The (Long-Term) Finance Thread

Carlos Danger

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Also - and this is very pertinent to many members of this forum who are pretty young and working in a not-all-that-lucrative field - time is your most important resource when it comes to accumulating wealth. The number of years that your money has to compound is very nearly as important as they amount you save and invest.

As soon as you start making regular money, put a little away out of every_single_paycheck and try to increase that amount occasionally. If you do that and avoid debt, you will reach your financial goals eventually, no problem.
 

CANMAN

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1st things 1st:
A: If you are just starting out in your life
1: Invest in your future early in your career. If you put in $5,000 a year for 10 years (from 20-29) into an IRA Mutual fund that earns an average of 12% (average of the S&P 500) and then never put another dime into your IRA, but don't touch it until you retire at 62 (or maybe 65)………....You will have more money at retirement than if you put $10,000 a year into the same IRA per year from 30 years old until you retire.
2: Don't go into debt, except to buy a house. My wife and I did bought a lot of things on credit, and I am now 56 and should get out of debt this year for the 1st time since I was 25 years old. DON'T DO IT. Don't buy a new car every few years, don't buy ANYTHING ON CREDIT. STAY OUT OF DEBT.
3: Put 15% of your income into your company 401K up to their match (if they match 4% then put in 4% of your income; if they match 2% then do 2% etc.) then put $4,000 of your income into an ROTH IRA in a good mutual fund (or $8,000 if you are married) then put the rest (up to 15% of your income) into the 401K. If you do that the entire time you work you can retire with well over $5 million if not $10-25 million for retirement.
4: Pay cash for things that you save up for. Don't buy a new car, the average car payment is over $500 a month: put $500 a month into a Mutual fund for 10 years, after you save up and buy a $10K car for cash, and in 10 years you should have over $100K. Then when your car needs replacing, take $10-15K out of Mutual fund, buy another used car, and keep putting $500 a month into Mutual fund (Above retirement). That will be another $2 million or so when you retire.

{I hate to say this for those that have family members that work in banking}
5: Don't go to a banker or Credit Union Investment person for investment advice: They work for the bank or Credit Union, they get credit or bonuses when they get you to invest in their products: and when I was last in the lobby of my Credit Union the best CD was 2.9% for 5 years on $50K: That doesn't even match inflation.
Go to a true financial advisor: a Mutual fund my brother in law advised my to buy into for our ROTH IRA (You can use almost anything to invest in for a ROTH IRA) earned us 11.7% during former President Obama's terms in Office (my 401K made 9.2% during the same time frame): but the last 3 years under President Trump that same Mutual Fund only made a lousy 29%. My 401K (not counting what I put in or the match) made 59%: it dropped to 7% from April to July of this year, but it back up to 18% since July.
I wish we were totally out of debt they last 12 years and I could have been putting the full 15% into retirement, and the last 6 years an additional $15K more to make up for my retirement since I am older. But when I get out of debt later this year I am maxing everything out.

B: If you are older and in debt: GET OUT OF DEBT AS SOON AS POSSIBLE, then start dumping 15% of your income into retirement (plus if you can afford to the extra $15k. Why retire broke? Retire as a millionaire. My Uncle and Aunt did it at 56, they retired with $5 million and live off the interest:, their best income was $95K a year. Their kids just wish they taught by more than example (and so do I).
My dad is 89 years old, still living in the house that he and my mom bought in 1958, still makes more off of his retirement than off of Social Security: and he retired in 1991. His best income year was $41,500. The only thing he ever bought on credit was his $14,800 house (that is now worth $325,000.

If you are out of debt except your house pay it off as soon as you can: don't keep the house payment for the tax break. Think about I: "I want to pay the bank $3,500 a year in interest so that I can get a $2,000 tax break": (and that is only if you get more than the $24,000 joint tax deduction, which less than 10% of married Americans got last year). I want to pay the bank $3,500 in interest so that I don't get anything back in taxes???? But people do it because their parents taught them to do it; and bankers tell them to do it.

Pay off your house: in 2008 when the housing market crashed 100% of houses foreclosed on by the banks had a mortgage: or in the reverse 0% of people that owned their house outright had the bank take them away.



How many people are planning on living only on Social Security when they retire? I hope no one thinks they will be able to
This is all solid advice. The only thing I disagree with now a days is the whole "don't buy anything on credit or credit cards" push. There is A TON of money to be made buy utilizing credit cards AND being responsible and paying them off every month. My wife and I have two primary cards we use, one as a monthly spend account for groceries, gas, etc. The other for our revolving bills. Both of those are paid off every single month in full, and we basically travel for free. We have a Southwest companion pass, and I can't tell you the last time we paid for travel related expenses. Same can be said for cash back cards. I also have an REI card I use strictly for my purchases, again paid off, and reap a ton of REI dividends every year which I use to buy or upgrade backpacking gear for free.

IRA's are great if you qualify under the income limit, unfortunately my wife and I do not. We have other investments/stock.

Another thing I have taken up which gives me joy since interest rates suck for savings accounts at the moment is moving our cash emergency fund around for bank sign up bonuses. If you monitor it, hit all the metrics, and read the fine print there is money to be made. You just get a 1099 at the end of the year. We got 500 from Capital one, moved the funds to a Citi account and got 700 dollars, and it's now sitting in a chase account for a 500 dollar bonus once we hit the term. Pretty solid return on your money that is otherwise just sitting, and you can't find any interest rates on savings now anywhere close to 2% or greater, so this is the next best thing.

We are looking at moving out of our townhouse next year and getting a single family home. I am hoping the housing market stays pretty solid and we can make some money on the move. Although I don't really want to rent it, we are setup with a new house in a great location and that may be an option for us if we can't make some money. In MD closing costs are about 20k, and the seller pays for buyers realtor, so there goes about 25k right off the top :(
 

johnrsemt

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CANMAN; that is great that you can and have done that. Most people can't and don't. If people were able to do that Credit Card companies wouldn't offer miles and perks like that because they would go broke.
90% of people that are going to use credit cards only for emergencies only last approx. 4 months before a pizza order becomes an emergency.
A report a read a few months ago, almost 25% of college graduates are coming out of school with as much if not more in credit card debt than in student loan debt: which is scarier than the student loans: because the interest rates are higher.
 

CANMAN

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CANMAN; that is great that you can and have done that. Most people can't and don't. If people were able to do that Credit Card companies wouldn't offer miles and perks like that because they would go broke.
90% of people that are going to use credit cards only for emergencies only last approx. 4 months before a pizza order becomes an emergency.
A report a read a few months ago, almost 25% of college graduates are coming out of school with as much if not more in credit card debt than in student loan debt: which is scarier than the student loans: because the interest rates are higher.
I’m very fortunate in the fact that my wife makes great money (Executive Director of Nursing) and I have worked my butt off, multiple jobs, for multiple years, and tried to saved while also living life. My grandparents recently passed away and the money they left us we dumped into a 529 for my daughter. Hopefully with compounding interest there will be enough in there to fund her education in 18 years.

I have seen some of the studies you’re talking about and it blows my mind. I have also read like 80% of Americans can’t come up with 1k cash for an emergency, which is mind blowing to me. We live in the MD/DC Metro area, and despite doing well, I feel like we are middle class at best. So those types of studies are hard to wrap my head around.

I have worked with a ton of nurses though who instead of going to University of MD for their BSN for 30-40k, they wanted the “prestige” and went to Georgetown for 100k. Now all they do is complain about their student debt while making the same amount of money as their no school debt having co-workers. Solid financial education and parental guidance is key in setting the stage to be successful in my opinion, and we are GREATLY lacking in that now a days.
 

johnrsemt

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Surprising how many people want the college 'name' on the wall; but no one looks. I have never gone to a doctor and said you did Medical School at U of U, not Harvard, so you are not removing my appendix. Personally I agree with you that a person who is not still paying off a million in student loan debt 20 years later is smarter than someone who is.

A young lady who graduated here 2 years ago got $82,000 in scholarships by applying for scholarships for under $1,000. Hard work, lots of time but it paid off and paid off well. 4 of them she applied at gave her over $5,000 each even though they said they were $1,000, just because no one had applied for them for years. Her HS counselor told her not to waste her time on pissy little scholarships that wouldn't add up to anything.

Another young lady that was an Explorer Scout in the Post that I was the advisor for went to pre-med and medical school on scholarships and grants and $5,000 her grandmother gave her. She is now an ED doctor and a Pediatric Psychiatrist; free and clear, and finished Medical school and residency with both no student loan debt and no credit card debt.
 

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