Finances and Planning for Future

[SAT 9,609]

My financial planner dad always told me to have 6 months or more of income saved up in case you lost your job. In the current economy, I think it should be more like a year.

Saving for 6 months of living expense isn't an easy thing to do for most. But that is one of the golden rules of personal finance.

[SAT 9,609]

I made sure I had all credit cards paid off, car paid off a couple years ago... etc.

I started living on a budget, saving 10% on a CDs account and 3% of paychecks on another regular savings. Plus 401k...

I am blessed to be from a frugal family, and living simply is great!

In the future, we are making plans to own a small comfortable home and still live on a budget while saving for our children's future

Thanks for starting this thread! I love making plans for a better financial future!

Thanks for your 2 cents.

Saving 10% of your income is another golden rule to go by. (And it really is easier said, than done).

Not everybody have a 401K. But if you do (and your employer matches your contributions). You can give yourself a pay raise by increasing, or maxing out on your contributions. (thus forcing your employer to increase their contribution).

If one doesn't have a 401k, there are many alternatives to save for the future. There are various IRAs available right at your local bank.

Edited February 23, 2013 by SteveAndTiff

[CHarvey80 72]

I am originally from San Diego, Ca so I have been around immigrants, like Steve, my entire life. I have seen the good the bad and the ugly of it.

For my investments, I watch them and try to make adjustments so that they average 10-12% a year and are a nice balance of both risky and conservative type investments.

I have 2 bank accounts that I split my paychecks between. One is strictly for the mortgage payment and house bills and the other is for living, saving, etc.

I think that any more then 2 credit cards and you are asking for problems. It makes it too easy to live outside of your means and before you know it you are in some serious trouble. Just like life it takes a balanced approach to be successful with your money.

You should always put at minimum 5% of each paycheck in the saving account, even if it is only $5. Before you know it it will turn into some serious money and can really save your butt!

Never budget off of overtime. That money is great but it can never be counted on, especially in this economy.

LIVE WITHIN YOUR MEANS!!!!

Currently I have a traditional IRA that I started about 7 years ago and I also have my companies 401K plan that I contribute 6% to.

I have 3 different types of life insurance through my job to make sure my wife will be taken care of in the event something horrible happens.

I contribute $100 a year to each of my nieces and nephews college funds as I know it is not easy being the parent and doing that, plus I can so why not.

We are working on having a minimum of 6 months worth of money in our savings account should anything happen.

I am looking into short term and long term investments for when we receive large sums of money we can invest it and have it mature over 10-15 years and make adjustments for the markets at that point.

Lastly, that I can think of, my house was purchased for more investment reasons then anything else.

Thanks for your 2 cents.

Saving 10% of your income is another golden rule to go by. (And it really is easier said, than done).

Not everybody have a 401K. But if you do (and your employer matches your contributions). You can give yourself a pay raise by increasing, or maxing out on your contributions. (thus forcing your employer to increase their contribution).

If one doesn't have a 401k, there are many alternatives to save for the future. There are various IRAs available right at your local bank.

Not only are you giving yourself a raise with your companies matching contributions (typically up to 6%) but you are reducing your overall taxable income.

[SAT 9,609]

I am originally from San Diego, Ca so I have been around immigrants, like Steve, my entire life. I have seen the good the bad and the ugly of it.

For my investments, I watch them and try to make adjustments so that they average 10-12% a year and are a nice balance of both risky and conservative type investments.

I have 2 bank accounts that I split my paychecks between. One is strictly for the mortgage payment and house bills and the other is for living, saving, etc.

I think that any more then 2 credit cards and you are asking for problems. It makes it too easy to live outside of your means and before you know it you are in some serious trouble. Just like life it takes a balanced approach to be successful with your money.

You should always put at minimum 5% of each paycheck in the saving account, even if it is only $5. Before you know it it will turn into some serious money and can really save your butt!

Never budget off of overtime. That money is great but it can never be counted on, especially in this economy.

LIVE WITHIN YOUR MEANS!!!!

Currently I have a traditional IRA that I started about 7 years ago and I also have my companies 401K plan that I contribute 6% to.

I have 3 different types of life insurance through my job to make sure my wife will be taken care of in the event something horrible happens.

I contribute $100 a year to each of my nieces and nephews college funds as I know it is not easy being the parent and doing that, plus I can so why not.

We are working on having a minimum of 6 months worth of money in our savings account should anything happen.

I am looking into short term and long term investments for when we receive large sums of money we can invest it and have it mature over 10-15 years and make adjustments for the markets at that point.

Lastly, that I can think of, my house was purchased for more investment reasons then anything else.

Not only are you giving yourself a raise with your companies matching contributions (typically up to 6%) but you are reducing your overall taxable income.

great post

[SAT 9,609]

I'm switching to the tablet now. I will discuss more in detail "The rule of 72" as I cook some pasta.....lol

[SAT 9,609]

The Rule of 72 :

Capital Gain vs. Actual gain

As I mentioned before. Take the number 72, divide it by the percentage of your interest/ profit/ dividend, and the result is the # of years it will take for your investment to double. But that's the very basics of the rule.

I used my daughter's 529 as an example. 15% return (Capital gain) for the year 2012. At this rate, her money will double in 4.8 years.

But that's NOT the rate. because I am still contributing to it. so for example.....

she has 1000 dollars in January of 2012 in the 529 account. The return is 15% for the year. she should have 1150 by December right? Wrong ! I am still contributing to it. So let's say I put 100 a month into it. by February, she will have 1100, plus 15% (annual return) divided by 12. ($13.75). For a total of 1113.75. Then for February, add another hundred, and then add the capital gains (The 13.75). by the end of the year, my daughter should have closer to $2350 dollars. Yes, the capital gains is still 15%, but the actual gain is more like 100%. Then for the year 2013, She will start with a higher principal to receive capital gains on.

As the principal of this account goes up, the % actual gain will come down. However, the value (The dollar amount) of the capital gains will go up. So a 529 for your child can be quite rewarding if managed properly.

But we're talking about The Rule of 72. Not the 529....

So, if you have any given account. and your return is 10%. And you have 1000 dollars in there. And you are no longer contributing to this account. Then it will take 7.2 years for this money to double.

[SAT 9,609]

Next. Try a website "sweetfreestuff.com" lots of free samples, baby stuff, t shirts, etc.

[CHarvey80 72]

The Rule of 72 :

Capital Gain vs. Actual gain

As I mentioned before. Take the number 72, divide it by the percentage of your interest/ profit/ dividend, and the result is the # of years it will take for your investment to double. But that's the very basics of the rule.

I used my daughter's 529 as an example. 15% return (Capital gain) for the year 2012. At this rate, her money will double in 4.8 years.

But that's NOT the rate. because I am still contributing to it. so for example.....

she has 1000 dollars in January of 2012 in the 529 account. The return is 15% for the year. she should have 1150 by December right? Wrong ! I am still contributing to it. So let's say I put 100 a month into it. by February, she will have 1100, plus 15% (annual return) divided by 12. ($13.75). For a total of 1113.75. Then for February, add another hundred, and then add the capital gains (The 13.75). by the end of the year, my daughter should have closer to $2350 dollars. Yes, the capital gains is still 15%, but the actual gain is more like 100%. Then for the year 2013, She will start with a higher principal to receive capital gains on.

As the principal of this account goes up, the % actual gain will come down. However, the value (The dollar amount) of the capital gains will go up. So a 529 for your child can be quite rewarding if managed properly.

But we're talking about The Rule of 72. Not the 529....

So, if you have any given account. and your return is 10%. And you have 1000 dollars in there. And you are no longer contributing to this account. Then it will take 7.2 years for this money to double.

I would think it would be more accurate to see what the average performance over a 5 to 10 year period is and use that as your capital gain.

A couple good developments from this;

Your output from the equation will be more accurate if not on the conservative side which will give you a more realistic forecast on what you need to average deposit wise each year to reach the end goal you have set, if you have set one.

Just my two cents....

Edited February 24, 2013 by CHarvey80

[SAT 9,609]

1361664588[/url]' post='6000189']

I would think it would be more accurate to see what the average performance over a 5 to 10 year period is and use that as your capital gain.

A couple good developments from this;

Your output from the equation will be more accurate if not on the conservative side which will give you a more realistic forecast on what you need to average deposit wise each year to reach the end goal you have set, if you have set one.

Just my two cents....

Yea...that would be a more complex equation tho lol. I was using a short example to explain the rule of 72. ....and yes, a 5-10 year period would be much more accurate. Tho I gotta say, the past 3 years have been closer to 20%. 2009 was phenomenal. But I'm not liking the way 2013 is looking.

Hey the more input, the more informative this thread becomes....so, be my guest brother.

[CHarvey80 72]

Yea...that would be a more complex equation tho lol. I was using a short example to explain the rule of 72. ....and yes, a 5-10 year period would be much more accurate. Tho I gotta say, the past 3 years have been closer to 20%. 2009 was phenomenal. But I'm not liking the way 2013 is looking.

Hey the more input, the more informative this thread becomes....so, be my guest brother.

This year most industries have positioned themselves for a trough year so things will be moving moderately to vastly slower then the previous 2. There will still be some job posting for companies filling critical positions that become open by attrition, or otherwise.

My point being, people should be preparing likewise. The best leading indicator that you can follow, at least from my experience, to see where the economy is going is by looking at the construction industry, i.e. building houses, rock quarries, etc. if those are picking up in business then that means people are getting loans, spending money, states and local towns can afford to repair roads/bridges, start new projects. All job creators and show and promote growth within a local and state economy.

[AKSinghSingh79 143]

The first couple years are going to be tough I'd imagine for my husband and I. This is 100% my fault.

When I landed my first full time job back in late 2011, things were looking up. I was saving money, had health insurance, life insurance, contributing to a 401K, was putting larger payments towards my student loans, etc... Then in May 2012 my company shut down during the time I was in India getting married (great timing!).

After that, my savings were put on hold. Fortunately (or so I thought at the time) I got hired on with a new company relatively quickly. Since they were opening a brand new office in the area, I figured I had great job security since there was no threat of the office closing like my previous company. I finally moved out of my parent's house, signed an apartment lease, and bought a car. I was also soaking up lots of overtime hours from my new job. Things were looking good again.

After that, my employer began to slash my hours blaming it on the approaching winter season and lack of work. Then three days before Christmas, my supervisor announced that my status was changing from full time to temporary because he couldn't "keep paying me to do nothing". Interestingly enough, I was the only employee in the office who received the status change even though the rest of the staff members were also "getting paid to do nothing". Now I have no benefits, a car loan, student loans, and an apartment lease. My unemployment checks just barely cover my bills and I've slowly watched my savings deplete to nothing.

I guess you could say I made the typical twenty-something mistakes that commonly happen when a person earns real money for the first time in their lives. It's tough picking yourself up after you've fallen this hard. Now I'm terrified of being laid off again from a future company. I had imagined something totally different that my husband would be arriving into. Now I feel like he's going to struggle because of me. I hope he can at least get a job relatively quickly.

Note: I'm not writing this to gauge pity. I'd really like to know what I could do in the future to ensure that I don't make the same financial blunders that I've made in the past.

[CHarvey80 72]

The first couple years are going to be tough I'd imagine for my husband and I. This is 100% my fault.

When I landed my first full time job back in late 2011, things were looking up. I was saving money, had health insurance, life insurance, contributing to a 401K, was putting larger payments towards my student loans, etc... Then in May 2012 my company shut down during the time I was in India getting married (great timing!).

After that, my savings were put on hold. Fortunately (or so I thought at the time) I got hired on with a new company relatively quickly. Since they were opening a brand new office in the area, I figured I had great job security since there was no threat of the office closing like my previous company. I finally moved out of my parent's house, signed an apartment lease, and bought a car. I was also soaking up lots of overtime hours from my new job. Things were looking good again.

After that, my employer began to slash my hours blaming it on the approaching winter season and lack of work. Then three days before Christmas, my supervisor announced that my status was changing from full time to temporary because he couldn't "keep paying me to do nothing". Interestingly enough, I was the only employee in the office who received the status change even though the rest of the staff members were also "getting paid to do nothing". Now I have no benefits, a car loan, student loans, and an apartment lease. My unemployment checks just barely cover my bills and I've slowly watched my savings deplete to nothing.

I guess you could say I made the typical twenty-something mistakes that commonly happen when a person earns real money for the first time in their lives. It's tough picking yourself up after you've fallen this hard. Now I'm terrified of being laid off again from a future company. I had imagined something totally different that my husband would be arriving into. Now I feel like he's going to struggle because of me. I hope he can at least get a job relatively quickly.

Note: I'm not writing this to gauge pity. I'd really like to know what I could do in the future to ensure that I don't make the same financial blunders that I've made in the past.

Well, I know I have been there a couple times. I am sure most if not all the rest of us have. You were already ahead of the game with your habit of savings, keep that up!

Firstly - STOP BEATING YOURSELF UP! You can't control what others do, you can only control how you react to them. Pick yourself up, dust yourself off and march on. I know easier said then done but you got this!

Secondly - No 2o - something needs a brand new car. I don't care how much money you are making. At that age you should be investing that money into yourself and your personal growth, not something that devalues the second you sit in it. Just get a dependable used car, that's honestly all I buy to this day. Got my company truck and a used Infinity.

For now just focus on getting any job that will get you and your spouse through the hard times. Once everything settles down a bit start looking for the real money again, unless you have something on the horizon currently then go for it. But the main thing is having stability, whatever that means for you 2. It will be tough but no one ever learned anything from doing everything the right way the first time. You learn from your mistakes and mess ups, take the lesson and leave the rest.

Get stable, get to your feet, and get moving! We all have a lot more mistakes to make and lessons to learn, that's the adventure. The best part is you have your best friend and husband to enjoy the ride with now!

Keep saving, invest wisely, make sure you aren't all credit (you want to be fluid=cash as well), get what you need first and splurge when you can.

I'm sure others have some better advice hahahahaha

Edit - Just wanted you to know that I don't know ####### about anything

Edited February 24, 2013 by CHarvey80

[SAT 9,609]

Busy cooking...will add my 2 cents later...

[rlogan 2,036]

The mistake easiest to avoid is debt. It amazes me how many people lock themselves into a monthly struggle by borrowing for cars and big houses. One bad thing happens and you lose the cars and the house plus your credit rating is shot.

College doesn't make sense unless you are in a major that pays well enough to warrant the expense. A history major is about the same payback potential as booze and strippers. Except booze and strippers are a lot more fun than studying history.

[AKSinghSingh79 143]

The mistake easiest to avoid is debt. It amazes me how many people lock themselves into a monthly struggle by borrowing for cars and big houses. One bad thing happens and you lose the cars and the house plus your credit rating is shot.

College doesn't make sense unless you are in a major that pays well enough to warrant the expense. A history major is about the same payback potential as booze and strippers. Except booze and strippers are a lot more fun than studying history.

I'm in a field of study that does have a good payback but I just can't seem to stay at a company for a year. These constant lay offs have me worried. Is it the economy? Is it me? What's good advice for the next job I land? Start applying for other companies right away to avoid another potential lay off?

I agree with the big houses. I'm still unsure if I ever want to buy a house due to the enormous risks involved. It's so much easier to get out of a rental lease if something should happen.