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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:09 AM   #21
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by bogart
DaveW -- I agree -- probably we'll see some combination of the things you have listed, as well as new things I haven't thought of.* Seems inevitable to me
Me too. BTW, loved your movies man.

JG
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:15 AM   #22
 
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Re: Pay Yourself First or How did you create a savings plan that worked?

JG -- just about the only thing that the real Bogart and I have in common is that we both feel like we're dead . . .
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:21 AM   #23
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Re: Pay Yourself First or How did you create a savings plan that worked?

LBYM. Comes from being poor. Save 10%. Retired, and still doing it, and I think it's more than 10% but haven't run the numbers. Greatest natural law: the law of compounding interest. Makes me independent. Ooops, in all the hullaboo about NOLa, I forgot to buy my I-bond this month. Gotta do that today!
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:23 AM   #24
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by bogart
JG -- just about the only thing that the real Bogart and I have in common is that we both feel like we're dead . . .
I feel your pain man.

JG
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:36 AM   #25
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by Eagle43
LBYM.* Comes from being poor.* Save 10%.* Retired, and still doing it, and I think it's more than 10% but haven't run the numbers.* Greatest natural law:* the law of compounding interest.* Makes me independent.* Ooops, in all the hullaboo about NOLa, I forgot to buy my I-bond this month.* Gotta do that today!
I think that's neat (retired and still saving 10%). We no longer save anything and don't plan to again. Our whole deal is based on just
holding our own (not going backwards). OTOH
"We're holding our own!" was the last message from the Captain of the
Edmund Fitzgerald, so perhaps that's a poor choice of words

JG
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:40 AM   #26
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Re: Pay Yourself First or How did you create a savings plan that worked?

I got a late start on saving despite my best intentions. *First wife was a spender, not a saver, resulting in some major debt which the judge was very happy to dump on me during the divorce.

Really started saving after the divorce despite paying off 10 credit cards which had been maxed out and buying a modest home to house myself and my son. *I lost half my retirement, but since we did not save much it was only a minor loss.

I started saving as much as I could but the main focus was debt reduction and keeping the roof over our heads. *It was a very rough 3 years. *

Second wife was a compulsive shopper but was very frugal at it. *She would shop for hours at a time looking for the lowest price before buying anything. *We both worked long hours and had little time for trips other than family visits so we were able to save. *We maxed out our 401(k)s and started investing in after tax stocks. *We got burned a few times (part of the learning process) but also hit a couple of home runs. *Our strategy was buy and hold unless the reason we bought changed; then we sold. *

Third wife is a middle of the road type. *She like clothes (big surpize!) but is careful about prices. *I end up spending more than she does to support maintenance/repairs on our house and cabin. *Also, with a bad back I have to pay people to do stuff I would rather do myself but can no longer do. *That costs money.

We are nearing RE (my second; her first) in 23 months. *Our investments are struggling and we have just gotten back to even from the losses in 2000-2001 with company stock and some other stuff. *Long sad story * *But, we are forging ahead. *I have one more kid to get through college and we are a heavy debt reduction schedule. *Our ER budget post ER needs some work as we tend to still spend too much; mostly as justification for long hours and high stress jobs. *That will go away when we retire!

She saves 20% and me 12% of our checks in 401(k)s. *I have some cash stashed away in short term CDs and some bond ladders but we still have yet to set up a good income stream for ER. *Since we will be 55, SS is a long way off and would not help that much. *I have a pension (minus QUADRO) that helps but is little more than beer and toy money for now. *We save most of it but use it as a pool for big expenses like repairs (air conditioner $2K, roof $5k, etc.) *

Saving is hard to do and we have had many discussions on the subject. *It is a balance between "treating yourself" and being $ wise about the future. *She is not used to having much ...long story.. so she is still adjusting to having a positive bank balance and no CC debt, no car debt and only the mortgages to deal with.( Still a major tax write off for now).

Plan to save and put it where it is hard to get at.
Save each raise and a part of each bonus (need some play money to reward your hard work)
Invest carefully but you gotta pay if you want to play; so get in for the long haul.
Keep a stash of cash (MM and short term CDs) for short and long term expenses. *Use this to pay cash for cars and other big ticket items to avoid non-deductable interest payments. *
Dump the mortgage when it is no longe giving you a decent tax deduction.

Save for a goal and stick to it. *Resist the tempation to raid the cookie jar because you think you need a bigger TV or the latest handheld computer gadget. *Wait for sales on stuff and stay out of name brand stores. *

Saving and intellegent spending are the yin and yang of funding for life events; cars, house, college and retirement. *The energy and comittment you make today will pay off (with interest) in the future. *
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:50 AM   #27
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by SteveR
I got a late start on saving despite my best intentions. *First wife was a spender, not a saver, resulting in some major debt which the judge was very happy to dump on me during the divorce.

*
A lot of this sounds like my story. I took all of the debt from my first marriage,
but still got a good deal overall. I retired 100% immediately.
First wife (big spender) is working full time.

Second (and last) wife wants to work. She has very little financial knowledge
but she carries her weight and then some, so I don't get involved
(would only lead to trouble). My idea is that I will straighten it all
out after she eventually retires. Until then everything is completely separate.

JG
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 09:50 AM   #28
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Re: Pay Yourself First or How did you create a savings plan that worked?

Andre: 60% of your gross pay on a base of $50K per year! * You must get a lot of rent from your roommates. Enough to pay the payment on the heloc? and how do you consider the ot? Is that in your 60%.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 10:28 AM   #29
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
As our salaries increased we increased our savings.
This is what worked for me. Don't miss what you never had.

Took a few years raises but eventually hit a savings rate of 20%. Still there today (at least 'till FIRE ).
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 10:55 AM   #30
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by bogart
DaveW -- I agree -- probably we'll see some combination of the things you have listed, as well as new things I haven't thought of. Seems inevitable to me
Don't bogart my retirement?
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 12:15 PM   #31
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Re: Pay Yourself First or How did you create a savings plan that worked?

Like other early retirees have posted, I didn't have a specific savings plan. Instead, it was a bias toward saving instead of saving as an afterthought.

I started living below my means as a young man by moving to a less expensive part of the country where a guy could buy a modest, but well built house and a few acres cheaply.

The rest of the story involves LBYM and never incurring a debt (except a mortgage). I married a thrifty woman, too. No kids. No divorces. Good health. Lots of good luck.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 12:17 PM   #32
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Re: Pay Yourself First or How did you create a savings plan that worked?

Maddy,

basically, I just live cheap, I guess! Basically, in my paycheck I see about 57 cents on the dollar, once they've taken out taxes, 401k, health insurance, etc. Comes out to $1088 every two weeks, if I don't pull any overtime. I just get a straight hourly rate for OT, no 1.5x or anything exotic like that.

So basically, on average I'm probably living off of about $2400 per month net pay. I invest $1300, leaving me $1100. HELOC takes away another $600, leaving me with $500. Roommates are paying me $350 a month each. Plus, something else I forgot to account for...I lent one of my roommies some money, and he's been paying me back $500 per month. So, throw all that together and I've still got about $1700 per month to blow through. And they buy most of the food, and one of them pays the internet. Now once that loan is paid back, that'll be $500 less to play with, so I might have to adjust. And if interest rates go up too much I'll have to devote more to the HELOC. And I'm NOT looking forward to paying for home heating oil this winter!

So in my case, I might not be able to keep up this $1300 per month into mutual funds, plus the 401k, but I'm going to keep doing it while I can!

Also, I just figured that 60% based on making $50K (just got bumped to that in July) and taking 28% out of that (my 25% and the company's 3%), and then adding $1300 per month to it. If I work more OT and make more than $50K (If I don't work any more OT this year, I'll probably finish off the year at around $51,800) then the 401k portion will go up.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-09-2005, 10:01 PM   #33
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Re: Pay Yourself First or How did you create a savings plan that worked?

I have been lurking for a year and finally decided to start posting.

We save around 40% of our gross salaries. That has been our target from the start. We had to live "ultra cheap" in the beginning and have graduated to "semi frivolous". I do not intend to save more than 40% even if I can.

The key is not to live on $50 bucks a day but to increase it as much as possible with 4% withdrawal limit in mind.

I am a great believer of "Pay yourself" first. 15% 401K, 15% ESPP, 4K Roth and 7-10% after tax savings are taken out of both our paychecks even before they hit the account. Whatever is left in the account after paying bills/mortgage is play money.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-10-2005, 04:28 AM   #34
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Re: Pay Yourself First or How did you create a savings plan that worked?

This is petey who started the thread.

I want to express my gratitude to the kind folk who took the time to post their stories. Many many wonderful contributions.

Given that there were 300 views 24 hours later (now almost 600!) when I returned after starting the initial thread, I'm sure many people are finding the comments both inspiring & instructive!

Best,
Petey
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-10-2005, 06:23 AM   #35
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Re: Pay Yourself First or How did you create a savings plan that worked?

I got a good start right out of college. Because I was working full time and studying for the CPA exam at night my folks let me live at home for 1 year. This allowed me to save 70% of my income that first year.

After that I stretched and bought a condo at 22 which was a little odd for everybody around me. I bought it in a nice suburb north of chicago when most of my peers were spending 80% of their take home on rent and bars in Lincoln park (north side of chicago)

After that I can just say that I'm lucky to have such a good place to work. They pay me well enough that my wife doesn't have to work and can finish her school. Also, being in the investment field I get to see how badly so many in this industry manage their own affairs. My employer has also allowed me to invest in DFA funds with no management fee which is a hard deal to get so I am grateful.

I'm not as die hard of a cost cutter here as many. I have some expensive hobbies like competative trapshooting and cars. But we still manage to save 40-45% of our gross income (before any taxes) every year.

I agree with whoever said it before me that with the situation I'm in now I have to pay people to do things that I should be doing myself. This week I had to pay somebody $1K to paint my condo just becasue I don't have the time or patience to do it myself. but, oh well if the models work out I should be punching out (my version at 40-45)

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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-12-2005, 09:16 PM   #36
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by davew894
Is 10% really enough to save during FIRE?* I thought that to pay for inflation, savings rates need to be something like 40-50%.
There's a lot of "depends" in the answer.* It depends on what you make, it depends on how fast you want to get to FIRE, it depends on what your expenses are, etc.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-13-2005, 08:13 AM   #37
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Re: Pay Yourself First or How did you create a savings plan that worked?

Inflation is the enemy of the retiree. Most retirees would be better off if the federal reserve was abolished, along with its policy of constantly debasing the currency.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-13-2005, 10:35 AM   #38
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Re: Pay Yourself First or How did you create a savings plan that worked?

Quote:
Originally Posted by Michael
Inflation is the enemy of the retiree.* Most retirees would be better off if the federal reserve was abolished, along with its policy of constantly debasing the currency.
I hear ya, but it seems that the only alternative to the status quo would be the status quo ante-- a return to the gold standard.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-13-2005, 04:53 PM   #39
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Re: Pay Yourself First or How did you create a savings plan that worked?

I could live with that. It is also possible to come up with an agency whose only charter is integrity of the dollar.
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Re: Pay Yourself First or How did you create a savings plan that worked?
Old 09-13-2005, 05:23 PM   #40
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Re: Pay Yourself First or How did you create a savings plan that worked?

http://en.wikipedia.org/wiki/Gold_standard
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