well, I'm pretty sure he doesn't need that $55k to buy guns, legos and cars, like our OP!
How do you know? My guess is there are several 1%ers in this thread. If he's not a 1%er, maybe he's a prepper. Or maybe it helps him sleep better at night. Regardless, it's not significant. We're talking $50k, not even six figures.
well, I'm pretty sure he doesn't need that $55k to buy guns, legos and cars, like our OP!
WTF kind of emergency to you envision that requires $55k in cash? Many investments are very liquid. There's just no reason to let that kind of cash sit idle.
That said, I do have about 6 months of expenses or so in Savings just in case.
i've heard kids can be expensive
Have I drunkenly posted that I have a kid on the way? Because I do
How do you know? My guess is there are several 1%ers in this thread. If he's not a 1%er, maybe he's a prepper. Or maybe it helps him sleep better at night. Regardless, it's not significant. We're talking $50k, not even six figures.
WTF kind of emergency to you envision that requires $55k in cash? Many investments are very liquid. There's just no reason to let that kind of cash sit idle.
That is horrible. I have about 55K in my regular savings account as an emergency fund. And deposit to it once a month.
Also, if you do an average job gambling, the house cleans up. If you do an average job in stocks, you clean up. Not quite the same. Stocks can be gambling. But just buying an S&P500 fund and holding it for many years is just about the safest bet there is.
Rental properties as passive income is great (mostly because of fantastic tax breaks in real estate). But it often isn't worth the headache or effort until you get four properties. Start with a 4-plex apartment or something similar. If you can't afford that, then I wouldn't recommend rental properties.
Have I drunkenly posted that I have a kid on the way? Because I do
I already started buying baby shit because it was a good deal... I already have a stockpile of diapers and shit from awesome coupon deals.
"It's not how much you earn, it's how much you spend." is the wisest phrase anyone ever said to me in regard to living comfortably. I've tried to live by that and with a couple exceptions been successful. I still have more debt than I would like, but it's stuff like mortgages and not big screen TVs and cell phones. Likewise, I would like to take more risks with investments, but it's like a deep RPG to really get into it and stay on top of it.
Anyone hear of Dave Ramsey? I think he's bigger in more Christian/Conservative circles - as those are the people that talk about him the most - but he's a practical financial wizard. His view is based entirely upon really basic, simple principles that we all take for granted day in and day out. This is coming across as a plug, but it's not. I haven't bought any of his books or taken any of his free courses, but a lot of my friends and family quote him often. I've heard interviews and he seems really decent and down to earth dude. It's obvious that he's helped a lot of people avoid the common financial pitfalls. To me, most of his stuff is just common sense that just isn't that common.
Anyway, we try to keep enough in savings as an emergency fund, to cover ~6 months of unemployment/injury (in addition to short and long term disability insurance that we have). We treat it as verboten and never touch it, except to slowly add to it over time. Then we have something we refer to as a "super secret savings account", which is just another savings account that we pretend doesn't exist and dump money into bi-weekly. Then at the end of the year, we use it to offset tax withholdings by putting all or most of it into an IRA of some kind. Unfortunately due to some recent BS tax code changes, you can actually get penalized for keeping too much of your own money throughout the year (WTF). We also purposely divert ~10% of each of our paychecks into a mix of deferred comp accounts, Roth IRAs, traditional IRAs, and other pension-related accounts. So before we can spend it, we've already squirreled it away. That's really the key - at least for us. Our final take-home never looks like very much, but it is theoretically all spending cash.
Where snowballing can help is for folks who are in jobs with unpredictable income. Paying off smaller debts and eliminating minimum payments allows for more flexibility in managing the bigger debts should income take a dive. The cost is paying more interest.He teaches things like "snowballing" methodology of paying off debt... basically, pay the lowest amount of debt first, then the next lowest, etc... Nevermind that you're throwing money away because you're too stupid to realize that REGARDLESS of the AMOUNT of debt. You ALWAYS pay off the one with the highest interest.
A lot.
That's a depressing chart -- 81% are living paycheck to paycheck.
I think Ramsey's goal with the snowball method is just to get people excited about paying off debt. It feels good to pay it off, so paying off the smaller one, even if ultimately loses a bit of money teaches the reward of being debt-free being happiness rather than simple debt ratio. As I understand it, it is more of a stepping stone into a deeper financial understanding. Obviously anyone that just follows a set of rules blindly is going to regret it. "Follow this guide step by step and you'll be rich!" isn't the core of his message, but people will take away what suits them.Dave Ramsey is great if you want to learn absolutely nothing about what you're doing and just live life being a mindless drone.
He teaches things like "snowballing" methodology of paying off debt... basically, pay the lowest amount of debt first, then the next lowest, etc... Nevermind that you're throwing money away because you're too stupid to realize that REGARDLESS of the AMOUNT of debt. You ALWAYS pay off the one with the highest interest.
But hey, whatever works. I still find it sad and pathetic that instead of having people LEARN they would rather just turn them into mindless drones that obeys anything someone says. Not actually learning why or how you would do something.
For what it's worth, the issue only came up once in 2012 or 2013 and hasn't been an issue since. I don't recall specifics, unfortunately.Also, I hope you're REALLY looking at the tax laws correctly:
1) I'm not sure what you mean by "penalized for keeping too much of your own money throughout the year"... Unless you're simply referring to our progressive tax structure of moving up to the next income bracket.
2) You mention contributing to an IRA and ROTH IRA. There are pretty severe income limits on Traditional (Before tax) IRA's - hope you aren't over that threshold.
My favorite quote is a slight variant on it: "I can buy anything I want, any time I want, because I don't." I like that more because it shows the freedom and power you get from restraint. Rather than just preaching the restraint part. But the overall idea is the same.Overall very good quote. Everyone in the US has to play the game of "Keeping up with Jones". Neighbor got a new car? YOU NEED a new car.
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Dave Ramsey is great if you want to learn absolutely nothing about what you're doing and just live life being a mindless drone.
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2) You mention contributing to an IRA and ROTH IRA. There are pretty severe income limits on Traditional (Before tax) IRA's - hope you aren't over that threshold.
some of us just happen to read other forums saw a familiar name and did a double take. congratulations!
don't worry, by the time he's 16 i'm sure they'll have something way better than heroin.