ANONYMOUS personal finance poll

[jporter12]

My credit is shit, and only recently have even been ABLE to get approved for a credit card.  I got it for 2 purposes.  One is that since it's a 0% intro for 15 months, I had a $700 purchase that I wanted to make, but not the cash for, although I KNOW I will be able to have that paid off in a certain period of time (less than the 15 months) so yeah, just a short term interest free loan, so to speak.  The second reason is to try to build some credit, in order to be able to buy a house in the future.  I'm not one that thinks they should finance everything, but to be able to obtain a mortgage would be nice.  The plan after it is all paid down is to play the pay it off every month game, not using it for more than we would spend otherwise.

The bank account is pretty thin right now, we are in the process of getting on track with our finances, after being together for almost 8 years, and having everything in a mess for that entire time.  Our HUGE challenge right now is to reduce all of the SPENDING that we do, beyond bills and food, etc.

I have put together a really slick spreadsheet through Google Sheets that we use to track spending, and manage our income/expenses.  It has a "bucket" that we put the money into that we need for the planned monthly expenses and weekly expenses, that separates all of that stuff from the rest.

[Bubba]

Tough to tabulate the meaning of poll responses from those of us who don't fit the standard guidelines.  I'm retired, so no steady income.  I live on the quarterly dividends from my stock holdings, which gives me enough money to live on comfortably and do what I want...short of the dream of the yacht on the Riviera.  With no vehicle or personal loans outstanding and a paid-off mortgage, expenses are pretty minimal.  I managed to save for a nice retirement even though I never earned more than $60K a year, mostly because I've always lived pretty basic and started investing in the market in my 20s:  never had cable or sat TV (still don't!), always drove used cars, paid cash for affordable toys, and didn't spend a lot on the latest/greatest tech stuff.  To this day, I use a burner phone that costs me $100/year.  What's odd is that I THOUGHT I WANTED all that stuff at the time, but looking back over the last 40 years, I can tell you that I don't miss not having it.

I'm in the process over the next 5 years of divesting some of my stock and diversifying into safer and less volatile investments, aiming for about a 60:40 to 50:50 blend; I typically do one large sale of stock late in the year, keeping my MAGI under the bracket bump to 20% for LTCG income.  So at any one time over a year, I may have as much as $150K-200K in my savings (prior to redirecting the funds from the sale) to right now, where I'm down to under $4000 total cash and awaiting the next payment of quarterly dividends from my brokerage account.  Not collecting SS yet and prolly won't until I reach 70.  But I did just buy a sweet '12 KTM 990 SMT that brings out the hoonigan in me--proof that 65 year old guys DO have fun!!!

[Helmutt]

3 minutes ago, Bubba said:

Tough to tabulate the meaning of poll responses from those of us who don't fit the standard guidelines.  I'm retired, so no steady income.  I live on the quarterly dividends from my stock holdings, which gives me enough money to live on comfortably and do what I want...short of the dream of the yacht on the Riviera.  With no vehicle or personal loans outstanding and a paid-off mortgage, expenses are pretty minimal.  I managed to save for a nice retirement even though I never earned more than $60K a year, mostly because I've always lived pretty basic and started investing in the market in my 20s:  never had cable or sat TV (still don't!), always drove used cars, paid cash for affordable toys, and didn't spend a lot on the latest/greatest tech stuff.  To this day, I use a burner phone that costs me $100/year.  What's odd is that I THOUGHT I WANTED all that stuff at the time, but looking back over the last 40 years, I can tell you that I don't miss not having it.

I'm in the process over the next 5 years of divesting some of my stock and diversifying into safer and less volatile investments, aiming for about a 60:40 to 50:50 blend; I typically do one large sale of stock late in the year, keeping my MAGI under the bracket bump to 20% for LTCG income.  So at any one time over a year, I may have as much as $150K-200K in my savings (prior to redirecting the funds from the sale) to right now, where I'm down to under $4000 total cash and awaiting the next payment of quarterly dividends from my brokerage account.  Not collecting SS yet and prolly won't until I reach 70.  But I did just buy a sweet '12 KTM 990 SMT that brings out the hoonigan in me--proof that 65 year old guys DO have fun!!!

Winnar!  Let's see the new hoon

[Bubba]

Dude:  I tried to attach a pic and couldn't figger out the new format for doing so.  Gimme a clue and I'll indulge you.  I can copy and paste the link from PB, but I tried that once and it didn't work.  Senility must be creeping up faster than I thought!  LOL

 

Edited May 3, 2016 by Tonik

[Bubba]

Well ef'it.  That didn't work...

[Tonik]

2 minutes ago, Bubba said:

Well ef'it.  That didn't work...

Damn old people. Fixed it for you. Just paste the link...leave out the IMG tags in front and on the end.  So just:  Http...bullshit....png

[Bubba]

Old people are a pain in the ass...now get off my damn lawn!  F'in whippersnapper....

[Connie14]

2 important items not addressed by the poll:

1. Mortgage debt. I have met many people that believe in the motto: Buy the biggest house that you can afford.  They end up house poor and can't enjoy the finer points of life (like motorcycles).

2.  It is surprising how many people aren't saving enough for retirement. They can't "afford" to save for retirement.

Edited May 3, 2016 by Connie14

[Bubba]

C14:  The old axiom about maxing out your mortgage debt was predicated on the belief that house prices would steadily increase throughout the many years of ownership.  Worked OK for most people from the 50s thru the late 90s, but greed and speculation and the practice of using equity as a ready source of income supplementation did away with that in the 2000s.  No idea where prices will go for the next 50 years, but sure wouldn't want to be mortgaged to the heiny when the SHTF....

[Anden]

6 minutes ago, Connie14 said:

2 important items not addressed by the poll:

1. Mortgage debt. I have met many people that believe in the motto: Buy the biggest house that you can afford.  They end up house poor and can't enjoy the finer points of life (like motorcycles).

2.  It is surprising how many people aren't saving enough for retirement. They can't "afford" to save for retirement.

1. Fuck house poor. your a small disaster away from being homeless.

 

2. I see this all the time with kids getting out of the CTC and going hog wild with the money they are making right out of highschool. Next thing they know they are strapped to a massive car and house payment. Not even having kids yet and I can see that they are fucked written on the wall. Because now they have to work the 55hr weeks to afford all thier dumb shit. And when the work isn't there they are hurting. And they continue this behavior untill something gives. (I am watching three guys do this now.)

The mid 50's folks are the ones that kill me though they know better. Don't laugh at me because I am maxing out my contributions for the year to every place I can stuff them. 

[Tpoppa]

When planning for a comfortable retirement....the ability to live within your means is more important than how much you make.

[speedytriple]

Or in my case what messed me up is working at a company that pushed us to the max of our equipment on piece work. We made great money for years, which led me to build a  new house an buy nice things. We lived within our means an had savings I put decent money in 401. Then years later they cut our prices by 1/3.  After a few years of not being able to earn the same money, I now live house poor. I have thought about downsizing the house an using equity from it to better the situation. I am always looking for a better job, but after 21 years in a specialized feild work is hard to find making any better money. Having a large family with medical needs adds to the problems. 

[motocat12]

Transferred my college loans to a credit card for lower interest, Just couldn't miss a payment or put on any new charges at the regular higher rate until the balance was paid. Later used a convenience check to buy a $3300 car beating the bank's loan rate.

[max power]

2 hours ago, Bubba said:

Tough to tabulate the meaning of poll responses from those of us who don't fit the standard guidelines.  I'm retired, so no steady income.  I live on the quarterly dividends from my stock holdings, which gives me enough money to live on comfortably and do what I want...short of the dream of the yacht on the Riviera.  With no vehicle or personal loans outstanding and a paid-off mortgage, expenses are pretty minimal.  I managed to save for a nice retirement even though I never earned more than $60K a year, mostly because I've always lived pretty basic and started investing in the market in my 20s:  never had cable or sat TV (still don't!), always drove used cars, paid cash for affordable toys, and didn't spend a lot on the latest/greatest tech stuff.  To this day, I use a burner phone that costs me $100/year.  What's odd is that I THOUGHT I WANTED all that stuff at the time, but looking back over the last 40 years, I can tell you that I don't miss not having it.

I'm in the process over the next 5 years of divesting some of my stock and diversifying into safer and less volatile investments, aiming for about a 60:40 to 50:50 blend; I typically do one large sale of stock late in the year, keeping my MAGI under the bracket bump to 20% for LTCG income.  So at any one time over a year, I may have as much as $150K-200K in my savings (prior to redirecting the funds from the sale) to right now, where I'm down to under $4000 total cash and awaiting the next payment of quarterly dividends from my brokerage account.  Not collecting SS yet and prolly won't until I reach 70.  But I did just buy a sweet '12 KTM 990 SMT that brings out the hoonigan in me--proof that 65 year old guys DO have fun!!!

This is my biggest fear. Not investing correctly. 

I contribute quite a bit to my 401k but not sure it's enough or where my money should be. 

[Connie14]

5 hours ago, max power said:

This is my biggest fear. Not investing correctly. 

I contribute quite a bit to my 401k but not sure it's enough or where my money should be. 

Even less than optimal equity investments will outperform bonds over time.  There are lots of options for low cost index funds that mirror the total stock market (or portions of the market if that is your preference.). Many fund companies even have life cycle index funds that are low cost and will slowly taper the index funds to a more conservative portfolio as you get closer to retirement.

It is more important that someone starts saving early than their elected investment options. 

[redkow97]

11 hours ago, Connie14 said:

2 important items not addressed by the poll:

1. Mortgage debt. I have met many people that believe in the motto: Buy the biggest house that you can afford.  They end up house poor and can't enjoy the finer points of life (like motorcycles).

2.  It is surprising how many people aren't saving enough for retirement. They can't "afford" to save for retirement.

Truth.  I was a bit worried that we may have put ourselves into this position by tacking $80k onto our mortgage when we moved.  We're fine for now, but things will be a little lean while my wife's on maternity leave, and if she doesn't go back to work full-time.

The thing I never considered with home ownership was all the property taxes.  As a single guy, I could rent a nice 2-bedroom place for $550-$650/month.  Utilities for such a small place were a non-factor, and certainly less than either of the homes I've owned.  Now I pay nearly as much in taxes as I used to pay in rent!

For a family trying to rent a larger house, or for people who rent in more expensive neighborhoods, the math might not work out that way, but I think home ownership is a goal promoted more by banks than by the financially savvy. 

 

I took a hard look at retirement a couple of months ago.  I have a pension plan at work, and that will pay me a decent amount if I stay where I'm at long enough - but I don't want to count on that or be chained to it.  My wife has a traditional IRA that I forgot existed.  She just puts 6% into it (plus 3% employer match) every paycheck.  I recently started putting 10% of every check into my roth IRA as well.   I don't think anyone has ever retired and said, "I wish I hadn't saved so much."

[Bubba]

8 hours ago, max power said:

This is my biggest fear. Not investing correctly. 

I contribute quite a bit to my 401k but not sure it's enough or where my money should be. 

Here's the rub--every investment caution starts with the same disclaimer:  "Past performance is not a guarantee of future returns."

That being said, your age makes a huge difference on how critical your choices of investment type become.  If you're under 40 and looking at another 20+ years of investing, it's hard to go wrong with any of the low-cost US-based index funds from Vanguard or Fidelity.  Something as simple as the Total Market Index Fund (VTSAX) will track the performance of the US economy.  There are more sophisticated but relatively simple portfolios that you can put together using a variety of low-cost funds that include growth and value stocks, large-/mid-/small-cap stocks, international stocks based in Europe, Asia, and developing countries.  Google 'lazy portfolios' to find some recommendations.

I'll give my EXTREMELY AMATEURISH investor's view of what MAY HAPPEN over the next 10-20 years, with the disclaimer that my crystal ball doesn't work any better than the charlatan selling fortunes at the county carnival.  Right now, the US market is nearly at an all time high as far as valuation is concerned.  In addition, interest rates worldwide are at an all-time low, with some countries--Japan, for instance--holding rates in the negative range (I can't  even imagine how this works!).  What that means to me is that it's an expensive time to buy into any market category--stocks or bonds--and it's likely that many categories will underperform their long-term historic performance for a period of 5-20 years.  I believe personal tax rates will go up significantly over the next several decades out of necessity based on the type of socialist society the US is trending towards.  I think that undeveloped markets like Asia and South America, with literally billions of potential new consumers, will offer greater opportunity for long-term growth vs the relatively mature markets of the US and the EU, but you better be willing to endure a long/bumpy/scary ride over the next couple of decades.  And that leaves the the only reasonable retirement solution as "save more than you think you'll need" and hope for the best.

Some light reading from one of the regular columnists on MarketWatch.com:

http://www.marketwatch.com/story/8-lessons-from-80-years-of-market-history-2014-11-19#:vI5xcEANdDqzPA

http://www.marketwatch.com/story/the-emotional-and-psychological-risks-of-investing-2016-03-30#:ct1TSAcS0rqzPA

 

[madcat6183]

17 hours ago, redkow97 said:

That's not an enviable position.  As you noted, people's priorities vary - I think I'd put up relatives in my house before paying their mortgage(s). 

0% interest on balance transfers is an interesting factor that I hadn't thought about.  I've never had a balance to transfer, but in a bind, that's a good thought.

The last paragraph here is key.  We carry CCD debt because it's 0%, why wouldn't I?  When we're making what we are on our investments there is no point to NOT use free money.  Mower-0% 4 years, Home Depot 0% 6-12 mos, CCD's 0% for eternity if you play the game.  Heck even looking into balance transfers usually can make sense.  I earn WAY more on any real investment than the small fee I would pay to transfer a balance if it was needed.   

 

That is the 1 thing I hate about our cars though, not being new meant no 0%.  Think the rates are both reasonable, but plan is to pay the truck off this summer a year early, then wife's car which is a lower % rate next summer 2 years early.

 

[Tonik]

3 minutes ago, madcat6183 said:

 

That is the 1 thing I hate about our cars though, not being new meant no 0%.  Think the rates are both reasonable, but plan is to pay the truck off this summer a year early, then wife's car which is a lower % rate next summer 2 years early.

 

True you are not saving as much because of the non-zero interest but you are still saving a considerable amount of money. As you continue to buy used you will continue to bank more money.  As you get older you will start putting more and more down on the used cars and thus banking more...eventually paying cash.

Then you will retire and buy a new Lambo, for cash.  Stay the course man.

[Bubba]

11 minutes ago, madcat6183 said:

That is the 1 thing I hate about our cars though, not being new meant no 0%.  Think the rates are both reasonable, but plan is to pay the truck off this summer a year early, then wife's car which is a lower % rate next summer 2 years early.

 

Madcat:  If you have equity in your home, you can take a line-of-credit loan out to purchase depreciable items like cars, usually at lower interest rate than a personal loan for a used car, and the interest is deductible from your taxes in the same way your mortgage interest is.  The great danger is that, if you are unable to make the payments at any point, they take your house instead of simply repossessing your auto.  Never overextend your income:debt ratio!!!

[Bubba]

Paul Farrell's "Lazy Portfolios":

https://web.archive.org/web/20150516010906/http://www.marketwatch.com/lazyportfolio

[madcat6183]

27 minutes ago, Bubba said:

Madcat:  If you have equity in your home, you can take a line-of-credit loan out to purchase depreciable items like cars, usually at lower interest rate than a personal loan for a used car, and the interest is deductible from your taxes in the same way your mortgage interest is.  The great danger is that, if you are unable to make the payments at any point, they take your house instead of simply repossessing your auto.  Never overextend your income:debt ratio!!!

Very true, but think Pole Barn.  That will be the HELOC or a refinance in the next few months, we want to get the improvements done first though that we want inside the home.  Updating countertops, bathroom remodels, then comes the refi and pole barn. 

 

We do well, but we definitely play the game.  And house poor is just stupid, I have never understood it.  Well house or car poor honestly.  Or toys, shoot, the only way to be poor, is to truly be poor in my eyes. 

[Bubba]

Madcat:  Yup.  I suspect that none of the posters on OR are among the "truly poor" if they are members of the riding community.  The kind of financial problems being discussed here are mostly a first-world problem!

[madcat6183]

I do have one question on this topic;  Wife had to finance about 90% of her schooling, 7 years for her doctorate.  With that said, we've paid a lot down, but still have some left, enough that I would like to look into consolidation.

 

Anyone have recommendations?

 

Thanks

[Tonik]

Student debt is the same as any other debt, other than you can't dismiss it with bankruptcy.  Refi to the lowest rate possible, but don't encumber your HELOC with it, and pay off the highest rate debt first.