So, you got some extra money laying around

Lambourne

Lambourne

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I've been in the same situation a few times. Bachelor + car guy means I usually ended up with a sports car/convertible. Been doing the smart thing for the last two years though, knocked out a personal loan and made a substantial extra payment on my student loans for the first time. Feels good man.

I've been reading Mr Money Moustache for the same time, it's pretty good at making you smart with money.

Getting Rich: from Zero to Hero in One Blog Post
 
Khane

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Fucking school loans. Wish I was smarter as a 17 year old about those and they weren't so essentially criminal. I would have tried way harder than I did to get scholarships and grants. My parents didn't know shit about it either because I was the first person on both sides of my family to go to college.
 
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Lambourne_sl said:
I've been in the same situation a few times. Bachelor + car guy means I usually ended up with a sports car/convertible. Been doing the smart thing for the last two years though, knocked out a personal loan and made a substantial extra payment on my student loans for the first time. Feels good man.

I've been reading Mr Money Moustache for the same time, it's pretty good at making you smart with money.

Getting Rich: from Zero to Hero in One Blog Post
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I don't know if you need to go completely off-grid the way that guy is suggesting, but yea. He makes great points.
 
Khane

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If I could stop "wasting money on groceries" and dining out I'd be a goddamn millionaire within 5 years. But I cant... I just can't fuckin do it man!
 
OneofOne

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I remember when I first moved out on my own lo those many years ago, and I lived on ramen, chili and rice, and cereal. I was soooo set on being "a responsible adult" I think I actually saved more money with that shitty damn near minimum wage job than I do today. My "treat" was grabbing a Subway sammich once a week when I went to go do laundry. Man, times have changed, and I really need to find that mindset again.
 
Lambourne

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Cad_sl said:
I don't know if you need to go completely off-grid the way that guy is suggesting, but yea. He makes great points.
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Yea I have no plan to retire particularly early or grow my own food and whatnot, but it's pretty good at making you take a good look at your finances. One of the take-away points that really made a difference for me was that loan interest is basically your present self making a claim on your future self's income, without having a complete view of his situation. Income from savings on the other hand is your present self giving your future self extra income.
 
Shonuff

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Deathwing_sl said:
Not a whole lot. But we've got more than enough in savings to put a substantial down payment on a new car and still have 6+ months of income saved. Plus, there's some wiggle room in the monthly budget. It's enough that we should really do something with it instead of just letting it sit around in the savings account.

What I can't figure out what's the best way to "spend" it. My student loans are paid off but my wife still has some, they're ~5% interest but we've been paying them off for ~3 years already. I know loans are interest front loaded, so I don't know if paying extra on loans we're already 30% into is worth it.

We have a mortgage, but it's only 3.75%. It's still in PMI range, but since both PMI and interest are tax deductible, I don't know if that's worth paying off early to get the PMI off.

No car loans, but both our cars are old(2000 and 2003), so we anticipate having to buy a new car relatively soon.

I have a 401k account with Fidelity, would it be best to just put $X/month into that account in a Vanguard index fund? Post tax(so I can pull it out if needed) or pre tax?
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Invest at pre tax. No one gave me anything - compound interest did. I start investing at 24 years old, and never looked back.
 
Gravel

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Lambourne_sl said:
I've been in the same situation a few times. Bachelor + car guy means I usually ended up with a sports car/convertible. Been doing the smart thing for the last two years though, knocked out a personal loan and made a substantial extra payment on my student loans for the first time. Feels good man.

I've been reading Mr Money Moustache for the same time, it's pretty good at making you smart with money.

Getting Rich: from Zero to Hero in One Blog Post
Click to expand...
His blog must be making the rounds lately because I've been seeing it a lot. I blew off his ideas when I first saw it several months ago, but recently I think it's pretty sound.

Personally I'm hoping to retire in 2026 at age 42.
 
Deathwing

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Retiring that early seems out of place in that guy's overall "doctrine". By retiring that early, aren't you essentially borrowing from your future self by not generating some income? Also, that's a pretty big bet to take. A lot of things could happen after 42 that would greatly affect your income needs. Unless you really hate your job, why not keep working through your prime money making years? If you end up with some extra dough when you croak, I'd assume there will be some loved ones that will benefit.
 
BrutulTM

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Retiring at 42 is insanity. Changing careers maybe, but if you actually retire at 42 you will want to kill yourself by 50.
 
Harfle

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BrutulTM_sl said:
Retiring at 42 is insanity. Changing careers maybe, but if you actually retire at 42 you will want to kill yourself by 50.
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Maybe thats what he want's to do. But yeah why the fuck would you want to retire so early.
 
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Deathwing_sl said:
Retiring that early seems out of place in that guy's overall "doctrine". By retiring that early, aren't you essentially borrowing from your future self by not generating some income? Also, that's a pretty big bet to take. A lot of things could happen after 42 that would greatly affect your income needs. Unless you really hate your job, why not keep working through your prime money making years? If you end up with some extra dough when you croak, I'd assume there will be some loved ones that will benefit.
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I'd probably still work part time as well. But once your investments cover your expenses + inflation you are good to go, once you have your expenses under control. This guys whole point is minimizing expenses to a very extreme degree. He's saying "you don't need all that shit." And to a large extent, he's right.
 
Deathwing

Deathwing

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My point is that there's only so much control you can exert over your future expenses. What if your health fails unexpectedly? What if social security is insolvent some point in the future? What if medicare is repealed? What if taxes on investment income increases? I don't think any of those are outlandish "what ifs" either.
 
Lambourne

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I agree that it is better to keep working while you can and build more wealth. Early retirement doesn't need to be the goal for the advice to hold. No matter what happens, you will still be in a better position if you have no debt and a source of passive income. If you end up on disability but you own your home outright and have 1-2k/month in interest coming in, you are in a far better position than someone in a paycheck to paycheck lifestyle that doesn't even own their car, let alone their house.

The blog is mostly about cutting expensive bullshit and building wealth instead of spending it all. The initial vibe it gives off is that it's about living like a monk, but it's more about making smart and informed choices.
 
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Deathwing_sl said:
My point is that there's only so much control you can exert over your future expenses. What if your health fails unexpectedly? What if social security is insolvent some point in the future? What if medicare is repealed? What if taxes on investment income increases? I don't think any of those are outlandish "what ifs" either.
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Re: health problems - do you not have health insurance?

If Medicare is repealed and SS fails, people who have concentrated on building wealth would hardly be the worst off. Me personally my retirement # is about $3.5M invested not counting my residence equity. I only spend about $80k/yr in expenses/vacations/etc so I don't need a huge amount.
 
Deathwing

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I do have health insurance. I don't take it for granted though. My expectations are that insurance finds a way to not pay my bills instead of the other way around. My experience so far with my newborn have not disappointed that expectation.
 
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Deathwing_sl said:
I do have health insurance. I don't take it for granted though. My expectations are that insurance finds a way to not pay my bills instead of the other way around. My experience so far with my newborn have not disappointed that expectation.
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Really? With 3 kids my child-related medical bills have been near-zero aside from paying the insurance. And I had 2 of them in the NICU. I saw the bill that went to the insurance on it and it was like $250k.
 
BrutulTM

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Deathwing_sl said:
My point is that there's only so much control you can exert over your future expenses. What if your health fails unexpectedly? What if social security is insolvent some point in the future? What if medicare is repealed? What if taxes on investment income increases? I don't think any of those are outlandish "what ifs" either.
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What if you don't want to spend half your life as a useless sack of meat with no purpose?
 
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