Money Matters

[Schneed10]

Originally Posted by 724Skinsfan

Most banking institutions offer many types of IRA's. I have a roth IRA setup through Bank of America http://http://www.bankofamerica.com/...plate=ira_roth which seems fairly reasonable.

Schneed and ThatGuy are definitely on the money with everything they've said. One huge suggestion I have is to build a spread sheet that lists all of your mandatory expenditures (rent, insurance, bills, etc) and also your voluntary expenditures. Like Schneed said, get a tally of your bank receipts for a particular month to draw information from. Here's a good spreadsheet if you want to get some ideas: http://office.microsoft.com/en-us/te...062791033.aspx

Two quick ways to experience a little bit of savings are:

1) setting a specific number of times that you eat out (if any). My wife and I used to eat out anytime we didn't feel like cooking which came to be at least 2-3 times a week. Once we said "OK, we will eat out just once every two weeks" obviously we noticed a significant amount of savings.
2) Set aside a specific amount of gas and grocery money per week. We set aside $35 a week on gas for two cars (Civic & Malibu) and $50 a week on groceries which includes anything we buy at Wal-Mart. Once you can operate within those limits you'll notice that you don't nearly as many trips (gas) to the store or elsewhere.

We cut our expenditures down by about $700/month using a couple of these techniques.

Nice, it's amazing what you can cut out of your budget without even really missing a beat.

Some financial books talk about the "latte factor." So many people hit up Starbucks a couple times a day and buy a $4 cup of coffee each time. Let's say you are someone who buys 2 lattes every workday from Starbucks, and between the two of them you spend $10 each day. Well, each month has about 21 workdays in it. That's $210 a month on lattes.

Maybe you only buy one latte per workday. That's still $110. If you started buying Starbucks beans by the pound, grinding them up at home, making the coffee yourself, and bringing it with you in the morning in a thermal mug, you'd still have Starbucks quality coffee and you'd save boatloads of money.

That's why tracking your expenses is important. Sometimes you need to add up the numbers to realize how much you're spending on certain things. Some single types hit up bars all the time and drop tons of money on drinks. Instead, buy beer by the case (or booze by the bottle) and get a little pregame on before you head out. You'll save quite a bit in drink costs. Little things like that can go a long way.

[12thMan]

I think there is a place for Index Funds as well as no-lund funds. No Load, however, doesn't always translate to lower expese ratios. Typically with Index Funds that's the rule, but all bets are off after that.

Loaded funds may charge a fee on the front end or the back end, depending on the agreement and the class of shares you purchase. But over time, key words, over time, load funds can be just as competitve, if not more so, in expenses and returns.

If I had to go with one fund family, and there are many, that I would have to put my name on the line for someone new or experienced, it would the American Funds.

They've been in the business for over 75 yrs, well respected within the industry, they have the longest tenured portfolio managers, they tend to lead the pack year after year in keeping expenses low for investors, and more importantly their funds post solid returns - many of them for decades!

Whether you're looking to start a non-retirement account, Roth IRA, Traditional IRA, or College Savings Plan, this company is as rock solid as they come - I promise you that.

Again, the argument of no load vs load has been around as long as Warpath itself has, so it's not anything new to hear it here. People will always be on both sides of that fence, and justifiably so. But I would just tell anyone to check out everything. And yes, having a Financial Advisor is good thing.

Gereally speaking, it's probably a good idea to find a seasoned professional by way of referal rather than trying to just walk through the door and handing over your money to 'some guy'. You want to ensure your long term goals and objectives mesh well with your advisor's temperment, professionalism, and experience. In a nutshell, does he or she make you feel comfortable?

[MTK]

Originally Posted by Schneed10

Nice, it's amazing what you can cut out of your budget without even really missing a beat.

Some financial books talk about the "latte factor." So many people hit up Starbucks a couple times a day and buy a $4 cup of coffee each time. Let's say you are someone who buys 2 lattes every workday from Starbucks, and between the two of them you spend $10 each day. Well, each month has about 21 workdays in it. That's $210 a month on lattes.

Maybe you only buy one latte per workday. That's still $110. If you started buying Starbucks beans by the pound, grinding them up at home, making the coffee yourself, and bringing it with you in the morning in a thermal mug, you'd still have Starbucks quality coffee and you'd save boatloads of money.

That's why tracking your expenses is important. Sometimes you need to add up the numbers to realize how much you're spending on certain things. Some single types hit up bars all the time and drop tons of money on drinks. Instead, buy beer by the case (or booze by the bottle) and get a little pregame on before you head out. You'll save quite a bit in drink costs. Little things like that can go a long way.

Along the lines of the latte effect I've noticed the bring your lunch to work effect. When I bring my lunch rather than eat out I save so much money. Eating out even at just a sub shop can run a good $8 for lunch... so that's potentially at least $40 per week or $160 per month!

I typically bring my lunch 4 days per week and I only eat out on Fridays, it definitely helps ease the burden on the wallet.

[That Guy]

as for insurance, if you've got 20years until retirement, you can buy decreasing term insurance that'll cover the balance of your mortgage immediately and decrease its coverage over time (meanwhile, you're paying off the mortgage, so the decrease is okay). that's the cheapest way to cover expenses should something happen, and by the time it's up (if you've not neglected saving and investing) you can be self insured.

or you can just buy general term insurance. you get more coverage and it's cheaper than whole life (you don't toast bread in your freezer, so why mix your life insurance with a high-fee investment you can't control?).

also, no new cars saves a lot of money (IF you know enough to avoid total clunker or have a friend/family member that can help you).

the most important though is to get a FIXED mortgage (not adjustable rate), try to put money down when you buy a house, and try to accelerate payments if you can afford it. Some companies offer mortgages LONGER than 30 years... AVOID THOSE. while it might let you move into a slightly bigger house, the interest you end up paying compared to the house's value is insane.

[FRPLG]

Originally Posted by Mattyk72

Along the lines of the latte effect I've noticed the bring your lunch to work effect. When I bring my lunch rather than eat out I save so much money. Eating out even at just a sub shop can run a good $8 for lunch... so that's potentially at least $40 per week or $160 per month!

I typically bring my lunch 4 days per week and I only eat out on Fridays, it definitely helps ease the burden on the wallet.

I also notice it helps you stay in shape. Most of the food one buy's for lunch will be of the less than healthy variety.

[firstdown]

Originally Posted by Schneed10

The power of saving money:

Let's say you're 30. You open an IRA account and put $5,000 in the S&P 500 index fund today. You leave it there until you retire at age 65. Historically, the S&P 500 earns about 10% per year. Some years are downers, some years are way up, and overall it comes to an average of 10%. Here's what happens:

2007: $5,000
2008: $5,500
2009: $6,050
2010: $6,655
...
2042 (retirement year): $140,512

Now let's say instead of saving $5,000 today, you decide to put it off and you start saving when you're 40 years old, in the year 2017.

2017: $5,000
2018: $5,500
2019: $6,050
2020: $6,655
...
2042 (retirement year): $54,173

See that? You wait 10 years, and you just cost yourself about $85,000. If you had started saving at age 20 instead of age 30, you'd have $364,452 by the time you hit age 65.

Point being: it is never too late. Don't wait, it just costs you money. If you're talking about saving for your child's college education, or saving for retirement, or saving for a house, whatever. Do whatever you possibly can to get time working on your side.

When it comes to saving, yesterday is gone, but today is better than tomorrow. I even like to think about Rage Against the Machine when it comes to saving money:

"It has to start somewhere, it has to start somehow. What better place than here? What better time than now?"

You just made a great argument for privatising part of Social Security.

[firstdown]

Originally Posted by That Guy

as for insurance, if you've got 20years until retirement, you can buy decreasing term insurance that'll cover the balance of your mortgage immediately and decrease its coverage over time (meanwhile, you're paying off the mortgage, so the decrease is okay). that's the cheapest way to cover expenses should something happen, and by the time it's up (if you've not neglected saving and investing) you can be self insured.

or you can just buy general term insurance. you get more coverage and it's cheaper than whole life (you don't toast bread in your freezer, so why mix your life insurance with a high-fee investment you can't control?).

also, no new cars saves a lot of money (IF you know enough to avoid total clunker or have a friend/family member that can help you).

the most important though is to get a FIXED mortgage (not adjustable rate), try to put money down when you buy a house, and try to accelerate payments if you can afford it. Some companies offer mortgages LONGER than 30 years... AVOID THOSE. while it might let you move into a slightly bigger house, the interest you end up paying compared to the house's value is insane.

Your better off instead of a decreasing term policy just go with a level term policy which is not very expensive unless you have health issues. They tend not to cost much more than the decreasing term and give you level death benifit.

[MTK]

Originally Posted by FRPLG

I also notice it helps you stay in shape. Most of the food one buy's for lunch will be of the less than healthy variety.

True, though I try to mostly eat salads when I do eat out. But the temptation is definitely there as opposed to packing a lunch.

[Schneed10]

Originally Posted by firstdown

You just made a great argument for privatising part of Social Security.

Yes exactly. Privatizing social security is a brilliant idea. Too bad dumbass George W is too much of a moron to convince anybody.

People are resistant to privatizing it because they A) they view the investments as too risky (which is retarded, it would be mostly US Stocks and Bonds) and B) the financial literacy in this country is retarded. Hardly anybody understands the power of saving money and managing it properly. Personal budgeting and personal finance should be a required course in high schools.

Enough political venting. We're here to share knowledge in a judgment free forum. You hear business people say all the time that "time is money." They're right. So if you take your money, and you put it to work over time, you end up with a lot more money. Pretty much that simple. The earlier you start saving, the better off you are.

[Schneed10]

Originally Posted by Mattyk72

Along the lines of the latte effect I've noticed the bring your lunch to work effect. When I bring my lunch rather than eat out I save so much money. Eating out even at just a sub shop can run a good $8 for lunch... so that's potentially at least $40 per week or $160 per month!

I typically bring my lunch 4 days per week and I only eat out on Fridays, it definitely helps ease the burden on the wallet.

Yeah that's another HUGE one. Bringing your lunch is the best solution. With food, I like to think there are four corners of the square, putting all four together is the holy grail:

- Tastes good
- Is Cheap
- Is Healthy
- Is Convenient

It's almost impossible to put all four together. If you're eating out, someone makes it for you, so it's convenient. It usually tastes good. But it's hard to find it healthy, and it rarely is cheap. If you want to eat out for cheap, you're usually talking McD's or Wendy's, rich is real unhealthy.

Then there's making your lunch. It's cheap. It's healthy if you do it right. And usually you can make it taste good. But it's inconvenient.

In the end, I'd rather not clog my arteries, and I'd rather have the extra $160 in my pocket each month.

[MTK]

Originally Posted by Schneed10

Personal budgeting and personal finance should be a required course in high schools.

I completely agree.

More 'life lesson' type of classes need to be taught at earlier ages. I know when I hit 18 and I got my first credit card I had no freaking idea how to manage my money responsibly. I had plenty of friends who were even worse than me. I think by 20 we all had pretty significant credit card debt ($1,000 or more).

It took me until just a few years ago to finally erase all of my credit card debt.

[TheMalcolmConnection]

It's all about planning before you begin the week. On Sunday, plan your menu, go out and stock up on what you need. Make double batches so you have leftovers. Both my fiancee and I can eat five days including snacks for sixty bucks. This is including a healthy version of macaroni and cheese, turkey chili, apple cinnamon muffins, turkey meatballs, shredded chicken sandwiches.

Possibly my favorite cheap meal that has leftovers for days is the shredded chicken. Buy a shit pile of chicken, load it all up in the crockpot, pour a bottle of BBQ sauce over it, let it go all day and you're done. Put it open-faced on a half of a whole wheat bun, and it's tasty and you've got pounds of it for leftovers.

[Schneed10]

Originally Posted by Mattyk72

I completely agree.

More 'life lesson' type of classes need to be taught at earlier ages. I know when I hit 18 and I got my first credit card I had no freaking idea how to manage my money responsibly. I had plenty of friends who were even worse than me. I think by 20 we all had pretty significant credit card debt ($1,000 or more).

It took me until just a few years ago to finally erase all of my credit card debt.

Yeah, college students pretty much fall victim to this trap all the time. So many of them haven't been taught about the dangers of debt. And of course, being away from home and parents for the first time gives you a sense of freedom. And being 18 or 19 years old, people usually have a sense of invincibility, like nothing bad is ever going to happen to me. Combine all that together and you get a lethal mix when it comes to debt. Credit card companies prey upon it; you can probably all remember your college days and having credit card companies set up a table in the commons or the cafeteria where you could just stop by and sign up for a credit card.

It's dangerous, especially for females who like upscale shopping. Some end up with debts requiring monthly payments equivalent to the rent for a 2-bedroom apartment.

Credit cards are a terrible temptation.

[TheMalcolmConnection]

But what about the free f-ing t-shirt?! WHAT ABOUT THAT?!?!?!?!

[BDBohnzie]

One of my fraternity brothers was the guy who ran all the Credit Card promotions on campus. While many people wanted to shoot him by the end of the semester, the fraternity made money off the number of applications that could be processed. The best prizes we gave away were shot glasses.

I didn't get my first credit card until after college. Well at least one that I used. I did sign up for a bunch in college, but cancelled accounts as soon as I got the card.