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Old 02-01-2015, 11:21 AM
 
12,623 posts, read 8,847,149 times
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Quote:
Originally Posted by CSD610 View Post
If this person had even $3.00 left after all monthly obligations were paid and put 1/2 of that in a savings account it would eventually grow.
Obviously it would take a long time but if left alone and not taken out of the account it would be there and it would be gaining a wee bit of interest.
Actually no, at least in realistic terms. A penny saved is no longer a penny earned in the current financial world. With office inflation bouncing between 1%-4% and the actual rate consumer have to deal with probably twice that, and interest paid in a savings account a bit less, you're losing money against purchasing power for every year. Today, you can't "save" your way out of it; you have to increase income.

And therein lies the trap.
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Old 02-01-2015, 11:52 AM
 
26,155 posts, read 21,396,009 times
Reputation: 22751
Quote:
Originally Posted by freemkt View Post
Yeah but the membership is what, $100 now? Since I don't have a car, I don't see how I could buy enough to make a Costco membership worthwhile for me.
You don't need a membership to eat at the costco food court fwiw
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Old 02-01-2015, 11:53 AM
 
26,155 posts, read 21,396,009 times
Reputation: 22751
Quote:
Originally Posted by tnff View Post
Actually no, at least in realistic terms. A penny saved is no longer a penny earned in the current financial world. With office inflation bouncing between 1%-4% and the actual rate consumer have to deal with probably twice that, and interest paid in a savings account a bit less, you're losing money against purchasing power for every year. Today, you can't "save" your way out of it; you have to increase income.

And therein lies the trap.


Real inflation is not in a range of 2-8%
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Old 02-01-2015, 11:53 AM
 
33,016 posts, read 27,323,935 times
Reputation: 9074
Quote:
Originally Posted by Emigrations View Post
It's $55. If you don't have a car, how do you even survive if you don't live in a major city with easy public transit?

Transit is very good where I live and decent supermarkets are accessible. Unfortunately, I'm in a poor location and Costco is 90 minutes away by bus.
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Old 02-01-2015, 11:55 AM
 
Location: southern california
61,289 posts, read 87,129,640 times
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I have been more poor than most ghetto
When bottomed out-- spending decisions are no longer a hobby
They are survival
Of course the criminal is not functioning by the same rules he does not manage his stuff instead he takes yours
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Old 02-01-2015, 11:57 AM
 
Location: TN/NC
34,848 posts, read 30,929,707 times
Reputation: 47173
Quote:
Originally Posted by tnff View Post
Actually no, at least in realistic terms. A penny saved is no longer a penny earned in the current financial world. With office inflation bouncing between 1%-4% and the actual rate consumer have to deal with probably twice that, and interest paid in a savings account a bit less, you're losing money against purchasing power for every year. Today, you can't "save" your way out of it; you have to increase income.

And therein lies the trap.
Unless you've been in on the market run up of the past few years.
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Old 02-01-2015, 02:35 PM
 
30,860 posts, read 36,775,907 times
Reputation: 34404
I think it can be done but you will most definitely need to adopt Mustachian lifestyle habits such as:

--Not owning a car.
--Renting a room / sharing an apartment
--Low cost cell phone & internet service
--No Cable TV.

Jacob at Early Retirement Extreme managed to spend only $7K per year not that long ago and he did this while living in the high cost San Francisco Bay Area. So it can be done...but you must re-examine American notions of what a "necessity" is and those lifestyle habits/assumptions that need to go out the window are mentioned here:

Getting Rich: from Zero to Hero in One Blog Post

As MMM further explains in a subsequent post, it's not about deprivation:

If You Think This is About Extreme Frugality, You’re Missing The Point

The two bloggers essentially espouse the same attitudes and philosophy, although Jacob at ERE is more wonky and Mr. Money Mustache is more entertaining.

Last edited by mysticaltyger; 02-01-2015 at 03:13 PM..
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Old 02-01-2015, 02:42 PM
 
30,860 posts, read 36,775,907 times
Reputation: 34404
Quote:
Originally Posted by tnff View Post
Actually no, at least in realistic terms. A penny saved is no longer a penny earned in the current financial world. With office inflation bouncing between 1%-4% and the actual rate consumer have to deal with probably twice that, and interest paid in a savings account a bit less, you're losing money against purchasing power for every year. Today, you can't "save" your way out of it; you have to increase income.

And therein lies the trap.
The real trap is that you're stuck in a "savings account mentality". Yes, we all need savings accounts, but you need to get your money to grow in the stock and bond markets (primarily stocks, with some bonds for the "sleep at night" factor). Savings accounts have never, ever been the place to be if you actually want your money to grow beyond the inflation rate. And they never, ever will be, either.

The good news is that investing is more accessible and cheaper than ever to your Average Joe & Jane.

Here is a mutual fund web site that allows you to open an account with $250, $100 if you make it an IRA.

http://saturna.com/amana/
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Old 02-01-2015, 02:43 PM
 
33,016 posts, read 27,323,935 times
Reputation: 9074
Quote:
Originally Posted by mysticaltyger View Post
I think it can be done but you will most definitely need to adopt Mustachian lifestyle habits such as:

--Not owning a car.
--Renting a room / sharing an apartment
--Low cost cell phone & internet service
--No Cable TV.

Jacob at Early Retirement Extreme managed to spend only $7K per year not that long ago and he did this while living in the high cost San Francisco Bay Area. So it can be done...but you must re-examine American notions of what a "necessity" is and those lifestyle habits/assumptions that need to go out the window are mentioned here:

Getting Rich: from Zero to Hero in One Blog Post

As MMM further explains in a subsequent post, it's not about deprivation:

If You Think This is About Extreme Frugality, You’re Missing The Point

The two bloggers essentially espouse the same attitudes and philosophy, although Jacob at ERE is more wonky and Mr. Money Mustache is more entertaining.


HOLD IT right there. How exactly is he getting housing -let alone everything else - for $7K a year in Bay Area? I'm paying $6K to rent a crummy room. That frugality you cite is not a magic bullet, I've been doing those things for years and have little to show for it.
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Old 02-01-2015, 02:54 PM
 
26,155 posts, read 21,396,009 times
Reputation: 22751
Quote:
Originally Posted by freemkt View Post
HOLD IT right there. How exactly is he getting housing -let alone everything else - for $7K a year in Bay Area? I'm paying $6K to rent a crummy room. That frugality you cite is not a magic bullet, I've been doing those things for years and have little to show for it.


If you are paying 6000 a year to rent a room you need to move. Working the min wage jobs you do you should find a cheaper col

» Frequently Asked Questions Early Retirement Extreme: — a combination of simple living, anticonsumerism, DIY ethics, self-reliance, and applied capitalism
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