Saving for the future.

[jbjones85]

My plan/strategy/goal whatever you want to call it is pretty simple.

I max out my 401K each year, have a small savings account for emergencies so I don't have to put it on credit, have a great interest rate on a 15 year mortgage and have no plans to "get something bigger". I do spend quite a bit of $ on the house itself renovating/updating (older home that needed some TLC) but I knew this going into it and given the location I got it at a good price to be able to do this.

My "weakness" when it comes to finances is vehicles, until the 4 runner I have sold/bought something different about even 10-12 months. The good news is that most were used and when sold I got pretty close to what I paid for them but at the same time I have had a payment for the 11 years. (now 31). I am HOPING to curb this habit with the 4 runner and once paid off (2 more years) keep it for many many years.

 

[Thefishguy77]

Comfortable retirement doesn't happen by accident:
- without accumulating enough savings (for chosen senior lifestyle) &/or receive family inheritance (if lucky enough)
- Two most important buying decisions EVER, over ones life time is:
a) house/property
b) vehicles
Make wise choices, or go into very long term debt / all buying decisions have consequences, good or bad !!

^^ I don't live in or drive brand new / these purchases, are made very wisely here.
- renovated 1963 brick bungalow that sits on +1.1 commercial acres / location-location-location, for investment potential
- wife drives a mint 2008 RAV4 Limited v6 while I drive a stock 2000 4Runner SR5 v6
(purchased in last year with cash / equals no car payments)
- I buy our family vehicles private (saved $5,000 on each recent 4x4 purchases)
- I sell our older vehicles myself, and get top dollar
- my Gen3-T4R will be kept bone stock, just turned 90,000 original miles / body still rust free & drive-train runs perfect
My fun money will be in restoring my Canadian muscle car, a rare 1967 Beaumont Sport Deluxe (396-350HP/M21/411's).

Regarding tools, my dad some 50 years ago said - "purchase quality and buy it once".
Now we live in a disposable society, & its rather difficult to purchase appliances, that aren't junk by the time the warranty runs out.
- in the home, we love are trouble free Bosch Appliances / and small kitchen stuff, by Breville
- washer & dryer, can't beat Commercial Speed Queen, like used in laundry-marts (aka Huebsch in Canada)

Went it comes to vehicle repairs, I source my own parts / my garage friend supplies his top mechanic.
- just did the rear brakes on wife's RAV4 with drilled & slotted G-3500 grey iron premium rotors with ceramic pads
- my parts & indepentant labor, totaled $300 complete / over a $1,000 rear brake job, at Toyota dealer...I always avoid

^^ Lots of ways to save easy money sometimes & don't always have to get your hands dirty.
- be smart & calculating in decisions that involve spending hard earned money & enjoy the process
[the proper research & hunt for the deal (new or used), does pays off...treat it like a rewarding job]

Not everyone can drive used vehicles / and late last year our son needed a luxury SUV, for business-work.
- we went into $$ negotiations as a skillful team, on his brand new 2015 Lexus RX350 v6 AWD purchase
- in the end, he saved 13.3% off MSRP / even purchased the Lexus, $40 per month cheaper than the same one leased
- it took Dad some 7 weeks to sell his older 2008 Nissan Rogue, privately off our front lawn
- I detailed it myself (hand wax, tires changed, E-test, safety check) / sold for ~$5,000 over normal trade-in-dealership level

I think you nailed it right there. The only thing I would add/clarify is to the not everybody can drive used vehicles. I draw a big difference between a personal rig (most of us) and a work rig (some of us). I fall in to the work rig category and I am lucky it doesn't need to be new just need to fit my needs to allow me to do my job. I believe if you have a new vehicle for work and you can justify that it is a necessary investment for work, no different than purchasing tools for work (i.e. Realestate agent needs a nice car), shouldn't you be able to write that off? I'm asking as I don't write off anything more than mileage on mine but they have been paid free and clear forever. So I'm not worried about that.


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[Sled Driver]

I keep a year's worth of expenses liquid in a savings account, in addition to maxing out my 401k contributions, IRA/Roth, brokerage account, and other investments

I keep so much liquidity because I work in an industry where layoffs are sudden and can last a long time. Need to have a bunch of dry powder around just in case the worst happens. It drives my investment manager crazy but she is learning to deal with it.

I think a key in planning for the future is understanding your own personal risks and your own goals. A financial advisor can help you along the way with that type of stuff but you really need to sit down (with your spouse) and figure it out for yourself.

 

[wallytoo]

i live well within my means, have more than two months of food and water as part of our storage, paid for my house in twelve years, have zero debt. i have a business that i've run since 1998. i drive old shit because it's cheap to run, register, insure '87 4runner, '91 celica, '89 camry, '75 cj, '48 dodge dump truck.

i grow some of my food. i have more than 10k rounds of 45acp in various places. i heat with wood, because it costs me virtually nothing but my labor.

i am extremely comfortable in the boonies, less so in urban areas. i don't get lost in the woods, although i might get lost in a city. i don't worry about stuff i can't influence or control.

as far as capital, i've got a reasonable amount put away, and could probably get by on other non-retirement savings for about two years if i stopped working tomorrow, so i have a good rainy day and toys fund.

 

[Thefishguy77]

i live well within my means, have more than two months of food and water as part of our storage, paid for my house in twelve years, have zero debt. i have a business that i've run since 1998. i drive old shit because it's cheap to run, register, insure '87 4runner, '91 celica, '89 camry, '75 cj, '48 dodge dump truck.

i grow some of my food. i have more than 10k rounds of 45acp in various places. i heat with wood, because it costs me virtually nothing but my labor.

i am extremely comfortable in the boonies, less so in urban areas. i don't get lost in the woods, although i might get lost in a city. i don't worry about stuff i can't influence or control.

as far as capital, i've got a reasonable amount put away, and could probably get by on other non-retirement savings for about two years if i stopped working tomorrow, so i have a good rainy day and toys fund.

I finally just moved to the boonies and know what you mean about getting lost in the city. It's fantastic to have elk, bear, cougar, and some deer as neighbors. Ammunition, components to make more, cash, food, water (3 creeks and a pond, very very clean water. Damn near potable via testing), grow as much of your food as you can hunt the rest and make up for anything else in the store. Finally started winning the game of life


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[Victor_inox]

I finally just moved to the boonies and know what you mean about getting lost in the city. It's fantastic to have elk, bear, cougar, and some deer as neighbors. Ammunition, components to make more, cash, food, water (3 creeks and a pond, very very clean water. Damn near potable via testing), grow as much of your food as you can hunt the rest and make up for anything else in the store. Finally started winning the game of life


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I`d move to the woods in a heartbeat my major concern is a good school for my kid and luck of internet to argue with people on message boards.
Everything else I have, good vehicle, guns, few pallets of ammo..

 

[Thefishguy77]

I`d move to the woods in a heartbeat my major concern is a good school for my kid and luck of internet to argue with people on message boards.

Everything else I have, good vehicle, guns, few pallets of ammo..

We are planning on home schooling and have a good community around here to do that. I have a 10 meg DSL connection that works great. Let's not choose this thread to argue in though. This seems like a good thread.


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[grave]

(i.e. Realestate agent needs a nice car)

i dunno, my uncle is a pretty successful realtor and he drives a 20++ year old SAAB.

we mostly live by dave ramsey's principles. my wife and i have been debt-free for almost a year and will be until we buy a house. just bought my '06 4runner with cash and are now saving for a nicer car for her. my 401K is invested entirely in the S&P 500 and we have a 4-5 month emergency fund, along with what we've saved for a future home purchase.

we don't follow them to a t, but his principles have definitely guided our life for the last couple of years, helping us get out of debt and really build up our saving. we use one credit card, a southwest visa, for purchases over $100 just to get the points because we have places to go! yeah, dave doesn't approve of that but we forge our own path in those regards. groceries, car repairs, anything like that goes on the card, but nothing under 100 bucks.

all of this can't be done without budgeting. our budget is fluid, organic. it changes monthly of course, but we update it weekly, if not more often. my wife enjoys her time on the couch in the morning before work, under a blanket with her mug of coffee and our budget spreadsheet open on her laptop. it's her thing and i make sure to include myself so i understand it, too. we update it every few days and make sure we can pay for everything we need to and put away the amount we want to... perfect example; i want new tires NOW, but i can't get them until october 14th :[ we were broke for so long that it's easy enough for us to keep living that way, even though our savings account is pretty hefty and we budget a lot of our take-home pay into savings.

 

[AKmoney]

Just curious, why limit yourself to $100 purchases on the credit card? I put literally everything on mine (Citi Double Cash Mastercard). The cash back rebate works out to getting a 2% discount on everything.

Now if you're the type of person who gets weak in the knees each time you see something really sparkly or with lots of blinky lights or things that to BANG, then I suppose it's best not to use a credit card.

BTW - NEVER use a VISA Debit Card. My credit union gave me one and I ripped it in half. Have your bank send you a straight ATM card instead - one with no VISA debit feature.

 

[grave]

the $100 limit just keeps us (me) in check. sometimes i'll put gas on that card too (~$60), but i was deep in credit card debt for years and it scares me a bit to just put $20 here, $15 there, $40 there... we like to keep it to things that we have budget lines for... groceries, gas, car repairs, tires, et cetera. we're not worried about getting cash back or working the points system or anything like that, we just want to build up some travel points so we can fly somewhere once a year.

i also have an REI visa that i used to use for work purchases. my employer reimbursed all my gas purcahses and any home depot or paint store purchases i made, so i would rack up my REI dividend on the company's dime. i got a ~$190 dividend last year just from work expense reimbursements. i put that one away in exchange for the southwest card, though and don't have that job anymore :\

 

[AZ07Runner]

People should make a list of wants and needs...and be VERY honest and realistic. Do you NEED a $5 latte every day? Do you NEED the new iPhone 29?
Speaking of which, at 48 I got my first cellphone. REFUSED to pay the monthly bill for what I needed it for which is basically emergencies and the occasional convenience. My Republic Wireless bill came today: $12.08. Don't NEED it for anything else that I can do at home on the PC.

Don't try and keep up with the Jonses. Save and put 20% down to avoid PMI. Add extra to your mortgage and/or make two half payments each month. Buy quality once instead of cheap 3-4+ times. Don't eat out all the time (huge cost!). Barring emergency purchases, don't buy anything on credit you can't pay for and pay it off ASAP. Finding a significant other that is on the same financial page as you makes life a LOT easier, too.

 

[nevada]

Don't try and keep up with the Jonses. Save and put 20% down to avoid PMI. Add extra to your mortgage and/or make two half payments each month. Buy quality once instead of cheap 3-4+ times. Don't eat out all the time (huge cost!). Barring emergency purchases, don't buy anything on credit you can't pay for and pay it off ASAP. Finding a significant other that is on the same financial page as you makes life a LOT easier, too.

this!

im finally in a decent position financially, that I am currently making a 3x mortgage payment. its so nice to watch that number not just drop, but plummet!

 

[amalik]

I`d move to the woods in a heartbeat my major concern is a good school for my kid and luck of internet to argue with people on message boards.
Everything else I have, good vehicle, guns, few pallets of ammo..

Well with Douglas County, I think you made a good choice on the school thing

 

[amalik]

I notice a shit ton of people max out on their 401k's in this thread.

Can anyone speak to doing that for like a 10-year trend? A lot of huge swings in the market.

 

[Victor_inox]

Well with Douglas County, I think you made a good choice on the school thing

Correct, great schools. my son like to go, one thing I hated in my childhood is going to school.

 

[CXS]

I notice a shit ton of people max out on their 401k's in this thread.

Can anyone speak to doing that for like a 10-year trend? A lot of huge swings in the market.

I can speak to it from a 30 year view - the market goes up & down but in the long term is positive since it's not taxed until withdrawn and a real bonus if your employer makes a match of any kind. Anyone watching it daily will go nuts but after the long haul it's the primary reason my wife and I could retire.

I'd be remiss if I didn't mention the crash of 2008 that seriously hurt/destroyed many folks hope of retirement. On stuff like that you just have to hope for the best and that your target doesn't coincide with that kind of disaster.

 

[amalik]

I can speak to it from a 30 year view - the market goes up & down but in the long term is positive since it's not taxed until withdrawn and a real bonus if your employer makes a match of any kind. Anyone watching it daily will go nuts but after the long haul it's the primary reason my wife and I could retire.

I'd be remiss if I didn't mention the crash of 2008 that seriously hurt/destroyed many folks hope of retirement. On stuff like that you just have to hope for the best and that your target doesn't coincide with that kind of disaster.

Did your portfolio have to 'recover' from the 07-08 mess?

 

[B33R_Runner]

I notice a shit ton of people max out on their 401k's in this thread.

Can anyone speak to doing that for like a 10-year trend? A lot of huge swings in the market.

Here's a trailing 10-yr hypothetical illustrating a monthly $1,500 (i.e. $18,000/yr -- the current pre-tax 401k contribution limit) investment in the Vanguard Total Stock Market Index mutual fund. The red line is the mutual fund, and the blue line is the S&P 500 index for comparison purposes (as you can see, they're virtually the same). The green line represents amount invested. In this scenario, the $180,000 invested monthly over 10 years grows to $314,715. Note the 2008 crash and the abysmal start this calendar year are just blips on the radar.

Disclaimer: This is not investment advice. Invest in the stock market at your own peril.

 

[amalik]

Here's a trailing 10-yr hypothetical illustrating a monthly $1,500 (i.e. $18,000/yr -- the current pre-tax 401k contribution limit) investment in the Vanguard Total Stock Market Index mutual fund. The red line is the mutual fund, and the blue line is the S&P 500 index for comparison purposes (as you can see, they're virtually the same). The green line represents amount invested. In this scenario, the $180,000 invested monthly over 10 years grows to $314,715. Note the 2008 crash and the abysmal start this calendar year are just blips on the radar.

Disclaimer: This is not investment advice. Invest in the stock market at your own peril.

Untitled by Casey, on Flickr

Nice.

So that basically averages out to 7.4% annual return, correct? If I did my math right. Technically some years would be negative, so I know it's not a 7.4+ every single year, but I'm speaking in theory.

 

[B33R_Runner]

Nice.

So that basically averages out to 7.4% return, correct? If I did my math right.

Actually, much better than that: 10.92% annualized return (noted on the right side of the image). Remember, the $180,000 was invested monthly over the entire 10-yr period, not a big chunk at the beginning.

Conversely, here's another 10-yr hypothetical with the same fund; this time it starts on 1/1/1999 and ends on 1/1/2009. Quite the difference. The $180,000 turns into ~$155,000. Ouch. Sometimes timing sucks.