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Who is playing it fast and loose? Where are you even getting this information? Is saving half of your gross income fast and loose? I also don't carry balances on my credit cards but would have no problem doing so if I had a zero percent offer and didn't want to use my cash. I also don't find it useful to put more than 20% down, especially given my current rate of 2.5%. It's about balance I life so if you want to replace your car with another used car at year 5-7 instead 10 that's fine or replace your 5 year old 32 inch tv with a 50 inch for less than 400.00 that's fine too. I don't think paying off student loans prior to buying a house is a must either and there are many factors that play into the financial decision. My argument is that life is about balance not extremes and once you get your financial situation in order your lifestyle can expand as your situation improves still allowing to to meet or exceeds your goals.
I'm not sure why you're being argumentative. We probably see things pretty much the same - as does the OP. What he/she listed are some very good principles, not hard and fast rules. I think everyone here would agree there is room for variance. I only challenged your first post because you said that the OP's ideas were extreme and he/she was advocating living an impoverished lifestyle. They weren't. you wouldn't be saving $100k a year, if you were at least following them in some form or fashion.
I am editing my response (above) to include your post from a different thread, asking about the largest amount you have bet at a single time. Not judging you, as you seem to have the money and can afford it, but now I can see why you challenged the OP's financial principles as too constraining. lol
Quote:
2-3k at roulette on a single spin
I wagered a little over 5k on a single poker hand winning 18k or so but that's slightly different
I'm not sure why you're being argumentative. We probably see things pretty much the same - as does the OP. What he/she listed are some very good principles, not hard and fast rules. I think everyone here would agree there is room for variance. I only challenged your first post because you said that the OP's ideas were extreme and he/she was advocating living an impoverished lifestyle. They weren't. you wouldn't be saving $100k a year, if you were at least following them in some form or fashion.
I am editing my response (above) to include your post from a different thread, asking about the largest amount you have bet at a single time. Not judging you, as you seem to have the money and can afford it, but now I can see why you challenged the OP's financial principles as too constraining. lol
In my first post I said a couple were a bit extreme and mentioned nothing of an impoverished lifestyle. You are now getting confused.
I also didn't mention in the gambling thread but I had made more than 50k net playing poker the year I made those large wagers but the gambling had nothing to do with my comments on the "bit extreme" nature I thought the OP was and I detailed more than once what I thought was extreme and why.
You were the one who responded to my post orginally trying to take shots at me
Move in with roomates. You just dropped your rent by 50%. Move in with 4 people now you're only paying 25%. Get another job or go to school to better yourself and get higher pay.
??? ??? I'm pretty sure the vast majority of low income childless adults live with roommates. I have roommates, I pay half my income to rent a room, and I can't afford to go to school.
Here are my personal finance Ten Commandments that I have always abided by and it has worked very well for me. Feel free to share YOURS!
(1) Never use a credit card for purchases that you won't be able to payoff within 30 days. You should be using cold hard cash for those things. Your credit card should literally be only for improving your credit score or getting cash rewards.
(2) Keep things longer before replacing them. I only replace my electronics once every 10 years, to the extent they meet compatibility requirements and function well. I replace my computer once every 5 years. But when you buy a new one, buy a nice, high quality one.
(3) Keep your car for 10 years, but keep it in top notch condition. After the first several years, the car should be paid off. After that, you should accumulate and reserve the cash for your NEXT car purchase, which should be purchased outright. You will never have a car payment again. My car is 7 years old and I will keep it for 3 more years and then purchase outright. That will feel good. And it will allow you to earmark that $400 monthly car "payment" toward a nicer house or vacation. And NEVER lease a car.
(4) Always save at least 10% of your gross income in a savings account, reserved for special purchases such as a home, car, vacation or expensive item. Do not live paycheck to paycheck, even if it means sacrificing something, somehow.
(5) Always leave room in your budget for retirement contributions. Do not say, "oh, well I could always save for retirement later in life." Just settle for a decent enough apartment/house and take pleasure in saving for retirement so that you CAN actually retire.
(6) Always keep an emergency fund in an amount appropriate for your situation. It should be liquid cash literally just sitting in a regular savings account. Don't say, "oh, well I could just use my credit card or withdraw from my 401k, or collect unemployment in case of emergency." And do NOT touch it even if you want to do that home improvement project you've been dreaming of!
(7) When purchasing a house, DOT NOT put anything less than 20% down, ever. You're asking for an extra high monthly payment, PMI, higher interest, etc. Do not cut corners. Put the damn 20% down, even if it means waiting several more years. You will benefit from having much more instant equity and a lower monthly payment.
(8) Do not get all excited by coupons and deals. You need to view these things as the devil trying to get you just spend even MORE money than you would normally. ONLY use the coupons and deals if you actually need or want the item at that point in time. New coupons and deals are always coming right around the corner again.
(9) Student loan debt should be paid off before you ever purchase a home. You cannot sell a college degree like you can with other assets and have someone else assume the liability. It has to be paid off sooner or later, so might as well pay it off ASAP.
(10) NEVER include bonus/nonguaranteed income in your budget to cover monthly expenses that ARE guaranteed. Bonuses are often not guaranteed, and are highly variable. Just stash it away in accumulated savings for those future big purchases. Guaranteed, fixed expenses should be covered by guaranteed, fixed income.
1} I have had to/been known to put things on the CC I could not pay off, sometimes with ZERO % and other times paying a little to tide me/it over. But was paid off as quicly as possible! I just swtiched a card for better rewards card.
2}I KEEP electronics til it don't work no more! You replace every 10 years? I DO replace the computer about every 5 as they seem to fail.
3}The last vehicle we traded in was 16 years old. I hope that counts? I have only ever had 2 vehicles I made payments on, and didn't like it either time.
4}We save 10% auto-deduct into vacation club account,,,even if not just for a vacation! if we can help it. we paln a major trip {Disney World, Cruise, Hawaii} for every 5 years, and do week-end or weekly getwaways nearby in between.
5}we save 25-30% anyway for retirement, regardles, again, autodeduct and quartely payments to retirement plans helps.
6}We DO keep an emergency fund, though I think we should increase it as we haven't in years. I am thinking one year's GROSS income should do it, that way IF something happens, we have MORE THAN a year's worth of austerity living expenses handy. Gotta increase that for us...YES in cash paying a lowly money market rate....
7}We OWN our home for so many years, I don't know the details anymore...We'd like to change to something smaller, so we are saving towards that too, not counting on this one for the paying of the new one, we may rent this one out...its paid for after all.
8}I HAVE used coupons to my benefit, but buy only what I would have bought anyway.
9}Never had student loan for much, and paid it of quickly....I believed in working your way through one way or another if possible. I had 2 full time jobs, and carried 12 CHs, came out with 3 A's and a B. The B killed me, though! I did that two semesters like that in a row, boy was that exhausting! But I was YOUNG and could do it, can't now.
10} I have always saved the extra odd bonuses and things...
Thanks for posting!
I've got to have the safest steel cage I can get, and that means a new car every 5 years or so. I see it as an extra insurance premium, and honeslty I still can live really well and save mid 20%'s of gross on my income with a car payment.
Here are my personal finance Ten Commandments that I have always abided by and it has worked very well for me. Feel free to share YOURS! The lurtsman reviews your commandments- reviews in bold
(1) Never use a credit card for purchases that you won't be able to payoff within 30 days. You should be using cold hard cash for those things. Your credit card should literally be only for improving your credit score or getting cash rewards. Good
(2) Keep things longer before replacing them. I only replace my electronics once every 10 years, to the extent they meet compatibility requirements and function well. I replace my computer once every 5 years. But when you buy a new one, buy a nice, high quality one. You would be much better off buying a relatively new medium quality one. Right now people needing new computers should plan to spend 250 to 400. Anything above that and they are buying a gaming machine. If they don't use it for gaming, they threw away the extra money.
(3) Keep your car for 10 years, but keep it in top notch condition. After the first several years, the car should be paid off. After that, you should accumulate and reserve the cash for your NEXT car purchase, which should be purchased outright. You will never have a car payment again. My car is 7 years old and I will keep it for 3 more years and then purchase outright. That will feel good. And it will allow you to earmark that $400 monthly car "payment" toward a nicer house or vacation. And NEVER lease a car. Buy the car with cash, paid off on day 1
(4) Always save at least 10% of your gross income in a savings account, reserved for special purchases such as a home, car, vacation or expensive item. Do not live paycheck to paycheck, even if it means sacrificing something, somehow. Load up a savings account to the required level, take the rest and invest it in stocks/bonds through a LOW fee mutual fund or ETF. Retirement accounts are best for this due to the savers credit and the lower taxes.
(5) Always leave room in your budget for retirement contributions. Do not say, "oh, well I could always save for retirement later in life." Just settle for a decent enough apartment/house and take pleasure in saving for retirement so that you CAN actually retire. Plan to max the IRA every year once your personal income is over 24k/year. Max it out first, live on what is left over.
(6) Always keep an emergency fund in an amount appropriate for your situation. It should be liquid cash literally just sitting in a regular savings account. Don't say, "oh, well I could just use my credit card or withdraw from my 401k, or collect unemployment in case of emergency." And do NOT touch it even if you want to do that home improvement project you've been dreaming of! Isn't this the savings account from #4?
(7) When purchasing a house, DOT NOT put anything less than 20% down, ever. You're asking for an extra high monthly payment, PMI, higher interest, etc. Do not cut corners. Put the damn 20% down, even if it means waiting several more years. You will benefit from having much more instant equity and a lower monthly payment. With all due respect, this is a terrible commandment. I'm a financial professional. I make ALL of my money from a combination of investing and providing financial research. I had the cash to put more down on my house and instead bought with 5% down because I calculated the mortgage as two loans. An 80% and a 15% with the 15% having the PMI wrapped into the cost. It was cheaper for me to pay the PMI and interest on the extra 15% and use the cash to pay off student loans because I had some outstanding loans at 6.8%. Waiting several years would've been horrendously stupid. My monthly cash payment on the mortgage is 1217. My rental payment for an inferior place would have been around 1200. My mortgage payment includes 350 towards principal plus I get the appreciation. For people that are not financially literate, this would make sense. For people that are literate, it would be a disaster. When the cash cost including PMI is less than or equal to rent and a person intends to stay in the house for a long time, there is NO good argument against buying.
(8) Do not get all excited by coupons and deals. You need to view these things as the devil trying to get you just spend even MORE money than you would normally. ONLY use the coupons and deals if you actually need or want the item at that point in time. New coupons and deals are always coming right around the corner again. Good advice
(9) Student loan debt should be paid off before you ever purchase a home. You cannot sell a college degree like you can with other assets and have someone else assume the liability. It has to be paid off sooner or later, so might as well pay it off ASAP. Bad advice, see #7. I paid off the 6.8% loans and used a smaller down payment, but I've left loans charging 5% to 6% because they are tax deductible and I get 5% to 7% on corporate bonds in a tax deferred retirement account. Buying the home is more important than paying off student loans, especially if the student took them out in the more attractive years with rates from 3 to 4%.
(10) NEVER include bonus/nonguaranteed income in your budget to cover monthly expenses that ARE guaranteed. Bonuses are often not guaranteed, and are highly variable. Just stash it away in accumulated savings for those future big purchases. Guaranteed, fixed expenses should be covered by guaranteed, fixed income. Great advice
Great list! I follow about every single one except 5 (I need to work on it..) and 7, unfortunately didnt put 20% down, but will have house paid off in 5 years instead of 30, should be paid for next year in full.
also, many people in poverty level (not all but many) got into it because of not following these types of guidelines.
Doesnt make sense to me to save 10% of my gross income towards a bigger purchase, when I can put that towards debt
It's complicated, because it depends on all the alternatives with the money, and also on whether or not your existing debt costs more than new debt would if you financed the purchase.
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