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How to encourage a friend
Old 05-13-2005, 01:25 PM   #1
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How to encourage a friend

I have a buddy that is going through some serious issues. Graduated top of the class, good-looking (you know all the right stats), but has not saved a DIME during the last 7 years.

He asked me yesterday how much he should have saved--w/o going into a lot of detail, I shared that at our age (late 20's), we should have a minimum net worth between $100 - $175 M.

The look on his face was one of defeat. How do I help empower him. I feel like I left him hopeless.

Any encouraging stories?

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Re: How to encourage a friend
Old 05-13-2005, 01:28 PM   #2
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Re: How to encourage a friend

Quote:
Originally Posted by Tommy_Dolitte
I have a buddy that is going through some serious issues.* Graduated top of the class, good-looking (you know all the right stats), but has not saved a DIME during the last 7 years.

He asked me yesterday how much he should have saved--w/o going into a lot of detail, I shared that at our age (late 20's), we should have a minimum net worth between $100 - $175 M.

The look on his face was one of defeat.* How do I help empower him.* I feel like I left him hopeless.

Any encouraging stories?

*
In my late 20s I had 0. I have a lot more than that now.

Mikey
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Re: How to encourage a friend
Old 05-13-2005, 01:31 PM   #3
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Re: How to encourage a friend

Yeah, I spent it as fast as I got it in my 20's, which was dumb. I could've ER'ed without the late 90's stock market windfall if I was a little smarter than I was with my money.

Back to your friend...laugh heartily at the good looking, high achieving bastard!!!
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Re: How to encourage a friend
Old 05-13-2005, 01:54 PM   #4
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Re: How to encourage a friend

There's no magic.* Tell him to get a jar and drop $10 in TODAY.* Tomorrow add another $10 and keep adding $10 every day until he can add even more on a long-term consistant basis.

When he has a few hundred bucks in the jar, he can open a Roth IRA (if he qualifies) or any other type of account that he won't touch until he retires.* Then he can have auto debits from his checking account going to the retirement plan account(s).


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Re: How to encourage a friend
Old 05-13-2005, 03:11 PM   #5
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Re: How to encourage a friend

Same here. I didn't have much either in my late 20's. Tell him to always buy used cars. I use to buy a new one every 4-5 years. What a mistake. My last one was 2 years old and 5 years later is running just fine.* *
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Re: How to encourage a friend
Old 05-13-2005, 03:38 PM   #6
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Re: How to encourage a friend

In my 20s, I didn't have squat (except a lot of debt, a mortgage,
2 kids and a non-working spouse). Same in my 30s. Same in my 40s, mostly. I came, I saw, I earned, WE spent. Then in my
40s came the ER epiphany. I guess the message is that even with
no real plan and no real savings program, an acquisitive spouse
and other disadvantages, it can still be done. Well, not everyone
can do it, but still................

JG
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Re: How to encourage a friend
Old 05-13-2005, 07:03 PM   #7
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Re: How to encourage a friend

Tell him to find a wonderful woman and have a family.

Make his wife and kids the #1 priority.

Take life one day at a time.

And before you know it he'll have grandkids that worship him!
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Re: How to encourage a friend
Old 05-13-2005, 08:53 PM   #8
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Re: How to encourage a friend

I didn't have a real job until I was 28 so I was somewhat penniless until I started making money as an IT professional.

MJ
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Re: How to encourage a friend
Old 05-13-2005, 10:21 PM   #9
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Re: How to encourage a friend

Quote:
Originally Posted by Tommy_Dolitte
I have a buddy that is going through some serious issues. Graduated top of the class, good-looking (you know all the right stats), but has not saved a DIME during the last 7 years.

Any encouraging stories?

Plays golf too? Sounds like a future manager. That will give him some extra nest egg money to put aside.

Sounds like he is well ahead of many others. He started at least thinking about it some time well before retirement. If he does not have a ton of credit card debt, he is probably doing quite well compared to the average joe.

Vicky
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Re: How to encourage a friend
Old 05-14-2005, 01:59 PM   #10
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Re: How to encourage a friend

Quote:
Originally Posted by Tommy_Dolitte

How do I help empower him. I feel like I left him hopeless.

Any encouraging stories?

Well, point out that (according to many peoples' views on this forum which I haven't personally subscribed to ) your 20s are supposed to be your 'glory years' where you have all of your fun and piss away most of your money on fun and frivolity (i.e. not being a cheap bastard like yours truly and a few select others so you can reach FIRE when you're 39 ). So, like most others in the world, he isn't very atypical.

Granted, if he wants to ER before he's 40, then he's got a tough road ahead of him....but the only day that it's ever 'too late' to start saving is tomorrow.

You could work up a variety of graphs showing him what $10,000/year saved up would be worth after so many years, etc., etc., to give him some visual incentives. Also, don't forget to show the value of starting today versus just one year later: In that graph of $10,000/year for 20 years, point out that if he waits just one more year to start saving, the difference of waiting just one year 20-25 years from now results in several times his initial investment. Also point out other 'unknowns' that might impact his budget and net worth such as possibly having a wedding, kids, cars, emergencies, job losses, etc.

Congradulate him that he didn't wait until his mid 50s to 'wake up' like, sadly, many Americans do, and realize that he hasn't saved anything. Encourage him to work up a budget of what retirement would look like, and help him see that he will need a hefty portfolio to fund his retirement (note: I'm not talking about the $3 million that many professional sharks salespeople claim you need - I'm referring to the fact that even a scant $1 million portfolio will seem enormous to a 20-something who hasn't saved a dime, much less a $2 million portfolio that will likely be required to satisfy the urgings of someone who has found a need to spend all of his earnings in his 20s.

Offer to show him some of your notes/goals/ways of saving. Give him plenty of info on savings options (i.e. make sure he understands his 401 (k) options, make sure he's funding a ROTH if his income isn't too high, make sure he has taxable investments, etc.). Not only teach him how to fish, but go fishing with him a few times to make sure he has the hang of it .

Oh, and who could forget: e-mail him the link to this forum!
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Re: How to encourage a friend
Old 05-15-2005, 04:14 PM   #11
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Re: How to encourage a friend

Quote:
Originally Posted by Tommy_Dolitte
He asked me yesterday how much he should have saved--w/o going into a lot of detail, I shared that at our age (late 20's), we should have a minimum net worth between $100 - $175 M.
First off, i'm screwed. I'm 25, and according to my Excel chart, I will have a net worth (only counting fairly liquid assets - liabilities) of $0 come October (hopefully sooner if I can help it). College is expensive, and i'm still paying for it. My SO is still in school, and she won't be done for 2 more years. After that we will have a pretty kick-ass household income, but I will almost be 28 by then. :P

Second, what do you mean by 'should'? By whose standards? The goals of many on this board are atypical, and for someone who plans to retire at age 67, $100-175k by late 20s is a bit much.

I currently save (either by 401k/roth contributions, actual savings, or debt retirement) 50.6% of my gross income, and have recently begun to reevaluate this. Once my debt is gone, I'm going to buy a mid-90s truck, and a pair of seadoos (with trailer of course!). I need to have some fun, and saving 50.6% isn't very much fun. It's one thing to be thrifty, it's another to let life pass you by.
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Re: How to encourage a friend
Old 05-15-2005, 06:25 PM   #12
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Re: How to encourage a friend

When you are in your 20's you are supposed to "eat, dink, and be merry. :P

It worked for me.
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Re: How to encourage a friend
Old 05-15-2005, 07:16 PM   #13
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Re: How to encourage a friend

Quote:
Originally Posted by Marshac
Once my debt is gone, I'm going to buy a mid-90s truck, and a pair of seadoos (with trailer of course!).
I feel your pain. Just tell me you're going to get the seadoos used (and pay cash)...they depreciate even more than a boat the minute you drive them off the lot. Another hole in the water that you throw money into...but they are a lot of fun!

As for enouraging a friend...an ER mentality is a lot like the matrix. No one can be told what the matrix is - you have to see for yourself.
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Re: How to encourage a friend
Old 05-15-2005, 07:47 PM   #14
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Re: How to encourage a friend

Quote:
Originally Posted by Zipper
When you are in your 20's you are supposed to "eat, dink, and be merry.
Did plenty of dinking, but I screwed up on that last part...I thought it was "Be Mary". No wonder that was a confusing time for me.
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Re: How to encourage a friend
Old 05-15-2005, 08:18 PM   #15
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Re: How to encourage a friend

Quote:
Originally Posted by Marshac
First off, i'm screwed. I'm 25, and according to my Excel chart, I will have a net worth (only counting fairly liquid assets - liabilities) of $0 come October (hopefully sooner if I can help it). College is expensive, and i'm still paying for it. My SO is still in school, and she won't be done for 2 more years. After that we will have a pretty kick-ass household income, but I will almost be 28 by then. :P

Second, what do you mean by 'should'? By whose standards? The goals of many on this board are atypical, and for someone who plans to retire at age 67, $100-175k by late 20s is a bit much.

I currently save (either by 401k/roth contributions, actual savings, or debt retirement) 50.6% of my gross income, and have recently begun to reevaluate this. Once my debt is gone, I'm going to buy a mid-90s truck, and a pair of seadoos (with trailer of course!). I need to have some fun, and saving 50.6% isn't very much fun. It's one thing to be thrifty, it's another to let life pass you by.
I TOTALLY relate! We make sure to reduce our expenses as much as possible, we put about 35% of gross away for retirement, but you have to have fun now, too! Thus, the Jacuzzi, the mega-grill, the HDTV, the home theatre.....I just make sure I get a good deal and enjoy. We give ourselves an allowance each month for fun, which includes eating out, toys etc. and we spend it any way we want. When it runs out, we stop until the next month. Stress level is WAY lower than it used to be when we would just watch every dime and try to go spartan. BTW 35% is about 40k, but we are in a good 20 year mortgage so more than 10k in principle gets paid on the house, so I guess 50k net worth increase per year, plus interest. Half of each year's raises goes into investments, and the other half acts as COLA adjustments where needed.

Back on topic. Just tell the guy to set up an automatic withdrawal to Roth IRA, max 401(k) matching, tell him to buy the house he loves and stay in it, buy his cars 2 years used, and everything will work out fine.
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Re: How to encourage a friend
Old 05-15-2005, 08:52 PM   #16
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Re: How to encourage a friend

I - of course - heard the more raw - cous version. No quotes please!
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Re: How to encourage a friend
Old 05-15-2005, 09:01 PM   #17
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Re: How to encourage a friend

Quote:
Originally Posted by soupcxan
Just tell me you're going to get the seadoos used (and pay cash)...they depreciate even more than a boat the minute you drive them off the lot.
Of course! Craigslist
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Re: How to encourage a friend
Old 05-16-2005, 12:19 AM   #18
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Re: How to encourage a friend

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Originally Posted by th
Did plenty of dinking, but I screwed up on that last part...I thought it was "Be Mary".* No wonder that was a confusing time for me.
Just remember TH, regardless of the pain you have endured, Mikey loves you.
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Re: How to encourage a friend
Old 05-16-2005, 04:08 AM   #19
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Re: How to encourage a friend

Quote:
Originally Posted by th
Did plenty of dinking, but I screwed up on that last part...I thought it was "Be Mary".* No wonder that was a confusing time for me.
Not bad!

JG
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Re: How to encourage a friend
Old 05-16-2005, 06:56 AM   #20
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Re: How to encourage a friend

I had credit card debt and no savings till I was 29. 21 years later I ER'ed. It can be done.....gotta LBYM.
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