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It doesn't make sense to me to put money into a saving account when I can be reducing credit card debt.
I couldn't agree more with that. The interest on the credit card will cost you more than the savings account would ever pay. Once the card is paid off you can start putting that money into savings. You'll never miss it.
You either live with your parents or you live in a shack or you work for the U.S. government.
If I did I would save 95% of my post-tax earnings instead of 80%. I've not lived with my parents since 17. No US Government job or shack. I pay $1250/month in rent and I share a 2 bedroom apartment.
I agree with those who pay off their credit card debts ASAP. That is the worst debt to have. I even pay off low interest student loans ASAP because you aren't gonna get a nice interest rate like 7% anytime soon.
Mine are even happier: an 82 Toyota Celica turning 29, a Toyota Supra turning 26. Both so happy they could live a longer life and are not sitting in a junk yard, or squished into a pancake.
I've figured out how much money I need to live (including some for entertainment and other extras) and divided that into four weeks (I get paid weekly). Every time I get money, I take that amount aside. Everything else goes to savings. I opened a savings account and use it only for that purpose (saving). I don't touch that money unless a BIG emergency comes up (hasn't happened since I started the account, five months ago). I've found that putting the money in a different account works really well. Sort of "out of sight, out of mind."
A little off topic, but for those who have mentioned saving a large chunk of your income what are your plans for it? Early retirement? Comfortable retirement? Do you ever feel you're missing out by living so frugal?
Comfortable retirement. It takes millions now to retire at 65 and retain a decent middle-class standard of living without fearing that you'll outlive your nest egg or that inflation will kill your purchasing power. And you can't count on social security or some other government hand to come bail you out.
Comfortable retirement. It takes millions now to retire at 65 and retain a decent middle-class standard of living without fearing that you'll outlive your nest egg or that inflation will kill your purchasing power. And you can't count on social security or some other government hand to come bail you out.
Frightening isn't it? Just think, those who think they are entitled to make 100k/yr will someday be making that and they will still be below the poverty line.
I have never really thought of my finances like this. THANK YOU! I actually think I'm going to start doing that soon.....well in about a month or so, since I'm moving soon and everything is going to be in transition. It's a simple piece of advice, but I never really thought of it!
Quote:
Originally Posted by dotx
I've figured out how much money I need to live (including some for entertainment and other extras) and divided that into four weeks (I get paid weekly). Every time I get money, I take that amount aside. Everything else goes to savings. I opened a savings account and use it only for that purpose (saving). I don't touch that money unless a BIG emergency comes up (hasn't happened since I started the account, five months ago). I've found that putting the money in a different account works really well. Sort of "out of sight, out of mind."
If you earn enough, I think the best approach is to maximize savings in all tax-deferred vehicles - 401k ($16,500); HSA ($3,700); Roth/IRA ($6,000). Additionally, save outside those vehicles for an emergency fund and then vacations, whatever.
After all that has been allocated - THEN establish your standard of living. You earn $5,000 month, pay yourself first as listed above, and live on what's left.
The problem is that many, many people do not have sufficient discretionary income to do this. Every cent they earn is spend on the basics. It is easy to save when one is earning $100k a year, not so much when it's 25K. Those only dependent on low wages find it difficult just to pay their bills and impossible to save.
Plainly, there are many, many people with very high incomes who are disciplined enough to keep a low standard of living and they will surely benefit with peace of mind in retirement. Others without that high income need to find other sources of income. Years ago, I always knew I would never get ahead on a wage, so invested in real estate which kept me going through some hard times. Of course, I was married then, with two incomes. Couldn't have done it if I had been single.
I have never really thought of my finances like this. THANK YOU! I actually think I'm going to start doing that soon.....well in about a month or so, since I'm moving soon and everything is going to be in transition. It's a simple piece of advice, but I never really thought of it!
You're welcome! Having a savings account has made a HUGE difference. And since I now know how much money I need to live (and how much I have available for extras every week), things are so much clearer and organized financially!
Best thing I did was deposit part of my check into a separate account at a separate bank. A few hundred per check really adds up over time. Great way to build the rainy day fund.
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