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Old 02-16-2013, 06:02 AM
 
Location: Cape Coral
318 posts, read 472,314 times
Reputation: 488

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Quote:
Originally Posted by packer43064 View Post
Agreed. Millions of people don't save anything or a very small amount. I can barely save $100 a month.

The people who see this thread and save are probably looking at their 401k's and trying to stretch every penny just to say "we save 3k a month". Were humans....exaggerating is quite normal especially when it comes to money.
Or

It is important as a community that we talk about this since there are so many people who are in the paycheck to paycheck cycle.

I live in SW Florida, the home of the second home. Population during winter months 300k, pop. During the summer 150k.

Most of these people live in NY or Mid West. They own and maintain a second home. That doesn't happen by accident. There are millions who scrimp and save in order to build the life and freedom they want after 40 years of grinding it out.

You don't save $150,000 dollars over night. It starts with $100 a week. It also starts with being in the right place at the right time and taking the $50 k you saved and putting into a RISK situation. In my case, buying and flipping a house at the right time.

In other words, it is freakin luck!

If enough people read this that are not saving, maybe we can provide inspiration.

You synical people take note. You may learn something even if you feel it is all BS.
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Old 02-16-2013, 06:13 AM
 
Location: Central Massachusetts
4,915 posts, read 5,055,814 times
Reputation: 6664
Quote:
Originally Posted by BugManTPC View Post
Or

It is important as a community that we talk about this since there are so many people who are in the paycheck to paycheck cycle.

I live in SW Florida, the home of the second home. Population during winter months 300k, pop. During the summer 150k.

Most of these people live in NY or Mid West. They own and maintain a second home. That doesn't happen by accident. There are millions who scrimp and save in order to build the life and freedom they want after 40 years of grinding it out.

You don't save $150,000 dollars over night. It starts with $100 a week. It also starts with being in the right place at the right time and taking the $50 k you saved and putting into a RISK situation. In my case, buying and flipping a house at the right time.

In other words, it is freakin luck!

If enough people read this that are not saving, maybe we can provide inspiration.

You synical people take note. You may learn something even if you feel it is all BS.

I agree whole heartedly with this. Much of the gains people make are by taking a risk. It is only a risk if you don't think it through. Now if you had said to take that 50k and put it down on a horse at the track that is a risk not well thought out. However your idea of buying houses to flip is a good one. Also 50k can buy you a small one man operation business that someone is wanting to retire out of. There are many roads to Dublin.
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Old 02-16-2013, 06:28 AM
 
75,790 posts, read 75,195,966 times
Reputation: 53107
risk is a relative term.

stocks 6000 points ago were less risky then cash turned out to be.

homes turned out riskier then equities.


now that bonds are coming of a 30 year bull run they can be very risky.

the biggest risk over almost every 30 year retirement period going back 146 years without fail has been cash instruments which resulted in more failure periods then any other combination..
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Old 02-16-2013, 07:13 AM
 
198 posts, read 422,359 times
Reputation: 227
It's not luck, it's discipline. It's delayed gratification. Get a saving and investing plan in place and stick with it over a period of years(not months). You have to take advantage of the power of compounding.
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Old 02-16-2013, 07:32 AM
 
837 posts, read 1,640,938 times
Reputation: 659
Quote:
Originally Posted by BugManTPC View Post
A baseline would be:

Gross Income - 401K Contribution - medical - taxes = Net Income - Expenses - PissAway Cash - personal portfolio investments - life insurance = cash saved and hopefully put away
That's a definition but one that ignores the benefit of 401k entirely, excludes employer matching, makes no consuderation of Roth over non Roth (where arguably a $1 is worth less), and would give no value to debt reduction. If I pay off my mortgage in 3 years you might say Ive saved $0, but in practice ive put away $300,000, or conversly, I might "save" $50,000 a year but turnaround and finance some fancy vehicles. That might be the smart thing to do given interest rates, but if all you consider is the above then you miss out of these nuances. Moreover, once you hit 500k in assets, that starts throwing off meaningful cash. Someone who earned and banked 10% put nearly $4,000 a month extra away from that - seems silly to ignore that. In the end, we are talking about saving for retirement, and the best metric is then monthly net worth increase.
That's why I look at my savings as ~$60k "put away" + ~$40 to 50k asset appreciation/debt reduction.
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Old 02-16-2013, 08:17 AM
 
75,790 posts, read 75,195,966 times
Reputation: 53107
debt reduction improves cash flow by cutting expenses. it is not the same thing as increasing income.

it may have a similiar effect early on but it is very different.

corporations report both profits and revenue and both are tracked seperatley.

profits can come from cutting expenses, revenue is a real increase in income . once those expenses are cut as low as they can a company can be gone or in trouble if income was not increased as well.

reducing expences are still an expense and are on the liability side of a balance sheet , having more income is on the asset side.

why is it different? once you reach the point you cut debt and expenses as low as you can that game is over.

if expenses creep up there is no further increase in income.

if you cut your cable bill, your cell phone bill etc, that appears to be the same effect as increases in pay . but if you have no job and all you can do is cut expenses you can be in trouble. with further increases in bills.

it is not a good idea to calculate that which is an expense reduction as your income increases. you need both just like that corporation.
never confuse cash flow with income , they are two different things and need to be done together.

the game plan is always get your expenses as low as you can ,that is a given . then work on the income side . you could invest some of that cash saved on bills and eventually that could increase income.

Last edited by mathjak107; 02-16-2013 at 08:32 AM..
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Old 02-16-2013, 08:32 AM
 
122 posts, read 231,990 times
Reputation: 43
Why do people count matched 401K contributions as their savings? Then I'm saving 4k lol BS
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Old 02-16-2013, 08:51 AM
 
75,790 posts, read 75,195,966 times
Reputation: 53107
for the same reason if i found 1000 bucks on the street . it increases my net worth over what it was.

the employer contribution is like money in the bank.

did you know an employee in some companies can get up to 50k or so in an employer contribution to there 401k?

the company trades pay for contributions if they structure the companies compensation plan over all that way.

Maximum Employee and Employer 401k Contribution Limits and Catch-up Amounts | Saving to Inve$t

Last edited by mathjak107; 02-16-2013 at 09:08 AM..
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Old 02-16-2013, 09:17 AM
 
198 posts, read 422,359 times
Reputation: 227
Quote:
Originally Posted by shadowyman View Post
Why do people count matched 401K contributions as their savings? Then I'm saving 4k lol BS
It's income that's not being spent. Why wouldn't you count it?
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Old 02-16-2013, 09:22 AM
VJP
 
Location: Decatur, GA
667 posts, read 1,474,500 times
Reputation: 545
My wife and I are both 30, and we save approx 6500 per month including roth, 401k, and brokerage savings. We gross maybe 180k, variable upwards which can change the savings numbers. We could probably save another grand a month but would have to give up nights out,mvacations, and other luxuries. Cars are paid off, home is worth around 250.

A written budget and living below your means in terms of fixed costs is key. I would rather have a half million invested than have a shiny Audi in my driveway.
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