Saving Money

[dxdx]

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.

This is very important to keep in mind, if anybody is still paying attention.

I was scraping together as much cash as I could to invest during 2008-2009. It was a huge sale that if you took advantage of, would be paying off very nicely right now.

And let me just add another tip since you're talking 401k's...

NEVER take out a loan against your 401k unless you are dying or something. My good friend did this in 2010 in order to get married in Italy screwy I mean, it was fun for us to go, but not only is he still paying back this loan 2 years later, he has missed out on the increase in share price of those investments, which is a big deal. Put it away and forget about it...

 

[Egon]

Investments. I guess this could be considered the same as saving? I got real lucky years ago with an investment that has paid off big time. I'll share it with you guys, maybe one or two of you will be lucky and pass this info on to the future MFKers. This took years to develop but there's really no down side.

My dad told me to buy a house ASAP. I was 25 when he told me this. I bought my first house at 35. Try telling a 25 year old anything right, lol, even the smart ones get in their own way.

I bought the house for 100K paid it off in 10 years costing me about 160K with interest (deductible but not part of this math)
I rent the house for $1000 a month profit (after taxes, HOA, insurance...)
My return is 7.5% the rest of my life and I got to live there for 10 years!
Down side:
Yes the price of the house dropped - doesn't matter unless I'm going to sell.
Maintenance - maybe an hour a month, 12 hours a year.
Supplies - Hot water heater, garage door opener....... wait that was for the house I'm in now (taxes). Yes, having a rental is a huge tax write off. I don't pay taxes anymore on anything I buy from home depo - anything!

That's the tip for you smart guys. FYI: Taxes are going to increase in our future. Tax "sheltering" will get more important and I have a thousand extra dollars in my checking every month. It took me 20+ years to figure this out. I was way smarter when I was 25 than I am now.

 

[jcardona1]

With talks about money, saving, investing, becoming, rich etc etc, I really like this quote:

When asked "What thing about humanity surprises you the most?", the Dalai Lama answered:

"Man…. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived."

Another thing I haven't seen mentioned is ESPPs (employee stock purchase plan). Lots of companies offer ESPP programs these days. I'm surprised how many people at my job don't take advantage of this. I know, because I see all the details as an internal auditor. This list of participants is very small compared to our total headcount. At my job we have 2 offering periods per year. At the end of each offering period they take your deductions and buy stock at 85% of the market price, using the lowest stock price at the beginning or end of the period. It's a guaranteed instant 15% gain, much more that could be send for most funds these days. Even if you don't plan on holding it long term, it's like a nice little bonus every 6 months.

So if you have an ESPP option at your job, use it!

 

[Inglorious]

Everyone knows the old adage for playing the stock market-"buy low, sell high" yet many people fail to do this. And dxdx is right about not taking out of your investments unless you need to, in fact if it's possible don't even look at the balance, just have the money automatically put in from your paycheck and forget it ever existed. If you don't know how much you have then you won't be temped to withdraw some.

 

[jcardona1]

Everyone knows the old adage for playing the stock market-"buy low, sell high" yet many people fail to do this. And dxdx is right about not taking out of your investments unless you need to, in fact if it's possible don't even look at the balance, just have the money automatically put in from your paycheck and forget it ever existed. If you don't know how much you have then you won't be temped to withdraw some.

Not to mention you'll essentially lose 30% of your 401k balance if you withdraw and not repay it.

 

[dxdx]

With talks about money, saving, investing, becoming, rich etc etc, I really like this quote:



Another thing I haven't seen mentioned is ESPPs (employee stock purchase plan). Lots of companies offer ESPP programs these days. I'm surprised how many people at my job don't take advantage of this. I know, because I see all the details as an internal auditor. This list of participants is very small compared to our total headcount. At my job we have 2 offering periods per year. At the end of each offering period they take your deductions and buy stock at 85% of the market price, using the lowest stock price at the beginning or end of the period. It's a guaranteed instant 15% gain, much more that could be send for most funds these days. Even if you don't plan on holding it long term, it's like a nice little bonus every 6 months.

So if you have an ESPP option at your job, use it!

nice quote, but I chose to have kids and I choose to save and invest, sacrificing some indulgences for myself, so that I can put my kids through college, buy some things for them and try to have a fulfilling life. My job doesn't sacrifice my health, I'm not a workaholic.

doesn't the dalai lama eschew material goods? if that's the case, then not spending all your money on material goods and putting that money away for your retirement and your child's future seems like a smart thing to do... this doesn't make me anxious about the future, I enjoy learning about this stuff, it's fun to me. The present is awesome and the future is better as long as my kids are happy and smiling.

You're spot on about the ESPP. My job doesn't have that or 401k so I'm on my own.

 

[aldiaz33]

This is very important to keep in mind, if anybody is still paying attention.

I was scraping together as much cash as I could to invest during 2008-2009. It was a huge sale that if you took advantage of, would be paying off very nicely right now.

And let me just add another tip since you're talking 401k's...

NEVER take out a loan against your 401k unless you are dying or something. My good friend did this in 2010 in order to get married in Italy screwy I mean, it was fun for us to go, but not only is he still paying back this loan 2 years later, he has missed out on the increase in share price of those investments, which is a big deal. Put it away and forget about it...

Totally agree with you...borrowing from your retirement fund is almost never a good idea. You also typically have to pay interest on the loan amount, so that makes it even worse.

Investments. I guess this could be considered the same as saving? I got real lucky years ago with an investment that has paid off big time. I'll share it with you guys, maybe one or two of you will be lucky and pass this info on to the future MFKers. This took years to develop but there's really no down side.

My dad told me to buy a house ASAP. I was 25 when he told me this. I bought my first house at 35. Try telling a 25 year old anything right, lol, even the smart ones get in their own way.

I bought the house for 100K paid it off in 10 years costing me about 160K with interest (deductible but not part of this math)
I rent the house for $1000 a month profit (after taxes, HOA, insurance...)
My return is 7.5% the rest of my life and I got to live there for 10 years!
Down side:
Yes the price of the house dropped - doesn't matter unless I'm going to sell.
Maintenance - maybe an hour a month, 12 hours a year.
Supplies - Hot water heater, garage door opener....... wait that was for the house I'm in now (taxes). Yes, having a rental is a huge tax write off. I don't pay taxes anymore on anything I buy from home depo - anything!

That's the tip for you smart guys. FYI: Taxes are going to increase in our future. Tax "sheltering" will get more important and I have a thousand extra dollars in my checking every month. It took me 20+ years to figure this out. I was way smarter when I was 25 than I am now.

My older bro retired at 33 because of a great rental property he purchased. If the numbers work out, it can be an awesome long term investment. Unfortunately, there are too many people in the Bay that are eager to buy and in most cases you end up with negative cash flow. In all but the worst neighborhoods this seems to be the case...I don't want to be a slumlord though...risking getting shanked in the neck while collecting rent isn't worth it to me.

... in fact if it's possible don't even look at the balance, just have the money automatically put in from your paycheck and forget it ever existed. If you don't know how much you have then you won't be temped to withdraw some.

Great advice!

With talks about money, saving, investing, becoming, rich etc etc, I really like this quote:

Another thing I haven't seen mentioned is ESPPs (employee stock purchase plan). Lots of companies offer ESPP programs these days. I'm surprised how many people at my job don't take advantage of this. I know, because I see all the details as an internal auditor. This list of participants is very small compared to our total headcount. At my job we have 2 offering periods per year. At the end of each offering period they take your deductions and buy stock at 85% of the market price, using the lowest stock price at the beginning or end of the period. It's a guaranteed instant 15% gain, much more that could be send for most funds these days. Even if you don't plan on holding it long term, it's like a nice little bonus every 6 months.

So if you have an ESPP option at your job, use it!

Man, I wish my company offered this...I'd be all over it.

 

[lp85253]

None taken. I hope my response doesn't offend you...

Cutting Expenses
In Phoenix you can rent a 2 bedroom condo for $500. Move into a 2 bed condo with a roommate and you have knocked $305 off of your rent. You have also just divided your utilities (baseline expenses) in half. That should free up some cash for said 50 year old.

Increasing Income
Look for opportunities to increase income or take a second job.

I know we are living in tough times, but people have two choices...

1. Complain about your circumstances.
2. Take action and try to improve your situation.

I apologize if that is crass, but not sure what you want me to tell ya...

I should have mentionedthe income is social security disability ...wich doesnt allow saving , kind of a govt. catch 22 if I SAVE A CERTAIN AMOUNT OF MONEY .... I lose my monthly check ..until I GET BROKE AGAIN ...AND re-apply.. so the only way to beat(not really...just to break even.... )the system is to cheat.and hide cash....

 

[lp85253]

Totally agree with you...borrowing from your retirement fund is almost never a good idea. You also typically have to pay interest on the loan amount, so that makes it even worse.



My older bro retired at 33 because of a great rental property he purchased. If the numbers work out, it can be an awesome long term investment. Unfortunately, there are too many people in the Bay that are eager to buy and in most cases you end up with negative cash flow. In all but the worst neighborhoods this seems to be the case...I don't want to be a slumlord though...risking getting shanked in the neck while collecting rent isn't worth it to me.



Great advice!



Man, I wish my company offered this...I'd be all over it.

soory ,quoted wrong post...

 

[dxdx]

I should have mentionedthe income is social security disability ...wich doesnt allow saving , kind of a govt. catch 22 if I SAVE A CERTAIN AMOUNT OF MONEY .... I lose my monthly check ..until I GET BROKE AGAIN ...AND re-apply.. so the only way to beat(not really...just to break even.... )the system is to cheat.and hide cash....

how do they know you're saving - do they have access to your bank account balances?

I guess if you're guaranteed this amount for life you don't have to save much if anything. I'm going on the premise that I won't have any guaranteed income so I need to set that up for myself through saving and investing...

my dad's 100% pay military pension is looking pretty good the older I get, but who am I kidding, I can't take orders......