Saving Money

[aldiaz33]

+1

As long as my electric, gas and water are paid, there's food and beer in the fridge, my pets are taking care of and my car has gas I'm golden! anything else is well to complicated.

I get paid hourly, so I live hourly! Simple



Go S. Vettel #1 rb8

You really want to work until the day you croak? You don't ever plan to retire?

 

[F1 VET]

Only 25, own my house, just trying to make it atm. Someday yes, but for now I have to be realistic, just glad I don't have overhead like kids or wives lol. My retirement won't be based soley on financial stability but also happiness, pride and accomplishments!






Go S. Vettel #1 rb8

 

[Egon]

Only 25, own my house, just trying to make it atm. Someday yes, but for now I have to be realistic, just glad I don't have overhead like kids or wives lol. My retirement won't be based soley on financial stability but also happiness, pride and accomplishments!






Go S. Vettel #1 rb8

+1 on all that!

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[ecoli73]

Only 25, own my house, just trying to make it atm. Someday yes, but for now I have to be realistic, just glad I don't have overhead like kids or wives lol. My retirement won't be based soley on financial stability but also happiness, pride and accomplishments!






Go S. Vettel #1 rb8

The way things are setup, if you don't have a family, you will be paying the bills of others who do. Might as well have your own


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[aldiaz33]

Only 25, own my house, just trying to make it atm. Someday yes, but for now I have to be realistic, just glad I don't have overhead like kids or wives lol. My retirement won't be based soley on financial stability but also happiness, pride and accomplishments!



Go S. Vettel #1 rb8

I hear you...I'm in the same boat; no kids and no wife and certainly no wives (plural?) -lol

I say this with all due respect, but pride won't buy you 3 square meals and it surely won't pay the power bill when you are 80 years old and unable to work. There's no time like the present...if you keep putting off saving for retirement, that day will never come.

___________________________________________________

Here's a short story that I pulled from this site that illustrates my point: http://www.financialfinesse.com/blog/2011/05/what-will-it-cost-if-you-delay-saving-for-retirement/

I checked the math and it is correct:


Salary: $45,000

Average annual rate of return: 8%

(For sake of simplicity we will keep these numbers constant throughout the worker’s time span)

First example: Jane, a 23 year old employee who is contributing 5% of her salary and does so each year until age 62. Projected retirement balance at age 62: $602,244

Now consider another 23 year old: Duane. Duane says, “I have time to save. I will start in 4 years when I’m 27.” Twenty seven is still young right? AND Duane would have around $2250 extra to spend each year (since he would not be contributing to his retirement account).

So what’s the trade-off or cost of delaying retirement savings for four years in this example? Considering that Duane would have a projected balance of $430,103 at age 62 his cost of delay was only (sarcasm intentional) $172,141! Sure hope that extra $9,000 he got to spend between 23 and 27 was worth it.

Obviously this example clearly shows that the longer you wait to save the bigger your cost of delay. But it’s not just the monetary cost it is also the delay in actually retiring.

 

[Inglorious]

I hear you...I'm in the same boat; no kids and no wife and certainly no wives (plural?) -lol

I say this with all due respect, but pride won't buy you 3 square meals and it surely won't pay the power bill when you are 80 years old and unable to work. There's no time like the present...if you keep putting off saving for retirement, that day will never come.

___________________________________________________

Here's a short story that I pulled from this site that illustrates my point: http://www.financialfinesse.com/blog/2011/05/what-will-it-cost-if-you-delay-saving-for-retirement/

I checked the math and it is correct:


Salary: $45,000

Average annual rate of return: 8%

(For sake of simplicity we will keep these numbers constant throughout the worker’s time span)

First example: Jane, a 23 year old employee who is contributing 5% of her salary and does so each year until age 62. Projected retirement balance at age 62: $602,244

Now consider another 23 year old: Duane. Duane says, “I have time to save. I will start in 4 years when I’m 27.” Twenty seven is still young right? AND Duane would have around $2250 extra to spend each year (since he would not be contributing to his retirement account).

So what’s the trade-off or cost of delaying retirement savings for four years in this example? Considering that Duane would have a projected balance of $430,103 at age 62 his cost of delay was only (sarcasm intentional) $172,141! Sure hope that extra $9,000 he got to spend between 23 and 27 was worth it.

Obviously this example clearly shows that the longer you wait to save the bigger your cost of delay. But it’s not just the monetary cost it is also the delay in actually retiring.

That's a great example, but it also works with investing a much higher percentage. Many people I work with max out at 6%(the company matches half to that point), so once they hit the employer contribution max they stopped. Me on the other hand is currently at 18% and rising because I want to retire early to be able to travel. My wife is also into the double digits on her investments as well, yet we don't put so much away that we can't live comfortably. It's all about prioritizing things and finding a balance that works for you.

 

[aldiaz33]

That's a great example, but it also works with investing a much higher percentage. Many people I work with max out at 6%(the company matches half to that point), so once they hit the employer contribution max they stopped. Me on the other hand is currently at 18% and rising because I want to retire early to be able to travel. My wife is also into the double digits on her investments as well, yet we don't put so much away that we can't live comfortably. It's all about prioritizing things and finding a balance that works for you.

Contributing a higher percentage will definitely get you there quicker. I think people should always contibute a minimum of 10%.

I've seen a few people complain about how the market has tanked in the last decade (the tech bubble and the housing bubble). It's funny how younger generations have it totally wrong when it comes to investing. We should not be complaining about stock market downturns...they are a huge benefit to people who regularly contribute to their retirement accounts...younger people in the accumulation stage of the game. If you regularly contribute a couple hundred dollars a month, when the market is not doing well, you are buying more shares with that money than you would otherwise be buying if the market were at an all-time highs. Think about it...you are buying when things are on SALE which is a good thing.

The stock market is the only area where people are more comfortable "buying" at a high price...it's totally ass backwards. You wouldn't expect to see people running to buy clothes if the stores increased prices by 50 or 60%, yet that's when people are more comfortable buying into the market. I'll never understand how people say that they will buy a stock or a mutual fund "when market conditions improve." That's basically saying, I'm going to wait until the price of that jacket goes up another 10 or 15% before I buy it...not very smart.

To be clear, I'm not talking about timing the market...I don't think you can do that, but it's common sense that when the market is not doing well, your money will buy more shares per dollar invested....so when the market recovers, you will reap greater benefits than if you are constantly buying at higher and higher prices. The key is to contribute regularly.

I'm not sure if I explained that very well, but if you stop and think about it I think you'll see what I'm saying.

 

[projectile]

Nice explanation , makes a lot of sense.
With the younger gen guess a lil bit of attention problems do exist , we find all the mutual fund paperwork really booring , hence keep putting it off.
Myself included.

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[jlnguyen74]

What if they are one and the same? I guess I'm weird in that I actually really enjoy finding ways to save a buck; saving is truly a hobby of mine. I'm always looking for ways to cut expenses, whether it's running more efficient pumps, putting lights on timers, insulating tanks in the winter or finding the best deal on pellets.

If you believe those are saving and your hobby, then good for you...

 

[aldiaz33]

Nice explanation , makes a lot of sense.
With the younger gen guess a lil bit of attention problems do exist , we find all the mutual fund paperwork really booring , hence keep putting it off.
Myself included.

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Yeah, it can be pretty boring stuff, but it's not that complicated once you get the basics down. In the investment game, the cost of procrastination is pretty huge. Check out some of those books I posted...I promise you, it will be well worth your time to learn the basics.

If you believe those are saving and your hobby, then good for you...

I do, thanks John.

I know that what you meant is that this hobby is crazy expensive and therefore incompatible with saving (especially when you buy new fish every day), but there are ways to save in almost everything you do...and I happen to enjoy realizing those savings.