Honestly it's the "occasional emergencies" that fuck me up as much as impulse spending. Last weekend? Car battery died. Out $150. Four weeks ago? Cat got a scratch in the eye and was discharging blood from the tear duct. $100 for cat doctor. And so on.
And so on. I put money aside for emergencies every paycheck but it gets used up faster than I'd like it to. But yeah r/personalfinance is my ideal in terms of what they advocate and what I'd like to do: 6 months of paychecks in savings, pay off all my debt as fast as possible, stay debt free. Not so good at it in practice doe. I certainly manage to pay my bills and put some aside every check. It just doesn't feel like nearly enough. I am finally getting to the point where I am getting ahead on payments on most of my major payments (student loans, car, etc). It's exciting because now I feel like I am actually making dents.
Paying off all debt as fast as possible isn't always good advice. Depends on the interest rate, repayment terms, and what else you could be doing with your money. Those are non-trivial, and in the end, accelerating debt payment could cost you a lot of money.
I was talking with a 24-year-old guy the other day. He's about to ask his girlfriend to marry him and said that he doesn't want to buy a house until he can pay for it 100% in cash. He has some money saved, probably enough to put 20% plus down. My strong advice to him was to put 20 to 30% down on a house right now and buy it with a fixed 30 year mortgage. Money is about as cheap as it will ever get right now. He could get a mortgage for less than 4% and the money that he would put into the house, if he is smart could see returns north of 6% in various mutual funds and other investment modalities. So, sometimes incurring a debt in order to float your money elsewhere is a smart move.
I'm loving the ideas in this thread. I'm now trying to reconcile the fact that I want to make a reasonable amount of money, but the career path I'm considering would leave me broke. I'm really activated by the idea of expanding service opportunities to young people, in some sort of supervisory or administrative support role. I think service is important, but a public servant doesn't make all that much, at least not historically.
Exactly. One has to trust the math. Consult a financial expert if you don't understand interest. Math doesn't lie, and debt isn't evil. We've been led to believe it is, because so many people got so royally fucked in 07-08. But in the end, if you do solid research, and abide by tried and true investment principles (history is still a thing, and it's a bit longer than seven years), then you shouldn't worry about your debt load as just a number. It's not a moral issue.
Average rate of return for investments: safe to assume 3-6% Average interest rate of all my debts: way above that Prepayment penalties? None. -Not sure about car, but none on CCs, none on student loans I think I'm generally pretty safe. My debt is mostly student loans at 6.8% and credit cards in the range of 12-18%. Not sure about the car note, but that's the last one I'm worried about.
Ours cost $1500. It was dope. We held it out on an island, invited 13 people, paid for dinner for everybody and then had a potluck reception two weeks later at my uncle's house (he's got 5 acres of park-like land). Not sure about your deposits, but you can reef back on that shit.
Our stories start out similar, then diverge drastically. Going to Maui on Thanksgiving (even that was a compromise to my family; I wanted Koh Samui or maybe even the Maldives--somewhere nobody would follow). 15 friends and family are joining us. Maui isn't cheap, but, hey, 15 people isn't that many. Even at $200 a plate, you're not too deep. Then comes the fun part. We said, "Hey, we'll have a party sometime after we come back." Once our moms got hold of that idea it was a completely transformed into a fucking nightmare regular old straight up wedding reception, thus completely and utterly ruining the whole idea behind going to a far off place where only the loyalists would attend. So, while you're technically right that I can get out of this bullshit and only lose my $1000 deposit, I'd never live it down. It's written in goddam blood. There are many times that I'm appreciative that I have a large, close-knit and supportive family. This is a rare exception.
Yeah. That's always been an intellectual problem I've faced with the whole thing. I'd much, much rather have the down payment on a house than a wedding, and they generally seem to cost about the same - though of course both can run high, depending on the house and/or wedding.
I'm on track to spend about $20k of my own money, and about $15k of my parents' and in-laws' money. It's ridiculous. No other way to put it. It'll be fun though, and of course you feel grateful that all these people want to support you. It's definitely about more than finance, but the money alone can give you a heart attack.
Damn, that's fucking brutal. My IRA is at 7.5% right now and I was bitching to the credit card when it was at ten and a quarter. The last loan we got on a car, the loan officer at the bank was physically pissed off; the rate we were offered ensured that the bank would be making $475 in total towards the purchase of a new Honda Fit. I think the rate was under 2%. Sometimes it's good to be a fogey.
And my credit score isn't bad, to boot. I have one delinquent record on it from a bank of all things, and I can't wait when that fucker drops off in another year or two. Every other bill I've ever had I have always paid early/extra/on time. I might get a lower rate if I called and asked - but I don't want a fucking lower rate. It'll only apply to new purchases anyway. I want no more debt.
I paid off a credit card on February 13, 2007. February 14 I got laid off from my job. Then I had to run the card back up again to establish another life in LA while putting my wife through college in Seattle... paid it off again just a couple months ago, but not without some serious trepidation. Figured it was entirely possible I'd lose my good gig yet again. I was actually relieved when the annual fee kicked in a day before the payoff went through, thereby giving me a balance of $69. Damn right I waited until the gig was done for the year before I paid it off completely. When the universe sends you signals like that...
Congratulations. I'm still at the point where I'm waiting for my paychecks to be at all considerable. Not to say that I'm not trying to create good habits because I don't make shit, it's just that creating sub accounts for different emergency funds like car repair, broken lightbulb fund, medical, etc., seems patently goofy right now when I'm funding them with such a small stipend. I'm not complaining though.It's exciting because now i feel like I am actually making dents.
FWIW, I don't get the point of creating multiple sub accounts for that kind of stuff. I have 4 bank accounts. 3 are all linked and really function almost as one account - it's a virtual wallet set-up by PNC (shameless plug) where I have one checking, one sub-checking, and one savings. Every paycheck I put a little money in the savings - that's what ends up getting pulled away for my short term emergencies. Every paycheck I immediately pay all bills due between that date and the next paycheck. If I have something that comes out automatically, like car insurance, I move that money to the sub-checking so that i can't spend it. I move it back the day of or before the automatic pull. The fourth account is a no-touch savings at a separate bank. It's linked to my other account but any money transfers take 5 days, so it's a good way to make sure I don't spend it. Technically I have a card for that account but I haven't activated it. That's my "no touch/SUPER rainy day/SUPER emergecy/Six month fund/mortgage" money. There is only a pittance in there but it grows every paycheck. So that's how I budget. I keep an excel spreadsheet and I plot out usually about 3 months in advance so I know I've got all my bills accounted for, I can see when I have extra paychecks and allocate that money, and see how much spending money I'll have. The one account is never touched, otherwise the money fluctuates and moves freely between the 3. Personally, I think $60 to spend on budgeting software is incredibly ridiculous.
I wouldn't disagree. Ironic, too? And it seems after reading about your personal finance system that you wouldn't need something like YNAB. As for the idea behind subaccounts, the benefit is completely psychological. I like to see my progress within each goal, but I guess you could do the same with an excel spreadsheet, so it's practically the same thing, huh?Personally, I think $60 to spend on budgeting software is incredibly ridiculous.