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gregday posted:Thanks to the advice from this thread, in the past 2 years I have:
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Nov 21, 2010 20:38
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gregday posted:The only thing I'm paying now is eliminating that last credit card, which is also a closed account, and my mortgage which only has about $6000 left. 
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Nov 21, 2010 21:02
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 Silly Canadian question: What's the difference between an RSP and an RRSP?
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Nov 23, 2010 02:53
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I hope someone will correct me if I'm wrong, but they're the same thing everywhere I've encountered them. (Registered) Retirement Savings Plan. I think which term you get depends on who you're talking to.
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Nov 23, 2010 03:40
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I'm thinking about getting a debt consolidation loan to pay off some high interest credit cards. It seems strange to me that somebody would just hand me a check for $14k, how do these things work exactly? How hard are they to get? Etc etc.
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Nov 23, 2010 08:03
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I'm a junior in college with no debt to speak of (or job), but I don't feel I really know anything about the real world especially money-wise. At the same time, I would like to avoid the common pitfalls people make wrt banks, credit, debit, money, etc. This seems like a good place to ask, What are they and how do I avoid them? I want to learn from others financial mistakes, so I can make all the right ones and be a rich motherfucker when I'm older.
ImPureAwesome fucked around with this message at 15:15 on Nov 23, 2010 |
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Nov 23, 2010 15:03
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ImPureAwesome posted:I'm a junior in college with no debt to speak of (or job), but I don't feel I really know anything about the real world especially money-wise. At the same time, I would like to avoid the common pitfalls people make wrt banks, credit, debit, money, etc. This seems like a good place to ask, What are they and how do I avoid them? I want to learn from others financial mistakes, so I can make all the right ones and be a rich motherfucker when I'm older. The golden rule. Don't fall into credit card debt. Pay it off every month, or at the very least, have a plan to pay it off (if you have to charge something big) and stick to it.
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Nov 23, 2010 17:52
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Surely its gotta be harder than just self-control. That seems....too simple? Even though I don't pay for college (thank you grandparents for being smart and saving money for me before I was even born), I probably spend a total of like a high-balled estimate of $40 every two weeks on food/entertainment, and gonna (hopefully) graduate with a bachelor in Elec. Engineering in two years. Is it that easy?
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Nov 23, 2010 18:37
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FISHMANPET posted:I'm thinking about getting a debt consolidation loan to pay off some high interest credit cards. It seems strange to me that somebody would just hand me a check for $14k, how do these things work exactly? How hard are they to get? Etc etc. At my credit union, we do not hand a borrower a $14,000 check and assume they will pay everything off and hope for the best. We take a full application, pull credit, ask for paystubs and all income to be documented, ask for current statements, send the payments directly to the credit card companies, and in most cases make a condition of approving the loan closing most or all of the accounts. As far as getting it, it helps if you are current on everything and if you make enough money such that between what you pay for rent/mortgage, your other debts, and the new proposed payment, that it doesn’t exceed some crazy percentage of your income. In calculating the debt to income ratio, we include the new payment, we exclude the payments on the debt we are trying to pay off. The final thing is don’t expect your payment to necessarily go down, even if the rate is lower. Credit card minimum payments are so low your payment may even increase some. And of course the obligatory disclaimer to not go out and charge up a bunch of new credit card debt ever again.
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Nov 23, 2010 18:38
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ImPureAwesome posted:Surely its gotta be harder than just self-control. That seems....too simple? - Start finding a job now. That means you should be looking through job postings and seeing what skills employers want. The ones you don't have, get. Network. Find internships that relate to your field and get a foot in the door. Start getting in touch with alumni and ask them about their careers, get advice from them. - Start saving for retirement as soon as you can. You don't have a job now, but if you make any money from summer work or internships, start a Roth IRA immediately. This will put you ahead of like 95% of people your age. Yeah, that's about it. Make sure you keep seeing the doctor/dentist regularly, especially since you probably are on a cheap student plan. Don't let your health insurance lapse. Don't buy a new car on credit. Don't spend all your money on hookers and blow.
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Nov 23, 2010 18:53
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ImPureAwesome posted:Surely its gotta be harder than just self-control. That's at least 95% of it actually. Don't spend money you don't have, make and follow a budget, plan large purchases well in advance, plan for retirement and maintain an emergency fund for when your car explodes/your roof caves in/your appendix needs to come out/you lose your job/whatever. edit: I guess I had the window open longer than I thought. I'll add that the reason so many people have loads of credit card debt is that our culture puts too much pressure on having the shiniest things, basically. Also no one bothers to teach young people how money works, so by the time you usually find out, well... Medenmath fucked around with this message at 19:01 on Nov 23, 2010 |
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Nov 23, 2010 18:57
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Sweet, thanks for the responses guys. That doesn't really sound too bad/hard at all. I think I'm totally gonna own at this 'life' thing. 
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Nov 23, 2010 19:58
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The other part I would add to that is to know what your money is doing and where its going. The base thing is to don't spend money you don't have aka avoid debt. You should also know how much money you have coming in, and know where it is going every month. I keep a spreadsheet where I track all of my income and expenses so I have a nice record of everything. I never look at my account balance and wonder where that hundred dollars went. Know what your bills are so you don't have any unexpected expenses. What are your interest rates on your accounts? On any cards you have? What are the fees for services you have? Having no debt is great, but you also want to make sure you are building your money and not just living paycheque to paycheck. If you have a base income of 2k and you only have 1k of expenses. Where is that other 1k going? Are you using it up as entertainment money? Are you putting it in a savings account? Retirement account? You can avoid debt and still not be getting ahead financially if you aren't actively trying to build wealth and instead just spend it as "extra" money.
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Nov 23, 2010 21:42
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So in essence I can simplify it to: 1.Graduate and get job 2.Make budget, including also savings and whatever a Roth IRA is for retirement 3.Not be retarded; stick to budget 4.Time 5.So much money I can literally drown in it The hardest part would probably to get a job (literally just shot an email over to the career placement office asking for help looking for a summer internship), but the rest sounds like something I handle pretty well.
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Nov 23, 2010 22:37
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ImPureAwesome posted:5.So much money I can literally drown in it If all goes well. One thing I hate about everything from online investment calculators to Dave Ramsey is this faith that markets will always yield 12% annually. We went through an exceptional period from about 1982 to about 1999 when they did, and there are a number of good reasons why they did, and why those conditions are not likely to repeat any time soon. Since 1999 most things been flat at best, and if you listen to people like Bill Gross, we are likely to be in a low growth, low yield scenario for a long time, what he calls the “new normal”. No one knows how long this will last. The fact is that life gets in the way and most people don’t ever accumulate piles of money deep enough to drown in, and that is probably a better reason to give steps 1-4 a shot. I’m a loan officer and while I see tons of responsible borrowers doing responsible things, I also see desperate people in horrible situations with self inflicted wounds. When life really shits all over you, that’s when you are least likely to get a loan, and having a pile of money, even a small pile, can be all that separates someone from making rational choices while they ride out the storm and someone forced to make erratic, panicked choices that work against them.
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Nov 23, 2010 23:15
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Well I don't claim I know the workings of banks/business, but assuming I don't turn into a dribbling moron budget-wise, wouldn't just the amount of growth on the savings/retirement I would have differ depending on if the market is bad or good or whatever?
ImPureAwesome fucked around with this message at 23:35 on Nov 23, 2010 |
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Nov 23, 2010 23:30
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ImPureAwesome posted:Well I don't claim I know the workings of banks/business, but assuming I don't turn into a dribbling moron budget-wise, wouldn't just the amount of growth on the savings/retirement I would have differ depending on if the market is bad or good or whatever? Rate of return matters a lot. When I plug in 12% rate of return over 40 years starting with $5000 and investing $3,600 additionial per year, I get 3.5 million. When I put in 6%, which may be more realistic, and probably better than most people did this past decade, I get $642,000. More realistically, you will have sharply down years and very good years, have emergency funds that will yield almost nothing, times when you use the emergency funds and then times when you have to curtail your retirement savings. Over 40 years there will be illnesses, periods of unemployment, mistakes that you make. Its inevitable, and have kids and the opportunites for setbacks multiply. Sorry if I am a wet towel thrown on your dreams.
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Nov 24, 2010 00:00
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Zeta Taskforce posted:At my credit union, we do not hand a borrower a $14,000 check and assume they will pay everything off and hope for the best. We take a full application, pull credit, ask for paystubs and all income to be documented, ask for current statements, send the payments directly to the credit card companies, and in most cases make a condition of approving the loan closing most or all of the accounts. I clicked on an 'ad' from my Wells Fargo account management and they had a little tool where you put in your balances and your interest rate, they figured out your average interest rate, then knocked a couple points off of it. The payments they listed where lower than my current minimums. The debt is between two cards. One of them I got before I was 18 and is in my mom's name. I don't care about cancelling that card. The other I got shortly after I turned 18, so I've had it for 6 years. I'd like to keep that open, because that looks good on my credit score, right? The limit on that card is $6300, which is a lot higher than anything else. Even though the interest rate is 20.99%, it is some form of emergency backup. So basically I'd like to keep that account open. Is anything bad going to happen if I go into Wells Fargo and talk to a banker about this? Would it involve a credit pull? I'd generally like to know what I'd be getting into if I pursued it.
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Nov 24, 2010 00:18
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okay, this is the stuff I don't know about. i don't really know what a rate of return is, but wiki says that rate of return is the change in your final to inital over inital, but when would initial ever be bigger than the final? does it mean the inital rate versus the final rate if it drops? I see the equation that for over a period of time, there's a gain of <1, is that what you guys are talking about?
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Nov 24, 2010 00:24
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Zeta Taskforce posted:Sorry if I am a wet towel thrown on your dreams. ...But yeah, if you plan on having a kid, that pool of money will be more like a kiddie pool. A kiddie pool of debt 
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Nov 24, 2010 00:27
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You have $10. Three scenarios: Scenario A - $10 becomes $15, ($15-$10)/$10, $5/$10, 50% rate of return Scenario B - $10 becomes $10, ($10-$10)/$10, $0/$10, 0% rate of return Scenario C - $10 becomes $5, (15-$10)/$10, $-5/$10, -50% rate of return
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Nov 24, 2010 00:28
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ImPureAwesome posted:but when would initial ever be bigger than the final?
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Nov 24, 2010 00:32
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alreadybeen posted:You have $10. You're ignoring the "rate". All of these would be per year, month, week, whatever. This is actually an incorrect way to calculate rate of return, as everything should be equalized to a standard time (present, 5 years from now, etc). This is due to none of these accounting for inflation or anything. Its important to note that $15 next year is actually less than $15 now due to the "time value of money" Dead Pressed fucked around with this message at 00:40 on Nov 24, 2010 |
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Nov 24, 2010 00:37
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moana posted:When the stock market (or whatever else you're invested in) goes down. It happens! Okay, ya that makes sense if you play the stock market. But when did I get from saving for retirement/savings to playing the stock market? I think that's what's confusing me
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Nov 24, 2010 00:41
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Stocks are a popular way to save for retirement, as its usually the company-preferred way to contribute to your retirement by default, among other reasons.
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Nov 24, 2010 00:44
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Go read the long term investing thread. A large chunk of your retirement account should be in equities (stocks). It's not playing the stock market if you invest in a large index fund of a lot of stocks. Start reading up on it now and you will be well-informed when it comes time to make decisions on what to choose to invest in for retirement!
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Nov 24, 2010 00:45
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Well, what's the point of starting early just to put money into the risky stock, that just seems kinda dumb. there's gotta be a better, slower, less risky way that uses my advantage of starting early.
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Nov 24, 2010 00:50
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moana posted:Go read the long term investing thread. A large chunk of your retirement account should be in equities (stocks). It's not playing the stock market if you invest in a large index fund of a lot of stocks. Start reading up on it now and you will be well-informed when it comes time to make decisions on what to choose to invest in for retirement! Okay, that sounds like a good idea.
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Nov 24, 2010 00:52
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ImPureAwesome posted:Well, what's the point of starting early just to put money into the risky stock, that just seems kinda dumb. there's gotta be a better, slower, less risky way that uses my advantage of starting early. You'll read a lot more about it in the investment thread, but the basic idea is that if you lose some money early on it's not necessarily a big deal because you still have decades to make it up. Also, "risky" here is a bit of a misnomer as it does not mean gambling on penny stocks or whatever; it just means not squirreling all your money into bonds or whatever.
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Nov 24, 2010 04:04
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In the most basic terms I can manage. Each asset has some level of risk, this ranges from US government treasure notes (nearly zero risk) to the extreme third world equities (stocks) and entrepreneurship investing. Risk is bad, return is good. If an investor can get the same return from two assets but one is riskier than another, the logical investor will choose the less risky. Because some assets are riskier than others, they provide greater return on average, in theory. Stocks are riskier than bonds because there is no promise to pay back a stock like there is a bond. There for in order to get investors to buy stock, the return needs to be greater than a bond. If a company is suddenly worth 1000 times more today than yesterday, the stock holders prosper tremendously while the bond holders don't get paid any more than they were yesterday. I hope I haven't lost you so far, but the key point is the greater the risk, the greater the return and vica-verca. So assuming you have a high tolerance for risk and won't panic and unload your stocks during a dip, why keep your portfolio entirely in stocks until you retire to get the greatest possible return? Because of the increase risk there is a much higher chance a large portion of your portfolio is wiped out towards the end like what happened over the past couple year in the market. However if you had 30 years to go before retirement, like you do starting out, you DO have time to wait for a rebound so it makes sense to be heavily invested in stocks as opposed to bonds. Why not do a lot of bonds when you are saving early for retirement? Due to the power of compounding interest you want the best possible return you can in the early years since the effect is compounded. See the example between 6% and 12% in Zeta's post. If you get bonds early on you are shooting yourself in the foot by taking too little risk and thus lowering your return. Hope that helps.
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Nov 24, 2010 04:22
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FISHMANPET posted:I clicked on an 'ad' from my Wells Fargo account management and they had a little tool where you put in your balances and your interest rate, they figured out your average interest rate, then knocked a couple points off of it. The payments they listed where lower than my current minimums. Your actual payment will be more dependent on the loan term you select than the rate, and you will likely not know the rate until someone has pulled your credit. My experience is that your total payment will not go down, and if you are serious about paying it off instead of streching it out, something like a 2 or 3 year term, your payment will probably go up. I've said it before and will keep saying it. Do what is financially responsible and your credit will take care of its self. If your finances are solid, the credit will be there when you need it. What you say is not wrong, just not that important. Yes, if you apply for a loan, they will pull your credit. An inquiry is probably worth 5 points and its effect is short lived. Closing your oldest account might be 10 to 25 points depending on the age of your other accounts. Being late on something can drop you 150 points, being maxed out or overlimit might drop you 100 points. You can certainly ask your bank if you can keep the account open, but if I were looking at it personally, if I saw a borrower who had a card at 21% and a $6000 balance that they could not get down, and I was paying it off, I would insist that it be closed. Also, having available money on your credit card is not the same as an emergency fund.
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Nov 24, 2010 07:16
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ImPureAwesome posted:I probably spend a total of like a high-balled estimate of $40 every two weeks on food/entertainment, and gonna (hopefully) graduate with a bachelor in Elec. Engineering in two years. Is it that easy? A lot of it will be adjusting to the fact that this won't always be the case (and honestly, you probably spend more than $40 every two weeks, you just dont realize it) and realize that now is the time to start saving while you do have so few expenses. Then, when you have money saved up, it won't be a total shock that you have to put 3 months rent down when you first move into your apartment And you have to pay moving expenses and you have to buy furniture AND you have to buy work clothes, etc.... and you have to do it all before your first paycheck even arrives. But in general, realize that you won't have only $40 in expenses forever. There's rent/your mortgage, utilities, cell phone bills, transportation costs, various forms of insurance, groceries, out of pocket medical/prescription expenses, and plenty of odds and ends - gym memberships, the cost of your hobbies, paying for lunch everyday, dry cleaning/laundry, haircuts, travel costs to the extent you want to go anywhere, cable, internet, netflix, the fact you have better taste than ramen and natty now... the list goes on and it all adds up and then when kids come along... Also realize that your salary isn't what you'll actually be taking home. Taxes can be a huge shock. To the extent you end up with a high paying job, you could see about 50% of your salary taken away after federal, state and local taxes. Take that into account when making important decisions like how much you want to spend on rent. Prioritize what's important to you because you probably can't have everything you want. Do you want to live alone after college? In an expensive city? In a trendy neighborhood in that city? With a minimal commute to work? In a building with a doorman for safety reasons? Things like that cost money and add up. A 500 sq. ft studio apartment in midtown manhattan in a doorman building can cost $2300+/month. It can be hard to have self control when you have a good paycheck and the things you want don't seem ridiculous.
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Nov 24, 2010 23:05
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I think I finally grasped the concept of budgeting. I tried my first budget earlier this year, but I didn't get it right. Now, I think I've got it. I get paid weekly, so I sat down and worked out how much of my income per week I need for my bills, and I put that much into an account called 'bills'. When I get a bill, there is an account full of money I can use to pay it, or if the bill is direct debited to my credit card, when I get the cc statement, there is again an account full of money to pay the bill. I stopped being overprotective of my little savings, and used them to actually pay off the outstanding balances on my credit cards so that I can afford the full statement amount every month. Somehow this means I'm now putting $200 a week into savings instead of the previous $50/wk, so I'm back to where I was, in fact I have more money than I did in September when I started doing things right. Debt free is AWESOME. I guess my question is, I now seem to have more money than I've ever had, and I don't know how to manage my savings. Any suggestions on balancing saving for things I want (new car please), saving for emergencies (have $10k emergency fund), saving for the future (I don't really understand australian retirement planning)and spending cash every week. Another point I'd like opinion on, I have a permanent part time position at my job, where I'm contracted for 25hrs/wk which cannot be reduced without firing me, and short of stealing/punching out my boss I'm not getting fired (go labour laws!) but work I 40hrs a week, the rest made up of casual hours. These extra hours can get cut, but in the foreseeable future, they won't be. I get the feeling I should budget with only my contract hours/pay in mind, but what would I do then with the extra $250/wk I'm actually making? Would I have a savings amount built into my budget PLUS this extra money?
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Nov 26, 2010 16:29
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Vestral posted:Another point I'd like opinion on, I have a permanent part time position at my job, where I'm contracted for 25hrs/wk which cannot be reduced without firing me, and short of stealing/punching out my boss I'm not getting fired (go labour laws!) but work I 40hrs a week, the rest made up of casual hours. These extra hours can get cut, but in the foreseeable future, they won't be. I get the feeling I should budget with only my contract hours/pay in mind, but what would I do then with the extra $250/wk I'm actually making? Would I have a savings amount built into my budget PLUS this extra money? You would have a savings amount built into your budget PLUS this extra money. I'd recommend just acting like it doesn't exists. If you're having a hard time keeping track of what your savings money is for, you could try out having two savings accounts - one for 'emergency money', another for saving up for a car. This would be highly dependant on if the bank you're with allows that sort of thing on the cheap, though. Australian retirement planning isn't too difficult. Here's a link with All You Need to Know About Superannuation (courtesy of the Australian Securities and Investments Commission), they can explain superannuation much better than a goon ever could. (Actually, now that I think about it, the FIDO website may be a good resource for many Ausgoons - moana, could this be added to the OP?) Also, the government will match any voluntary contributions you make to your superannuation up to a certain dollar value. However, this is dependant upon how much you earn (if you earn somewhere over the 60k line you're out of luck), and they will be phasing it out eventually. froglet fucked around with this message at 18:33 on Nov 26, 2010 |
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Nov 26, 2010 18:31
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Added, thanks!
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Nov 26, 2010 20:54
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Vestral posted:
I'm just reiterating what froglet said, but it's a really good idea to have separate savings accounts. What I do is I have 75% of my savings going in my emergency fund account and 25% of it going in the "I want an Ipad" savings. I don't know how much you make, but you could set it up in such a way that 90% of the savings you normally put in, goes into the emergency fund and then the remaining 10% plus any extra hours goes into "wants'
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Nov 27, 2010 01:29
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froglet posted:
That website is brilliant. Thank you. I realise I didn't provide any specific amounts in my last post. I don't earn a lot of money, but I have modest needs in life. I've worked out a weekly budget based on my guarenteed 25hrs/wk: take home pay $448.00 rent 110 bills 66 fuel 20 food 25 smokes 50 (If I'm gonna buy 'em anyway, I may as well budget them in) Money left $177.00 Savings $100 Entertainment/blow $77 Extra hours pay, straight to savings $225 This is pretty much how I'm spending my money each week, I've been putting $200-$300 a week into savings since September, depending on extra hours and buying things. I can stick to that entertainment figure easily, since I'm good with 'if theres no money left, you can't spend it, go sit at home and read a book or something' I have $10k in an ING online account as my emergency fund. Based on the 2 months I spent unemployed earlier this year, if I lose my job I spend around $1500/month so that fund should last me 6 months if I have no other money except that account. I have an everyday account, a savings account, a bills account and a rent account currently at my bank (and I can get upto 10 sub accounts I think, I agree many accounts is a good idea). The savings account has $3100 sitting in it, the rent account has two weeks rent extra in it, and the bills account is on track to always have at least $100 in it (currently $400 just chilling there, waiting for bills to need paying) Is it fair then to say that this is an acceptable plan for my current savings budget? 1. $20/wk to superannuation to get max government contribution (can't beat a 100% match) 2. other $80/wk into a savings account as extended emergency money/future needs 3. $190 of extra hours money into 'car' account with the plan to buy a car for $10k in 12 months 4. any extra hours money left to go into fund mentioned in 2. In regards to the car, I currently drive a 1989 model car. It gives me no trouble, but I'd like to move into the 21st century. If it did die or be prohibitively expensive to repair, I'm fine with replacing it with a simlar POS for $2k or less, so saving for the car is dependent on continuing to earn more money than my budget.
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Nov 27, 2010 11:29
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Okay, bear with me, this is my first post in this subforum. I'm a college senior, and I have a job offer for next year in Chicago. I've never thought about a budget or planning for the long term. I actually live very frugally, really only spending money on school books and food. I guess I'm trying to approach this as a complete newbie; I don't really even know what I should be thinking about when it comes to personal finance. Here are the details. I will have no debt when I graduate. I have very few possessions; I own a TV and a car (~12k value), as well as this laptop (bought in 2003), but other than that I'm basically going to have nothing when I show up to Chicago next year. I'm going to be living on a $115k salary with a bonus of $15k when I start, so I'm going to be putting a lot of that into buying things I need to get set up in a new city. Is the car worth keeping? I don't really know how viable it is to own a car while living a big city like Chicago, so any advice here would be appreciated. What exactly should I be thinking about as I start preparing for adult life? I know nothing about savings, investing, etc., although I'm currently reading through a lot of the megathreads linked in the OP. I assume a lot of the first big expenses of someone graduating from college are things like furniture. What other things do I need to think about? I basically don't have any idea what I should be considering, and that's where I'm really looking for advice.
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Nov 28, 2010 02:13
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Elemennop posted:Here are the details. I will have no debt when I graduate. I have very few possessions; I own a TV and a car (~12k value), as well as this laptop (bought in 2003), but other than that I'm basically going to have nothing when I show up to Chicago next year. I'm going to be living on a $115k salary with a bonus of $15k when I start, so I'm going to be putting a lot of that into buying things I need to get set up in a new city. Is the car worth keeping? I don't really know how viable it is to own a car while living a big city like Chicago, so any advice here would be appreciated.
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Nov 28, 2010 04:02
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Elemennop posted:What exactly should I be thinking about as I start preparing for adult life? As lovely as it may be to move twice, I'd recommend subletting for a few months before actually signing a year lease on an apartment, unless you already know the Chicago area well or are close enough to travel there beforehand. This will give you time to shop around for apartments, maybe look at neighborhoods close to where you're going to work (or easy to commute from) and will help you decide whether you need to keep your car or not. I loved living without a car in NYC, but I'm not sure how public transportation is in Chicago - maybe try the Chicago goon thread for more info? As far as savings and investing, your basic start should be: 1. Save an emergency fund of about 6-9 months expenses. For me, I keep about 2 months of expenses in a checking account and the rest in an online savings account like SmartyPig to earn some interest. Checking accounts usually give 0% interest. 2. Start figuring out how much you spend in your new life. I love mint.com to track spending since I put everything on credit cards, but whatever works for you. This will help you budget. 3. Invest for retirement. If your company has a 401k plan or something similar, post the details in the Long Term Investment megathread and we can help you decide whether you should be putting your money there or somewhere else. If it's a lovely plan (no matching, crappy fund selection) you should start your own IRA. Again, if you need help with that, just post in the investing megathread. There are lots of companies around (Vanguard is a personal favorite) that make it really easy for you to start saving up for retirement on your own.
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Nov 28, 2010 04:04
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