt that I have and instead of stressing over it make a pain free plan to pay it off. I will take what I pay on it and then what I owe on it and then figure out how much I have to add to what I pay now to have it done at the end of the year. I can only do one at a time, but I should have some chunks of money left to help put a dent in some other ones.

That does make sense. I also see what you are saying about the large debt. Divide it by the number of months you would like to have it paid off, and you will get a realistic amount for what you should be paying each month to reach that goal of paying it off in a certain time frame.

[capella]

That does make sense. I also see what you are saying about the large debt. Divide it by the number of months you would like to have it paid off, and you will get a realistic amount for what you should be paying each month to reach that goal of paying it off in a certain time frame.
Yep. I have a private loan of 5K from school I need to get paid off (for various reasons... it's not through a bank, but a family friend so no interest or anything, BUT it needs to be paid off). I already put 150 a month towards it. If I added 350 a month to it I would be done with it in about 10 months.

I have a few others that would go down if I threw a hundred or two at them each month. Then when the big ones (I have two debts that are large... 5K and 6K) are done the little ones should be, or they should at least be small enough to ax without too much further hassle.

It's still depressing to think I'll be in debt at least 2 years more. I am sick of it. But what can you do? Not everyone has had the opportunity to live debt-free. At least I am able to feed, clothe, and house myself AND pay down my bills. I am still young. I will be 26 in sixteen days. I am starting to feel older. I know that's silly but that is how I feel. :eek: I have a lot I want done by the time I am 30. And yes, I know that I'm not magically going to get wrinkled and start walking with a cane at 30. But I do want to have no other debts but a mortgage. I do want to be in a place to save a lot more by then. That's a tall order in my current financial state.

[pisces2473]

That's smart about the mortgage, Amy, so that you're not scrambling when the bill is due, wondering where the money made that month went.

We do that too for our rent, which is $1000/month. C is paid every week and puts $200 of his check in our joint account. I am paid every 2 weeks and put $400 in the account. That way, we have enough for bills, food, and rent, and what's left out of our checks is for us to spend--whether it be on car stuff, cell bills, clothes, whatever.

[pisces2473]

It's still depressing to think I'll be in debt at least 2 years more. I am sick of it. But what can you do? Not everyone has had the opportunity to live debt-free. At least I am able to feed, clothe, and house myself AND pay down my bills. I am still young.
Just keep remembering this, when you start to feel down.

Also, you are almost 26--you've done a lot already for someone so young. Remember that too.

[SpaceMonkey]

Just keep remembering this, when you start to feel down.

Also, you are almost 26--you've done a lot already for someone so young. Remember that too.

Exactly. Having a plan to get rid of that debt while you are still in your 20s is a big deal, IMO. You should be proud!

[pisces2473]

Exactly. Having a plan to get rid of that debt while you are still in your 20s is a big deal, IMO. You should be proud!
I was talking more about the fact that she's a homeowner, has a transferrable career, married, and in the grand scheme of things, not that much school debt. But yeah, the plan to get RID of the debt is great too.

[capella]

I was talking more about the fact that she's a homeowner, has a transferrable career, married, and in the grand scheme of things, not that much school debt. But yeah, the plan to get RID of the debt is great too.
Thanks. I think? :) I know I've done a lot. I also have a sicko perfectionistic need to do and be all I can. If I know I can do better or be more or grow then I will obsess on it. It's one of my best and worst attributes. :rolleyes:

Back on topic though!

[pisces2473]

Thanks. I think? :) I know I've done a lot. I also have a sicko perfectionistic need to do and be all I can. If I know I can do better or be more or grow then I will obsess on it. It's one of my best and worst attributes. :rolleyes:

Back on topic though!
No, you shouldn't question my kudos to you. I only pointed that out because I see how hard you are on yourself. You need to see how well you've done and that you've got plenty of time to do more and be more.

Anywhoo...I'm switching some of my money around in my Roth right now, I'm going to be a bit more aggressive this year.

[capella]

No, you shouldn't question my kudos to you. I only pointed that out because I see how hard you are on yourself. You need to see how well you've done and that you've got plenty of time to do more and be more.
You know... thanks Jen. That's a really nice thing to hear on the first day of a new year. :) I do recognize that I am too hard on myself. I know why that is and I think it would be an interesting discussion, but I'll start another thead. :p

[winneythepooh7]

You know... thanks Jen. That's a really nice thing to hear on the first day of a new year. :) I do recognize that I am too hard on myself. I know why that is and I think it would be an interesting discussion, but I'll start another thead. :p

I agree that you are being really hard on yourself as well.

In any event, I just spent some more time revamping my budget for the month/year and setting my financial goals again. I also came across an extra $50.00 I was able to transfer into my savings.

I am focused on paying off my car loan first (and I think I can use my tax refund and my "2 extra paychecks") to meet this goal.

Then it's onto the credit card. I definitely think both things are very do-able. If anything, I want the car paid off completely (we all know about those emergencies that always pop up so I won't beat myself up if I still have some money on the CC).

[AshleyJordan]

I think I, too, might have some "found money" in 2007. I'm probably going to split that between my high-interest savigns account and paying off my low-interest student loan, rather than to put it all in one place. . .
I should probably talk to my accountant or my cousin the financial advisor about this to make sure this is the most cost-effective idea.

[pisces2473]

I worked on mine as well. I looked at how much I take home every two weeks. I think I can put $100 into my Roth, $400 into our joint account for living expenses and still have a decent chunk of money to either spend or save. Well, some of it will be spent on personal expenses, like gas and other car stuff, etc. I don't have too much on credit cards right now, probably around $1200, and I'll just try not to charge anything and pay it off as fast as I can. I don't really keep balances too long on my CC, so I need to stop beating myself up when I DO have a balance on it, because it's not bad. It could be worse. It can ALWAYS be worse.

[AshleyJordan]

I was talking with my friend last night (an nyc public school teacher,) about how our incomes now are still modest but we have all of expenses covered and a little bit left over. We realized something important that I think is worth mentioning on this thread: that we're still at the earlier stages of our careers, and our incomes are only going to go up from here. Often times when you start making your money you also increase your spending, but I know even though i'm making slightly better money now my expenses aren't that different from when i was in undergrad. . .

[pisces2473]

You really think your income will rise? I don't want to sound pessimistic, but do you really think it'll increase so much that you'll notice it? Especially with inflation rising, COL increasing, etc?

I don't think we'll significantly notice any income increases...unless it's huge.

[capella]

One of my biggest money/career concerns is the very fact that my income won't really rise (especially when you factor in the cost of living increases and inflation). I might see a 500 a year step increase (and that's the top end) and an average 3-4% increase in pay (possibly, but that's not guaranteed).

[AshleyJordan]

You really think your income will rise? I don't want to sound pessimistic, but do you really think it'll increase so much that you'll notice it? Especially with inflation rising, COL increasing, etc?

I don't think we'll significantly notice any income increases...unless it's huge.

Maybe I am being too Pollyanna about this, but I honestly think it will. . . I'm not talking about huge impressive leaps. . . but definitely enough to stay ahead of inflation. I don't want to thread-jack by getting into the nitty-gritty of my own personal finances, but my bank considers me a pretty good credit risk, and I've discussed my own career growth/salary increases with the people at the top of my org, and so I feel pretty comfortable expecting (modest) salary increases.

[winneythepooh7]

You really think your income will rise? I don't want to sound pessimistic, but do you really think it'll increase so much that you'll notice it? Especially with inflation rising, COL increasing, etc?

I don't think we'll significantly notice any income increases...unless it's huge.

I often am concerned about this as well, and I also am in a similar field as Ashley.

I mean, if anything, I am going to be taking on MORE debt/expenses in the future, especially if we ever get a house.

I mean, yeah, M's business could do awesome, but I still am not of the mindset where I can really look at HIS money as MY money (but that's another thread that has already been debated!).

[AshleyJordan]

I mean, if anything, I am going to be taking on MORE debt/expenses in the future, especially if we ever get a house.


At least for the time being, I've tried very hard to keep my expenses down. . . for example, I probably live in the squarest neighborhood in New York. Sure, if I wanted to kill myself to make the rent every month I could spend more to live in Park Slope or Williamsburg. . . but I prefer to spend a smaller % of my income to live in a nice apartment but in a very boring, safe, area. A lot of these choices were made with an eye toward the next couple of years, when I do plan for my housing costs to rise considerably.

[pisces2473]

I think I'll be able to comment about salary increases after I have my review, which should be sometime this week.

*new thread idea*

[slimjim]

Ah, yeah...I also thought he was talking more about playing the market individually, rather than a company doing it for you.

I'm on my IRA's website now, trying to figure out how to make my money work better for me.

when i refer to "the market" or "investing", I am talking about any and all aspects of it. This includes 401s, IRAs, etc, not just something big or individual stocks.

In your 410s and IRAs, at this age you should be 100% equities or at the most 10% bonds (and I would lean towards higher yielding ones). I prefer individual equities myself, but they can be tricky and it is time consuming. However, the money in your 401s and IRAs is "investing" assuming that you just don't have it sitting in a money market or CD inside these shelters.

If you are contributing to these, no matter how small, you are on the right track.

what type of funds / stocks / etc do you have your money sitting in, within each of these retirement vehicles?

[pisces2473]

I have a certain percentage in a fixed account, which I tried to find more info on today but couldn't. Of the rest of my IRA, I have 50% in a mid risk fund, 25% in a high risk, and 25% in a money market. I just changed this, so I'm going to see how it goes. If it looks good, I'll change the percentages again, with more money in the riskier areas. Before I changed it, I had money in the mid risk and the money market.

[slimjim]

I have a certain percentage in a fixed account, which I tried to find more info on today but couldn't. Of the rest of my IRA, I have 50% in a mid risk fund, 25% in a high risk, and 25% in a money market. I just changed this, so I'm going to see how it goes. If it looks good, I'll change the percentages again, with more money in the riskier areas. Before I changed it, I had money in the mid risk and the money market.

I'm interested in knowing your thought process for having money in a MMA inside of an IRA. Some people might do this to have cash on hand to deploy for "trading", but I don't think that your thinking here. The reason that I ask is that an IRA is for retirement. I'm gonna guess, that you have at least 40 years until 67.5, so you have all the ability in the world to ride out waves in the market. Just about any fund or index was up big in 2006, but being in a MMA you missed all those gains.

[pisces2473]

I'm interested in knowing your thought process for having money in a MMA inside of an IRA. Some people might do this to have cash on hand to deploy for "trading", but I don't think that your thinking here. The reason that I ask is that an IRA is for retirement. I'm gonna guess, that you have at least 40 years until 67.5, so you have all the ability in the world to ride out waves in the market. Just about any fund or index was up big in 2006, but being in a MMA you missed all those gains.
Yeah, I don't know what I was thinking when I set it up years ago. I think I was hesitant to tie up my money for so long and with so much risk, but now I realize there are many years until I'll be able to touch it. That's why I've changed the risk factor. Like I said, I'll think about changing it again if my next statement brings good things :)

By the way, I know nothing about this stuff. I'm totally just picking blindly here. I looked at the high risk funds that have had good growth and had been around for a few years.

[Xander]

By the way, I know nothing about this stuff. I'm totally just picking blindly here. I looked at the high risk funds that have had good growth and had been around for a few years.
I'm terribly rusty on all of this stuff myself, so I think it's great that you're gaining interest in something so important and reading up on it. Just to note, a fund's past success is no guarantee that it'll continue to do well. I'd be more concerned with the investment philosophy behind the fund, management, fees, etc.

And all this talk is making me want to rethink my 401. :) Good tips so far--keep them coming!

[redav]

Pisces, I'm fascinated by the designation of your funds by risk. Since there are so many ways that a fund can compile an overall risk exposure (e.g. diversification, market cap, asset type, domestic/foreign, etc), it doesn't seem very helpful.

I do agree that young people ought to have nearly all their retirement investments in diversified stocks rather than cash (or bonds). However, some people just don't handle loosing value well, so when another 2002 rolls around and you start seeing returns of -60% quarter after quarter, the stress they suffer is too much. For them, having less in stocks will make them feel better, but they have to remember that their long-term returns are going to be lower because of it.

I still have enough risk tolerance that downturns like that don't rattle me too much. Right now, I have 90%/10% in stocks/bonds. I don't expect to stray too far from that balance for the next 10 years or so.

[winneythepooh7]

OK. I just opened an IRA through my ING account. Since I am broke right now, I opted for the plan where I automatically pay $25.00 a month to this account. (I suppose I can put in more if I have extra cash each month).

I am still planning to save at least $100.00 a month in my high-interest savings, which is also automatically placed in with every paycheck.

Now what?? This thread is making me feel very poor compared to other posters.

[slimjim]

Taking the mutal fund topic and spinning to a financial Tip:

Make sure you are aware of the fees charged by the fund. You really don't want to have an expense ratio of more than 1.5% and it is best to keep it under 1% if possible.

The best way to do this is to buy index funds (ie, vanguard total market, or vanguard 500). Because there isnt an active management, the fees are very low. Also, the problem with finding funds are that there are so many of them and most do not beat their benchmark and more than 85% underperform the s&p.

If you are buying in an IRA and you are not indexing, I really like the Davis NY Venture Fund (NYVRX).

Also be mindful of the type of shares you are buying, A, B, C class. All carry different loads.

Also, data proves that most funds that perform well in one year do not in the next. The reason is that too many people follow performance and the fund managers have too much money to work with (yes, too much money can be a problem).

Also, don't get caught in the 1, 3, 5, 10 year average trap. Remember that an average doesnt really tell you much. If a fund had was up 50% in one year and then down 50% the next and then up 50% the next, the "average" return for 3 years would be 16.6%, yet if you bought at the beginning of year 2, your have 0%.

hope that helps.

[slimjim]

OK. I just opened an IRA through my ING account. Since I am broke right now, I opted for the plan where I automatically pay $25.00 a month to this account. (I suppose I can put in more if I have extra cash each month).

I am still planning to save at least $100.00 a month in my high-interest savings, which is also automatically placed in with every paycheck.

Now what?? This thread is making me feel very poor compared to other posters.

you should look into which (if any) index funds they allow you to buy at no load on a weekly basis. Although you may need a minimum of $250-$500 to start. ING probably isn't the best place to be. I think you would be better served if you moved your IRA to Vanguard.

[pisces2473]

Pisces, I'm fascinated by the designation of your funds by risk. Since there are so many ways that a fund can compile an overall risk exposure (e.g. diversification, market cap, asset type, domestic/foreign, etc), it doesn't seem very helpful.

I do agree that young people ought to have nearly all their retirement investments in diversified stocks rather than cash (or bonds). However, some people just don't handle loosing value well, so when another 2002 rolls around and you start seeing returns of -60% quarter after quarter, the stress they suffer is too much. For them, having less in stocks will make them feel better, but they have to remember that their long-term returns are going to be lower because of it.

I still have enough risk tolerance that downturns like that don't rattle me too much. Right now, I have 90%/10% in stocks/bonds. I don't expect to stray too far from that balance for the next 10 years or so.
I didn't categorize them in that manner. A tip sheet from the people who do my Roth had them categorized in that manner.

Up to today, this is how my portfolio looked. The abbrevations for the names and percentages are below.

DREY STOCK INDEX FUND IS 22.23%
FIXED ACCOUNT 63.44%
GRTMRE GVIT MONEY MARKET I 14.33%

As soon as the market opens on Wednesday, this is what it'll look like:

DREY STOCK INDEX FUND IS 50%
GRTMR GVIT INTL VAL III 25%
GRTMRE GVIT MONEY MARKET I 25%

I have no idea if my fixed account has stayed the same or if it got swallowed up by these new changes. I'm not too worried.

[nikorock28]

you should look into which (if any) index funds they allow you to buy at no load on a weekly basis. Although you may need a minimum of $250-$500 to start. ING probably isn't the best place to be. I think you would be better served if you moved your IRA to Vanguard.

i opened a Roth IRA with Fiedlity some time back and I wanted to put my money in a mutual fund... but i needed a minimum investment of $2,500 to purchase a mutual fund with the Roth IRA. plus, there was also a $20 fee to buy it. how does Vanguard operate? can i put say, $100 a month, directly into a mutual fund every month within the Roth IRA with no fees to purchase it?

i put money into a 457 plan to avoid the 25% tax bracket when i was working (unemployed now) and it took me hours and hours of research to at least somewhat now what the heck to do. i read through each prospectus to figure out what the management fees were and tried my best to pick the lowest ones, while still maintaining diversified amongst large-cap, mid-cap, small, etc.. i initially had a 20% sitting in cash, but then decided to put it all into mutual funds. after some tweaking (i initially was putting money into loaded funds... oops!), i have the almost 100% (not full because there are miscellaneous amounts left over from trading) allocated over 10 funds now in the 457. i like the 457 because i can dip into it before retirement age (unlike the 401k), if need be. what i don't like is the additional 0.5 to 0.9% fees that Nationwide charges in addition to the mutual fund fees. however, at the time, it was being deducted from the 25% bracket and i will time it such that when i take it out i will hardly pay any tax on it.

[SpaceMonkey]

i opened a Roth IRA with Fiedlity some time back and I wanted to put my money in a mutual fund... but i needed a minimum investment of $2,500 to purchase a mutual fund with the Roth IRA. plus, there was also a $20 fee to buy it. how does Vanguard operate? can i put say, $100 a month, directly into a mutual fund every month within the Roth IRA with no fees to purchase it?

Vanguard's minimal initial investment for a fund in an IRA is $3,000. They charge a $10 annual fee for any IRA fund accounts below $5,000. The minimum purchase for most of their funds that I've seen is $100 (in other words, you can't deposit less than $100 in any single transaction).

[slimjim]

I didn't categorize them in that manner. A tip sheet from the people who do my Roth had them categorized in that manner.

Up to today, this is how my portfolio looked. The abbrevations for the names and percentages are below.

DREY STOCK INDEX FUND IS 22.23%
FIXED ACCOUNT 63.44%
GRTMRE GVIT MONEY MARKET I 14.33%

As soon as the market opens on Wednesday, this is what it'll look like:

DREY STOCK INDEX FUND IS 50%
GRTMR GVIT INTL VAL III 25%
GRTMRE GVIT MONEY MARKET I 25%

I have no idea if my fixed account has stayed the same or if it got swallowed up by these new changes. I'm not too worried.

what i don't like about this is that at the end of the day, you actually have more money in the MMA than you started with. Would be interesting to know the rate in the fixed account vs. the MMA.

You have the S&P index fund and and INT fund. you should look to put some money into a mid-cap and about 5-10% into a real estate fund (Cohen & Steers would be where you want to go).

[slimjim]

Vanguard's minimal initial investment for a fund in an IRA is $3,000. They charge a $10 annual fee for any IRA fund accounts below $5,000. The minimum purchase for most of their funds that I've seen is $100 (in other words, you can't deposit less than $100 in any single transaction).

I checked vanguards site and this is correct.

Fidelity might work best for you.
no maintence fees and the $2,500 minimum is waived if you make automatic contributions.
http://personal.fidelity.com/accounts/aong/roth_IRA_more.shtml.cvsr

[pisces2473]

what i don't like about this is that at the end of the day, you actually have more money in the MMA than you started with. Would be interesting to know the rate in the fixed account vs. the MMA.
Yeah I saw that too...but I don't know if the 25% of the MMA is 25% of my total money or 25% of the 37% (100-63 from fixed). If I'm making sense here...

You have the S&P index fund and and INT fund. you should look to put some money into a mid-cap and about 5-10% into a real estate fund (Cohen & Steers would be where you want to go).
I don't think I can put my money in any funds besides the ones that are "in" my Roth fund area, or whatever it's called. I have my Roth through Nationwide, who I also have my car and renter's insurance with.

[slimjim]

Yeah I saw that too...but I don't know if the 25% of the MMA is 25% of my total money or 25% of the 37% (100-63 from fixed). If I'm making sense here...


I don't think I can put my money in any funds besides the ones that are "in" my Roth fund area, or whatever it's called. I have my Roth through Nationwide, who I also have my car and renter's insurance with.

Who is advising you on where to put your money? Is it an insurance agent? Are you paying them?

What are the funds that are "in" your Roth fund area?

[redav]

I didn't categorize them in that manner. A tip sheet from the people who do my Roth had them categorized in that manner.
Personally, if that's the main way they categorized them, I'd be worried. It's more useful to know what they hold (e.g. broad market index fund, int'l growth fund, balanced stock/bond, etc) since you can extract risk from that.

For my tastes (ignore it if you want), 25% is more than I'd put into cash, or even bonds. It will give you positive returns, but they will be smaller, and on average, will weigh down the rest of your returns (not necessarily a bad thing, but it may slow growth over the long haul). Also, 25% in an international fund is a bit more than typically recommended (typ is up to 20%). While the value of the dollar falls, that int'l fund should perform very well, and you will look brilliant. But if that trend were to unexpectedly change (who can predict the future?), you may take a hard hit since it is exposes a lot to currency differences. If you don't mind me asking, why did you decide on these funds & mix?

As to some other questions about starting an IRA: I have a Roth IRA with Vanguard. It did not cost me anything to start. I was charged $10 once before I got above the limit for maintenance fees. (Each fund will have different rules for maintenance & custodial fees.) Vanguard funds are no-load funds, so there are no A, B, & C shares. I add funds each month through my bank's online bill-pay. Fidelity is also a good low-cost choice.

Companies are starting to offer life-cycle funds that are funds of funds--basically the company takes care of diversifying and rebalancing based on when you expect to retire. The risk exposure of the fund is automatically adjusted as you approach retirement. These seem to be a good vehicle for people with small portfolios or who don't want to continually manage their portfolio.

I don't think I can put my money in any funds besides the ones that are "in" my Roth fund area, or whatever it's called. I have my Roth through Nationwide, who I also have my car and renter's insurance with.
IRAs are not like 401(k)s--you can take them anywhere and put anything in it. If you don't like the options, it's pretty painless to roll it over to another company that gives you a better selection.

[pisces2473]

Who is advising you on where to put your money? Is it an insurance agent? Are you paying them?

What are the funds that are "in" your Roth fund area?
It's an insurance/financial agent. I don't pay them. I've had my insurance with Nationwide (and these agents) since I started driving. My family has done business with this agency since the 1950s.

I don't know ALL of the different investment area that available to me. Here's some off the top of my head--Dreyfus, Gartmore, Fidelity.

I don't know much about this stuff...I guess I'm doing fine. This is what happens when you are a liberal arts/humanities-type major and don't have anyone who understands financial stuff like this in your family...AND you don't have ANY employer-sponsored retirement funds. It could be a lot worse.

[nikorock28]

I checked vanguards site and this is correct.

Fidelity might work best for you.
no maintence fees and the $2,500 minimum is waived if you make automatic contributions.
http://personal.fidelity.com/accounts/aong/roth_IRA_more.shtml.cvsr

yes, i started the automatic contributions, but (as far as i could tell) i could only put the contributions into the fidelity cash reserves. i needed min $2500 to invest in a mutual fund.

[redav]

It's an insurance/financial agent. I don't pay them. I've had my insurance with Nationwide (and these agents) since I started driving. My family has done business with this agency since the 1950s.

I don't know ALL of the different investment area that available to me. Here's some off the top of my head--Dreyfus, Gartmore, Fidelity.

I don't know much about this stuff...I guess I'm doing fine. This is what happens when you are a liberal arts/humanities-type major and don't have anyone who understands financial stuff like this in your family...AND you don't have ANY employer-sponsored retirement funds. It could be a lot worse.

Most people actually learn this stuff on their own, through newspapers, websites, books, etc. Try going to each company's website and reading their general advice articles (most have them). That will explain a lot. Also, call one or two and ask them what's involved in investing. They are typically very helpful (but they do not give specific advice--they do not want to be accountable for your decisisions).

[pisces2473]

Personally, if that's the main way they categorized them, I'd be worried. It's more useful to know what they hold (e.g. broad market index fund, int'l growth fund, balanced stock/bond, etc) since you can extract risk from that.
I have no clue, and personally, I don't have time to sit around and worry about all of this. I don't really understand this stuff, and I have more interest in doing other things. All I want is to make sure I have SOMETHING for whenever I retire, whenever that might be. As I said in my previous post, I have no one to really ask about this stuff and I have to do this all on my own, as I have no employer-sponsored plan.

For my tastes (ignore it if you want), 25% is more than I'd put into cash, or even bonds. It will give you positive returns, but they will be smaller, and on average, will weigh down the rest of your returns (not necessarily a bad thing, but it may slow growth over the long haul). Also, 25% in an international fund is a bit more than typically recommended (typ is up to 20%). While the value of the dollar falls, that int'l fund should perform very well, and you will look brilliant. But if that trend were to unexpectedly change (who can predict the future?), you may take a hard hit since it is exposes a lot to currency differences. If you don't mind me asking, why did you decide on these funds & mix?
How do you know all of this? I didn't really have a method of picking. I figured that I need to increase my risk, so I put 25% of my money into something fairly risky. I had no idea that a typical recommendation is 20%. I don't know where one goes to get educated about this shit.

I'm starting to feel pretty insecure about all of this. Obviously there are people that are really interested in this stuff, and I am not one of those people. Money stuff just confuses me. That's great that you guys love this stuff, but please don't make the rest of us feel badly about what we've done.

As to some other questions about starting an IRA: I have a Roth IRA with Vanguard. It did not cost me anything to start. I was charged $10 once before I got above the limit for maintenance fees. (Each fund will have different rules for maintenance & custodial fees.) Vanguard funds are no-load funds, so there are no A, B, & C shares. I add funds each month through my bank's online bill-pay. Fidelity is also a good low-cost choice.
I didn't pay for mine either.

Companies are starting to offer life-cycle funds that are funds of funds--basically the company takes care of diversifying and rebalancing based on when you expect to retire. The risk exposure of the fund is automatically adjusted as you approach retirement. These seem to be a good vehicle for people with small portfolios or who don't want to continually manage their portfolio.

That sounds like something I'd be interested in...letting the company figure out how much to put where. But, can we trust these companies?

[nikorock28]

Most people actually learn this stuff on their own, through newspapers, websites, books, etc. Try going to each company's website and reading their general advice articles (most have them). That will explain a lot. Also, call one or two and ask them what's involved in investing. They are typically very helpful (but they do not give specific advice--they do not want to be accountable for your decisisions).

yeah, that's how i have been learning the past year. nobody in my family ever invested in anything, whether it be a 401k, stock, CD, etc. so, when i started my first real job, i read the pamphlet that Nationwide provided. i had no idea about investing before reading this. i became interested in it, so i began to read forums and information online. i have so much more to learn, but at least i know the basics now.

[nikorock28]

I didn't categorize them in that manner. A tip sheet from the people who do my Roth had them categorized in that manner.

Up to today, this is how my portfolio looked. The abbrevations for the names and percentages are below.

DREY STOCK INDEX FUND IS 22.23%
FIXED ACCOUNT 63.44%
GRTMRE GVIT MONEY MARKET I 14.33%

As soon as the market opens on Wednesday, this is what it'll look like:

DREY STOCK INDEX FUND IS 50%
GRTMR GVIT INTL VAL III 25%
GRTMRE GVIT MONEY MARKET I 25%

I have no idea if my fixed account has stayed the same or if it got swallowed up by these new changes. I'm not too worried.

it appears that you no longer have a fixed account... your 25% in the money market is 25% of the total 100%... not 25% of the 37%. what redav was saying is that for 25% of your portfolio to be in one international fund might be a bit too risky.

i admit it is A LOT of work to learn all of this stuff if you have had no prior experience to it. before the dot com crash a few years back, some people could care less about diversifying. from what i have read, it seems diversification became more of a big deal after people put all of their money in tech and were cleaned out.

[nikorock28]

That sounds like something I'd be interested in...letting the company figure out how much to put where. But, can we trust these companies?[/QUOTE]

a life cycle fund is just a mutual fund where the managers of the fund are more or less aggressive depending on how many years you have until retirement. they basically increase the cash component of your portfolio as you age. fidelity (and vanguard?) offers life cycle funds. so, you can put 100% of your portfolio in one life cycle fund and you wouldn't be too bad. in fact, that might be a very good option for you pisces.

[redav]

I'm starting to feel pretty insecure about all of this. Obviously there are people that are really interested in this stuff, and I am not one of those people. Money stuff just confuses me. That's great that you guys love this stuff, but please don't make the rest of us feel badly about what we've done.

Sorry. That really wasn't my intent. :redface: I've been picking up on bits here and there (financial section of the newspaper, conversations with others, my company's 401(k) presentations, investment companies' newletters--and where ever else I can) for the last 5+ years. When I first started, I made some less-effective decisions, got some insight from people who knew better, and now I'm in better shape. Unfortunantly, I don't know how to share that info without it sounding nit-picky.

Personally, I think that since you are showing interest, putting forth effort, and trying to make good decisions, you'll be fine. Just don't give up or become complacent/detatched. I think the impression comes across that only a special few with the "inside-know" can do it right, but I garantee you, investing & planning for retirement is something that ANYONE can do, if they stick with it just try to always to better.

[awhitmer83]

To answer the OP, my husband and I are totally revamping our finances this year. We just got rid of all our CC debt (thanks, bankruptcy), I finally got a job, and we're learning to live on cash only for the first time in our lives. We have a large (to us) amount of money left over after bills, so I'm planning ahead - I don't want to get used to wasting it.

Here's our plan so far:

- We made a detailed list of our bills and divided them by the two pay periods each month (we get paid at the same time). We're able to pay some things a few days late, like the phone bill, and others a little early to give us roughly the same dollar amount per pay period. Anything that stays the same, like our house payment, is automatically deducted from checking.

- We had our property taxes and homeowner's insurance put in with our house payment so we don't have to come up with the money at the end of the year.

- I enter all of our spending into Microsoft Money each month. It gives a breakdown of what percentage of income is spent on different things, like eating out (a major thing for us in the past).

- $100 per pay period is automatically placed into savings. Of course, we can add more if we want, but that is the minimum amount I was willing to put back. This is our emergency fund where we'll try to build enough to cover six months of expenses - other money is just left in checking.

- I'll start contributing to my 401(k) at the end of 2007. I'll be putting in 7% to get 10% with my company's match, so for now I'm putting 7% of my take-home pay into savings. I realize the 401(k) will be pre-tax, but that way we'll actually have more money when I start paying in for real. Also, half of any pay increase will be put toward the 401(k). For instance, if I get a 3% pay raise, I'll contribute 1.5% more.

- We spend $150 per pay period on gas. On payday, I withdraw $150 from the ATM and that money is to be spent ONLY on gas.

- I round my student loan payments up. For instance, one is $63 so I pay $100. The other is $155, so I pay $200. I also kick in more money with our two "extra" paychecks each year. With any luck, they'll be paid off in 10 years or so. When they're paid, that $300 a month will be added on to our house payment - we'd like to pay it off in 20 years instead of 30.

- We follow Dave Ramsey's train of thought on leftover money - it needs to be put in a category, no matter what that category is. I have all kinds of headings in Microsoft Money - $ for next Christmas, $ for clothing, $ for entertainment, etc. I want every dime going somewhere, even if it's allotted for chewing gum. That way we plan ahead for major purchases instead of losing a chunk of money one month and being short the next.

So that's the plan for now. It may end up changing as the year goes on, but anything is better than the way we've done things in the past.

[pisces2473]

it appears that you no longer have a fixed account... your 25% in the money market is 25% of the total 100%... not 25% of the 37%. what redav was saying is that for 25% of your portfolio to be in one international fund might be a bit too risky.
What the hell IS a fixed account anyway!? lol I thought it was good for me to be a little more aggressive, esp as I'm almost 27 and have plenty of years left until I can touch the money. So why isn't the risk good?

Sorry. That really wasn't my intent. I've been picking up on bits here and there (financial section of the newspaper, conversations with others, my company's 401(k) presentations, investment companies' newletters--and where ever else I can) for the last 5+ years. When I first started, I made some less-effective decisions, got some insight from people who knew better, and now I'm in better shape. Unfortunantly, I don't know how to share that info without it sounding nit-picky.

Personally, I think that since you are showing interest, putting forth effort, and trying to make good decisions, you'll be fine. Just don't give up or become complacent/detatched. I think the impression comes across that only a special few with the "inside-know" can do it right, but I garantee you, investing & planning for retirement is something that ANYONE can do, if they stick with it just try to always to better.
It's okay, I just got a little prickly before. Like I said earlier, since I've never worked for a company that offered a 401k, I don't know anything about them. I did the Roth all on my own, since I had some extra money when I first started working in 2003 and figured it would be a good idea to start one.

Is there any right way to do this? No one's a psychic, no one knows how a fund will do or what the market will bring. I'm really just guessing here.

Thanks for all the advice, so far :)

[vxmike]

Keep in mind that a 9 month 6% CD is not paying you 6%. 6% APY is for 12 months. So lets say you put $1,000 in a 9 month 6% CD. You would get $45 at the end of 9 months.

A whopping 4.5%. You just made $45 on a $1,000 investment and had to tie up your money for 9 months.

Obviously we're talking about APY here. I would love to see any credible on how to safely obtain higher than 5.50% APY on liquid money.

[vxmike]

I'm still amazed that people fear the market crash. It was purely do to speculation and history has shown that when there is speculation, there will always be some type of correction. However, if you are not a speculator, I believe you are relatively safe. Most investors who went through the dotcom crash are generally doing very well today.

With that said, if you don't first have a free cash, you shouldn't be investing. Once you have a little cash buffer, the only way to make your money truely work for you is to invest in the market.

We're in the most speculative economy presently that I can ever recall.

How do you claim that only speculators get hurt in crashes? When the market gets taken down by a speculator-driven crash all the steady little savers buying their mutual and index funds will get hurt plenty.

Yes a lot of people who went through the crash are OK today....but my opinion is we're still in the midst of the dead cat bounce off the 2000 decline.

Past peformance is no indication of future results. It's ALL educated (or not) speculation...

[vxmike]

You really think your income will rise? I don't want to sound pessimistic, but do you really think it'll increase so much that you'll notice it? Especially with inflation rising, COL increasing, etc?

I don't think we'll significantly notice any income increases...unless it's huge.

I agree. Incomes overall do not even keep up with inflation, so the only way people will gain ground is growth due to promotions, merit raises, etc in addition to standard wage increases.

Your standard 2-3% wage increase doesn't match the cost of living increase. Yeah we might all see 40% higher wages in ten years but how much will everything cost???

[nikorock28]

What the hell IS a fixed account anyway!? lol I thought it was good for me to be a little more aggressive, esp as I'm almost 27 and have plenty of years left until I can touch the money. So why isn't the risk good?


A fixed account is something that has a fixed interest rate. For example, in my 457 Nationwide Account i believe there is a fixed account with a rate of 4.10%. This means whatever money you put in there will grow at a rate of 4.10%, forever (though, I believe they have the right to change the rate at any time... similar to credit card interest). A fixed account protects against the volatility (ups and downs) of the market. A fixed account is essentially the same thing as a money market account and is sometimes referred to as a cash equivalent (or just cash).

Yes, at your age, I believe all of your money should be in stocks (or mutual funds in the case of your IRA), not bonds or a fixed account (cash). This provides the best chance to maximize your returns over the long haul. However, that being said, you want to diversify WITHIN the funds, meaning percentage portions are delegated to each different "type" of mutual fund. The main "types" of funds are large-cap, medium-cap, small-cap, international and cash. Redav was simply stating that you probably shouldn't have 25% in one international fund as that is generally accepted to be above the optimum allocation. However, I have seen recommendations that also said 25%... go figure. In my opinion, you might want to allocate your portfolio over maybe 5 funds as opposed to the 3 that you have now. This will protect you more in case one drops drastically. It depends how many options you have within your plan too and whether you have "good" funds or not. Many 401k plans have no good funds at all. But, from what I gather, yo u probably have decent funds to choose from.

[pisces2473]

Cool! Thanks Niko.

[NewMrs.]

If you are good about using your credit cards, get a cash back card like theAmex Blue Cash (https://www124.americanexpress.com/cards/loyalty.do?page=bluecash) or Citi Dividend (http://hhonorscard.com/us/cards/cardserv/divplat/index.jsp). Both give better cash back then Discover (up to 5% on the Amex).




You probably have to be pretty disciplined with credit cards to do this, but this is one trick that I do:

- My credit card offers a percentage back on your gasoline purchases based on the total $ that you charge on this card each month. So each month I charge almost everything that I possibly can, in order to maximize the discount that the card will give me on my gas purchases. I just make sure to pay the balance on that card in full each month.

There is one exception. My husband has a worse credit history than I do, so the interest rates on his credit cards are all higher than the interest rate that I have. He also has some outstanding credit card debt. So sometimes, instead of paying off the balance on my card in full, I will make the minimum payment on my card and take the rest of what I would have paid on my credit card and apply it to one of his cards instead. I then make sure that I pay off the balance on my card as soon possible.

I know that this is tricky and risky and borders on playing the cash-flow game, but I've found that we do save $ on finance charges if I do this once every few months.



I read a trick on another board a few nights ago. I bet alot of you probably know about this, but it never occurred to me before:

instead of ordering lemonade at a restaurant, order water and a lemon and make your own.

[redsail]

I know that this is tricky and risky and borders on playing the cash-flow game, but I've found that we do save $ on finance charges if I do this once every few months.

Doesn't sound too tricky or risky to me, it makes perfect sense to pay down the high interest balances first. Just gotta stay on top of things so you don't run things up, or charge on cards with high balances. There were folks on fatwallet that were moving balances from one 0% offer to another for a couple years. It was dizzying, and not something I'd recommend unless you are totally hawking the situation.

[teeny]

Wow, long post. Money is such an interesting topic, i like talking about it in appropriate situations, but it can be considered gauche and can leave people feeling really defensive about their choices, so I try not to talk about it with my IRL friends. I'd love someone to PM me if they know a lot about investments and have some suggestions! I fully agree that the majority of world is financially risk averse. I am not really, as I've saved enough money to have the luxury to not worry a ton about losing money.
I make a modest salary in nyc (30K) w/no benefits. By the end of the year, i hope to have at least 60K in savings. I'm not a trust fund baby, and my family of 5 lived very modestly on one medium level income. I don't think living poor is a sacrifice, I think it is fun and creative, and i love the freedom that having savings provides. I admire people like Warren Buffett that have a knack for investment but live a very modest way of life.

I have my money split into 4 places. An ING savings account (completely liquid, 4.5% interest), and ING mutual fund account (i started it in March in the riskiest fund- it has earned about 12% this year), a stock market acct.(which my granddad started for me, so i can't take credit for this, as he was a stockbroker), and a Roth IRA. I was able to save aggressively through college because I was the lucky type that had college paid for and always held lots of jobs- in effect- i had hardly any expenses and fully believe the theory of saving money when you have a lot, and having to spend when you don't.

Some of my tips:
*I live w/3 roommates in brooklyn. It's fun, and i enjoy it and save on rent and utilities

*always pay yourself first. i only get one paycheck a month (!) I take out $240 and divide it up into four envelopes, $60 each. Everything else goes directly into ING savings- liquid. I have a transfer set up so that $700 gets deposited into my checking 4 days before I have to write my rent check. And I transfer the amt. I need for my CC bill right before I make my electronic payment on one of the last days of my cycle. If effect- I make about 2 months of interest on my money in the ING acct. w/o having to pay my CC anything, and I get 1% back! Sometimes I use it for work and get reimubersed so rewards add up faster.

*the $60 each week is used for food, entertainment, etc. I open it up each Friday. I can only spend that for the week, though i sometimes allow myself to charge groceries.

*i drink water all the time, always take home my leftovers so I get 2 or 3 meals out of a meal

*I also have named accounts within my liquid account as well- one for Travel, a savings account i'm starting for my little brother, one for health insurance, etc... Each gets a certain amt. a month. I am thinking of starting one for a Mac laptop. I have the money to buy it now, but I think delayed gratification is important and i know i don't NEED it yet. I'd rather just budget monthly til the money is all there.

*once liquid savings becomes too high, I transfer it into the other accounts- I'm trying to cap liquid at 10K at the most.

*I consider the stock account to be my most aggressive form of investment- i pick companies that I like and believe in, or ones that are volatile and pretty low, and play around. I lost my password to this account- and need to find it! But I did good w/certain stocks, and tripled money on some (though lost too of course- and my granddad bought me a stock at $20 that fell to under $1, so it can be brutal)

*all bonuses, tax refunds, etc. go into accts- i don't even really think of spending them

*i find a lot of things used and make it work- furniture, clothes, etc. Craigslist, thrift stores, my parents, eBay.

*I use discount codes for purchases online, buy books used off of Amazon, borrow from friends, etc.

*I try not to make "shopping" a weekend activity (unless i need something particular). I am not knocking it- i love clothes and work in fashion- but the best way for me to not spend money is to not see whats out there sometimes.

*Hanging out w/other people that similarly don't want to spend a lot of money. I have funner sneaking water bottles of vodka into bars than hanging w/rich friends that I feel like i have to "keep up" with. I don't want to get into the habit of dropping $100 a night on dinner and drinks. I have a savings acct. labeled though for such splurges.

*making money on the side- coat checks, focus groups, selling things you don't use on eBay- i am free-er w/this money because I always think of it as something i didn't really have to "work" for.


A lot of people my age don't save this much (23), and I'm not knocking anyone that can't at this moment- as long as they are trying within their means. I think I'm somewhat frugal (though i have expensive taste) because I helped my parents w/financial advice at age 12- my mom always would complain about not having certain things (my dad is similarly modest w/spending and i lived in an affluent area where it seemed everyone had huge homes and new cars), so I learned a lot about money at a young age. And i know that shit happens, medical expenses, starting families, owning homes.. I'm saving aggressively now because I can- because i don't have those expenses yet. Bottom line is i don't need much right now, but one day i WILL want my own place. I am sorry if my post included lots of unnecessary information- but i hope it helped someone!!

[slimjim]

Teeny,
very solid post. You are the perfect example of how you can make great strides on a modest salary (and you live in a very expensive place...i'm just across the river myself).

I do a ton of investing and actually manage a significant amount of money for some friends / relatives that have entrusted their money with me (i don't charge them, do it because I enjoy it.... it could get dangerous if they blame me for loses, but they swear they don't care if they lose, and so far since I started doing it about 5 years ago, I have made them money every year). PM me with any questions you might have and I do my best to answer them... but in all honesty, it doesn't seem like you need much help.

[pisces2473]

While I congratulate Teeny on her savings prowess, I just want to point out that she makes do on a small salary in an expensive area because she lives with 3 roommates. That's why she's able to save so much.

I make less than she does, with benefits, so that's even more taken out of my pay, and live in a little bit less expensive area, and am in no way able to save as much as she does. This might be due to the fact that I MUST own a car, but there's no way around that.

I'm not saying any of this to be pessimistic, I'm just posting it so that people don't read her post and get down b/c they aren't in a similar financial state.

[winneythepooh7]

While I congratulate Teeny on her savings prowess, I just want to point out that she makes do on a small salary in an expensive area because she lives with 3 roommates. That's why she's able to save so much.

I make less than she does, with benefits, so that's even more taken out of my pay, and live in a little bit less expensive area, and am in no way able to save as much as she does. This might be due to the fact that I MUST own a car, but there's no way around that.

I'm not saying any of this to be pessimistic, I'm just posting it so that people don't read her post and get down b/c they aren't in a similar financial state.


I agree. Also hopefully I can pay off my car completely this year, which should free up some money to put into savings. It's not a major need for me to even have the car, but I still can't justify getting rid of it at this point.

And knowing how I am, even if I didn't have a car, I'd still spend some of that money on other things anyways.

I think a lot of being able to save a lot requires dedication and to an extent, a major lifestyle change for many people.

[teeny]

While I congratulate Teeny on her savings prowess, I just want to point out that she makes do on a small salary in an expensive area because she lives with 3 roommates. That's why she's able to save so much.

I make less than she does, with benefits, so that's even more taken out of my pay, and live in a little bit less expensive area, and am in no way able to save as much as she does. This might be due to the fact that I MUST own a car, but there's no way around that.

I'm not saying any of this to be pessimistic, I'm just posting it so that people don't read her post and get down b/c they aren't in a similar financial state.

I didn't post this to make anyone feel bad and i hope it didn't come across this way. I just want people to know that everyone can do it in a way that works for them.
I did own a car- but it got TOTALED by someone while i was away for thanksgiving (whole other thread :mad: ). It sucks, but the silver lining is I don't really need it right now and I'll get insurance money for it since it wasn't my fault at all.
Also, the way i see it is that savings = sacrifices. Living in a way that might not be as comfortable as you'd prefer and making it work. It might not work for everyone, but I do think if you are single (or not- i lived with a married couple for a while- though the whole thing was weird, and personally, i wouldn't want a roommate if i was married) and struggling, roommates should def. be considered since rent is often one's single biggest monthly expense.
again, i am new-ish here and don't want to come across wrong at all or get flamed. Really i just want to offer my honest advice and thoughts in a helpful manner.

[winneythepooh7]

I didn't post this to make anyone feel bad and i hope it didn't come across this way. I just want people to know that everyone can do it in a way that works for them.
I did own a car- but it got TOTALED by someone while i was away for thanksgiving (whole other thread :mad: ). It sucks, but the silver lining is I don't really need it right now and I'll get insurance money for it since it wasn't my fault at all.
Also, the way i see it is that savings = sacrifices. Living in a way that might not be as comfortable as you'd prefer and making it work. It might not work for everyone, but I do think if you are single (or not- i lived with a married couple for a while- though the whole thing was weird, and personally, i wouldn't want a roommate if i was married) and struggling, roommates should def. be considered since rent is often one's single biggest monthly expense.
again, i am new-ish here and don't want to come across wrong at all or get flamed. Really i just want to offer my honest advice and thoughts in a helpful manner.

I didn't take it that way at all. It didn't make me feel bad, or come across that way. I know where a lot of my money goes and have no one to blame but myself.

[pisces2473]

I agree. Also hopefully I can pay off my car completely this year, which should free up some money to put into savings. It's not a major need for me to even have the car, but I still can't justify getting rid of it at this point.

And knowing how I am, even if I didn't have a car, I'd still spend some of that money on other things anyways.

I think a lot of being able to save a lot requires dedication and to an extent, a major lifestyle change for many people.
My car is paid off, but I would still be saving about $150/month if I didn't have it, since I wouldn't be paying for gas or insurance. Not to mention repairs, when necessary. But when I work 30 miles from home, and public transportation is non-existant, I have no choice but to have a car.

I didn't post this to make anyone feel bad and i hope it didn't come across this way. I just want people to know that everyone can do it in a way that works for them.

I did own a car- but it got TOTALED by someone while i was away for thanksgiving (whole other thread ). It sucks, but the silver lining is I don't really need it right now and I'll get insurance money for it since it wasn't my fault at all.

Also, the way i see it is that savings = sacrifices. Living in a way that might not be as comfortable as you'd prefer and making it work. It might not work for everyone, but I do think if you are single (or not- i lived with a married couple for a while- though the whole thing was weird, and personally, i wouldn't want a roommate if i was married) and struggling, roommates should def. be considered since rent is often one's single biggest monthly expense.

again, i am new-ish here and don't want to come across wrong at all or get flamed. Really i just want to offer my honest advice and thoughts in a helpful manner.
Oh, I was not flaming you whatsoever! I just didn't want other people to read your thread and think "Hey I make more than she does and I can't save anything!" I think you offer some good tips, so please, don't leave! Stick around!

I didn't take it that way at all. It didn't make me feel bad, or come across that way. I know where a lot of my money goes and have no one to blame but myself.
Nope, me neither. I don't really know where my money goes though, LOL.

[Trillian42]

I'm not sure if I'm going to be able to save up for anything anytime soon, especially if I get into a PhD program. I'm going to be living off nothing for at least 5 years. I'll have my bf with me, which will be good, but still, we both have our own bills. Only thing shared would be the utilities. Part of me is hoping my mom will follow through with helping me buy a place. Since I'm going to be somewhere for at least 5 years, I think it would make sense, providing I can get the right mortgage payment.

And right now my extra money is going to my COBRA payments, so yeah. Hopefully I can get hired by my job soon!

In my experience COBRA is expensive. If you are on your own for insurance you might want to look into other individual insurance plans.

[Trillian42]

you can't just go through some hole-in-the wall bank that throws some teaser rate out there. You need to go through a brokerage house.

So how much of the 6% are you paying to the broker?

[Trillian42]

How do you know all of this? I didn't really have a method of picking. I figured that I need to increase my risk, so I put 25% of my money into something fairly risky. I had no idea that a typical recommendation is 20%. I don't know where one goes to get educated about this shit.

I've found the best place to go for a good, easy to understand, basic introduction to mutual funds and retirement funds is the yahoo finance website. They have articles like mutual funds 101 that really explain all of the basics. That's where I started when I was first learning. Then I also bought the Investing for Dummies book, which I also found helpful and easy to understand.

That sounds like something I'd be interested in...letting the company figure out how much to put where. But, can we trust these companies?

I looked into several of these funds with different companies, and they do seem to have the right balance for the age group I'm in. The management fees tend to be a little higher, but if you do not have enough to invest to diversify your portfolio (which it sounds like you are on the right track for diversifying) they are a great fund. I would recommend it for beginners. You can grow your money there and then when you feel you have learned enough and have enough saved, you can move your money to your own picks to reduce management costs.

[redav]

I thought it was good for me to be a little more aggressive, esp as I'm almost 27 and have plenty of years left until I can touch the money. So why isn't the risk good?

Risk = (severity of a bad thing happening) * (probability it will happen)
That basically means risk, in and of itself, is "bad"

However, you can't get good returns without some risk, so you have to balance that risk with the returns. Small companies have a greater chance of going under (risk), but if they succeed, they are a homerun (high returns). The more time you have, the more risk-tolerant you can afford to be (in other words, you can swing for the fences). There are several different things that make investing risky. Diversification spreads out that risk, so when something bad does happen, it doesn't hit as hard (it's a way to manage risk). Also, just because something is risky, it doesn't mean it has the potential for higher returns. Frequently they go together, but not always, hence the comment that I'd be cautious if funds were only represented according to "risk."

Is there any right way to do this? No one's a psychic, no one knows how a fund will do or what the market will bring. I'm really just guessing here.


No, not really. There are mathematical methods to optimize your probabilities, but it's difficult, and dependent on imperfect data. Some strategies have historically been more successful, so many seasoned investors gravitate to them. A financial strategy is like a sports gameplan. You can do lots of different things and still be successful. However, I think most good plans follow the same basic rules, so it's a good idea to learn those and follow them.

[Trillian42]

Yes, at your age, I believe all of your money should be in stocks (or mutual funds in the case of your IRA), not bonds or a fixed account (cash).

For clarification, I'm assuming you mean all your "investing" money should be in stocks. I agree with this. People should keep in mind that they should have several (4-6) months of expenses saved in a cash account (such as a savings or Money Market Account). Also keep in mind that if you have this, you already have a percentage of your savings in a cash account, so any investing (retirement or otherwise) you put in fixed accounts or MMA just adds to that percentage.

[redsail]

For those with mortgages, here's an article about how you may be able to lower your income tax burden by alternating your standard deduction and doubling up your deductible mortgage expenses. Link to article (http://www.ruckcpa.com/taxes-pers-tips.htm)

[MsClear]

I never buy furniture or household items new. Rather, I go to yard sales, church sales or "inherit" used items from family and friends. It does make a huge difference.

I'm also a book nut, but I've converted to a library first system, and I buy the book later if I'm really fond of it and will read more than once.

Two little things from me. :)