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Old 07-06-2007, 11:43 AM   #21
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Single? Serious B-Friend? Fiance? Husband?
Jeez and I thought only Coach was hitting on the girls these days

Seriously though, Laurences point is spot on. A lot of people trying for financial security and eventual independence discover at the wrong time that their significant other isnt on the same page as they are.

And theres usually only one good solution to that problem. And its expensive in all sorts of ways.

Message: hook up with someone that has the same financial expectations and goals that you have.
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Old 07-06-2007, 01:28 PM   #22
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CFB -

You need to do some editing on that pancake. Looks way too fake
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Old 07-06-2007, 10:04 PM   #23
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Yeah I cut it a little too close and didnt give it any perception of depth... and its frickin huge, but i'm trying to do my part to help around here.
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Old 07-06-2007, 10:25 PM   #24
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Yeah I cut it a little too close and didnt give it any perception of depth... and its frickin huge, but i'm trying to do my part to help around here.
Based on pancake size alone, I think you're helping out 70% more than last week. However, I don't see any room for growth in your future. Unless you can come up with a convincing stacking scheme, I'm calling this one over. Hopefully you'll transition to a value play gracefully and look to start paying out syrup dividends.
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Old 07-06-2007, 10:29 PM   #25
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Hey, I could easily go to two, maybe three pancakes before I'd start losing the ability to post a snappy ripost.

And I'm thinking on that whole macdonalds experiment about embedding the syrup inside the pancake, while concurrently doubling the fat.
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Old 07-07-2007, 04:32 AM   #26
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Jess - If only I had figured out what you are figuring out at 27. At you age, I was not in debt... But I had not begun preparing for Retirement.

The only advice I would give to you is: If you are not in a high paying job that you can maintain... do what you need to do to get in a fairly high income bracket. For example: If you are not college educated (or some sort of technical school), invest in yourself to earn more and have job stability.

If the education has already been taken care of... it is not uncommon for people to increase in salary as they gain experience (kinda the way it works). However, you will plateau at a point.

A reasonable plan is consistent and steady saving over time, investing in a diversified portfolio of stocks and bonds (I would use mutual funds low cost/index funds), and allowing compounding to do its work. I would not take inordinate risks. Stick with a tried and true approach.

IMHO: unless you get a large windfall or have a very high income level (combined with LBYM), it will take at least 20 years to acquire enough assets to ER. And that is if the markets cooperate. If what I stated is true, you should be able to ER around 50 - 55 years of age.

One last note. There are two career paths one can take (once you have settled into a field). This is a source of debate amongst people:
  • Job hop to try to increase salary
  • Stick with one employer
IMHO: Find a great employer that has a long-term track record and still provides retirement benes (like health care) and stick with them. They are out there... just fewer. If you get offered a substantial increase in salary from an employer... always ask yourself the changes that you will sustain the salary. It does no good to get a $100k raise and it last on 6 months.

One area where you can still find long-time employers with decent health and retirement benefits is with Large Financial Services Companies (like Insurance Companies). These groups are consolidating (fewer around than 10 or 20 years ago)... but there are still quite a few around the country. This service area also seems to be less prone to layoff than say the manufacturing sector. Another area that seems to be growing in need and salary is health care. Although... I am not sure about benes in that field.



All in all, if you stick with a basic plan and save earnestly... you will be fine. Welcome to the fold!
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Old 07-07-2007, 08:47 AM   #27
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Jessica. Don't be so hard on your self. I was twenty years older than you are now before I got my act together. You got a lot of good advice and good reading suggestions. I will add two more. "The Richest Man in Babylon" and "Mary Hunt's The Complete Cheapskate". DH and I were in debt to the tune of $30000 and cleared it in 18 months using Mary Hunt's Rapid Debt Reduction Program. It organized our bills and we attacked them one by one. We were older than you and really wanted to be debt free asap so we went on an austerity program.

We now have and emergency fund and a budget. That is key. You have to know where your money is going and make choices about where you spend your money. Governments and Companies do not run without a budget. Households should not run with out one either.
If we had not gotten our financial house in order we would not have known how to handle the money we inherited that lead to our early retirement. We would have pi**ed it away. I wish I had known at 27 what I know now. You are on the right path and have come to the right place to get sound advice on handling money. You will do well. Good luck.
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Old 07-07-2007, 09:24 AM   #28
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Hey Jess....

Lots of good advice, so I won't rehash what others have said....

BUT, there is something to think about with your 401(k)... since you do not make much now, what is your marginal tax bracket I bet it is 15%...

So, the tax savings of the 6% that you are putting into your 401(k) is small... why not put it into the 401(k) ROTH if it is offered Yes, your tax bill goes up, but with many more years of compounding and more than likely higher tax bracket when you retire... you can have a lot more money

If you still want to put it in the regular 401... put some into your company stock... there is a rule that will let you take it out when you retire and you will only have to pay tax on the cash you put in.... the rest is deferred capital gain...
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Old 10-19-2007, 10:39 AM   #29
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Wow, I just revisited this thread and had no idea I had gotten these responses! Thank you all SO much. You have no idea how much better I feel about my situation.

Things will be changing for me in the next few months. I've been interviewing for jobs in Boston, which pay significantly higher than my current salary, and I'll be moving back in with my parents for a little while. Both of those things will help me out tremendously.

I look forward to reading all of the suggested books and learning the ins and outs of investing.

THANKS AGAIN!!
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Old 10-23-2007, 01:46 PM   #30
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Wow, I just revisited this thread and had no idea I had gotten these responses! Thank you all SO much. You have no idea how much better I feel about my situation.

Things will be changing for me in the next few months. I've been interviewing for jobs in Boston, which pay significantly higher than my current salary, and I'll be moving back in with my parents for a little while. Both of those things will help me out tremendously.

I look forward to reading all of the suggested books and learning the ins and outs of investing.

THANKS AGAIN!!
You should check back in on this thread in a year from now and compare your financial situations then and now. Tracking your net worth is one of the easiest and most useful things you can do. It'll really motivate you and help you see that sometimes, even when it feels like you're getting nowhere, that you're still moving forward.

Best of luck to you.
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Old 10-23-2007, 02:55 PM   #31
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Welcome! We are all suckers for financial success/milestone stories!
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Old 10-23-2007, 06:02 PM   #32
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The truth is: Yes, you can. Are there people living in the same city and earning more than 25% less than you do? (Of course there are.)

Well, imagine you are on of those people and start acting like it. Move to a neighbourhood with all such people if needed. The nice thing: You can spend the same amount as they do monthly, and you will save. A lot.

Also: No car. No TV. Outlet shopping. Buy the cheapest studio in town.
IMO, this is not good advice. Just think, if Jessica were your daughter would you want her living in a slum, walking in dangerous areas because she doesn't have a car, or bored to death because she doesn't have a TV (the world's cheapest entertainment BTW)?

Probably not. Well Jessica is someone's daughter, and they probably feel the same about her.

I think at 27 the smartest thing is to concentrate on increasing your earning power, meeting lots of ambitious people, living in affluent areas so the MEN that she meets will have something to offer besides you-know, and yes, heresy of heresies, dressing attractively!

The strategy of pretending that you are already dead my be fine for older folks who know their limits, but doesn't make sense for people with youth on their side.

Ha
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Old 10-23-2007, 06:06 PM   #33
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Wow, I just revisited this thread and had no idea I had gotten these responses! Thank you all SO much. You have no idea how much better I feel about my situation.



THANKS AGAIN!!

Hi Jessica

Stop by every now and then and let us know how you are doing.

We are basically crazed Evangelist nice folks trying to convert help others avoid the financial sins mistakes most of us have made on our journey to heaven financial independence. So we enjoy hearing from acolytes newbies to our cult ranks.

praise the 401K and pass the dryer sheets
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Old 10-24-2007, 08:54 AM   #34
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You may also find www.slnet.com and the forums interesting. Plenty of great advise how to change spending habits and reduce debt.
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Old 10-24-2007, 12:23 PM   #35
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Hi everyone. I have been lurking on this board for a while and figured I might as well register.

My name is Jessica, I just turned 27 and I have always dreamed of retiring early enough to really enjoy life. My problem is that I got a late start in growing up and being responsible, and it's kicking me in the pants now. I have about $11k in credit card debt, $10k in an auto loan and about $25k in student loans. Yes, I cringe when I actually have to face those numbers.

Between my 401k and Roth IRA, I have less than $2500. I contribute 6% to the 401k, which is the minimum to receive the max employer contributions. I can't afford to contribute anything to the IRA at this time.

Right now I am paid very little for what I do right now, but in October my job code will be changing, and with it, a new salary. I am expecting a $10k raise and I'm not sure where I should put the extra money.

Should I go back to contributing to my Roth IRA (and/or bump up the % on my 401k), or if I should be aggressively paying off my debts first? Or should I treat each with equal importance? I know that the earlier you start saving, the better, but I also know that the longer I drag out my debt balances, the more money I'm losing in interest over time.

I'm in bad shape and it stresses me out on a daily basis. I'm dying to start actually saving money and learning about investing, etc. Any advice would be greatly appreciated. Thanks in advance! :confused:
set a goal for where to be at end of year. Set another goal now for where to be in 3 years.

10k raise with 10k+ in cc debt, my suggestion is to lose the CC debt within a year. If you can cut spending in addition to the raise, this goal can be achieved in 8 months or so.

If car loan is a 4-5% interest rate, I would leave it be and start an IRA.
If student loans are 3-7% interest rates, I would also just pay the minimums and start an IRA.

A reasonable 3 year goal might be to have 1X income saved in retirement accounts (so if you make 50k/year, the goal should be 50k in IRAs/401ks combined).

Then set a 6 year goal to be 2X income or 3X income set aside. Took me a few years (6??) to get 1X income set aside, but might only take me 12 years to get 2X income (I am in year 11 of retiremwent saving at age 34), then 3X income comes soon after that...

The eventual goal is 25X income... when this happens, retirement should have already happened.
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Old 10-24-2007, 01:03 PM   #36
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A reasonable 3 year goal might be to have 1X income saved in retirement accounts (so if you make 50k/year, the goal should be 50k in IRAs/401ks combined).
I agree with setting goals, but this is an incredibly ambitious (read: not reasonable) goal for someone to achieve in three years with her debt and little disposable income. Unless her salary improves, then she is not going to be able to save 1/3 of her income while paying taxes and paying down debt.

Also, if the ROI on her investments does not exceed the interest rate on her debts, then she gets a better return by paying down debt instead of focusing on building up a nest egg.

Instead, I'd counsel to focus on paying down debt and building up an emergency fund of several months expenses. This is not to say she should miss out on any free money from an employer match to a 401k. And a Roth can somewhat double as an emergency fund if she has a low chance of needing to tap it.
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Old 10-25-2007, 05:53 PM   #37
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Wow... all of this conversation sounds very similiar to myself. I knew nothing about saving or investing. Fortunately, I have never really wanted vast amounts of STUFF, although usually the things I DO want are expensive. I really owe a huge debt to a friend of mine that got me started in the right direction when I was around 28. Just talking about it with others that understand what things can be done to help a situation is extremely valuable.
Unfortunately I come from a family that is not saving, or investing savy at all. Had my friend at work not shown me the light, I probably would have gone on doing just what I was doing, and been all confused in 30 years of working wondering why I could not retire. Most people simply refuse to believe the simple truth that if you start young enough becomming a millionare is not just easy, but inescapable. I started a bit late, and I know that now.... but I am very fortunate to have seen it before it was too late to do anything about it. Thanks to everyone here that continues to share what they know and help to add to my knowledge and understanding of how to RETIRE EARLY!!!
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Old 10-25-2007, 07:03 PM   #38
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I second what armor99 said - everybody's advice is so valuable to me, since I know little to nothing. My parents also never taught me the importance of saving, but rather, the importance of being materialistic and keeping up a good image. It's going to be annoying living with them again and watching them toss money down the toilet. They use paper towels for EVERYTHING, paper plates, they leave all the TVs on at the same time, order out every night, etc... They're not very wealthy by any means and they get mad when I inquire about their own retirement plans. Very frustrating.

Anyway, I just accepted a job in Boston that offers no benefits. I'm also taking a slight pay cut because I really want the job and it'll be good for my career in the long run. So I'll have to really tighten my belt and sock away a lot in my Roth IRA to make up for the loss. I also transferred my credit card balances to a card with a 0% introductory rate until Dec 08. I can see change in the future, albeit slowly... very slowly...

The goal thing is good advice. I'm assuming Quicken has a feature that will help me with that.

Thanks again! I can't say that enough.
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Old 10-25-2007, 08:20 PM   #39
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I also transferred my credit card balances to a card with a 0% introductory rate until Dec 08. I can see change in the future, albeit slowly... very slowly...
Good move!!! When I was up to my eyes in CC debt, I started moving it to 0% and VERY low % CC's. It helped immensely! Everything I paid went directly to the principle...NOT monthly interest fees! The payoff of the huge sums actually went fairly quickly after that. ($50K+ paid off in about 2 years)

BTW, good luck with your new j*b!!!
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Old 10-26-2007, 11:04 AM   #40
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I agree with setting goals, but this is an incredibly ambitious (read: not reasonable) goal for someone to achieve in three years with her debt and little disposable income. Unless her salary improves, then she is not going to be able to save 1/3 of her income while paying taxes and paying down debt.

Also, if the ROI on her investments does not exceed the interest rate on her debts, then she gets a better return by paying down debt instead of focusing on building up a nest egg.

Instead, I'd counsel to focus on paying down debt and building up an emergency fund of several months expenses. This is not to say she should miss out on any free money from an employer match to a 401k. And a Roth can somewhat double as an emergency fund if she has a low chance of needing to tap it.
goals are

SMART

Specific
Measurable
Action based
Realistic
Time bound

Specific- have a goal to get a certain amount set aside. Whether it's 1 months salary in EF or 1X salary in 401k.

Measurable- you should look at amount in account and see money there.

Action based- you need to take actions to meet the goal. Figure out what these actions are- this is the method to achieving goal.

Realistic- you need to be able to achieve them.

Time bound- having a deadline helps.

I have set goals I missed for 3 straight years, and in the 4th year (this year) I have met the goal already because the actions I took this year were different than the ones taken in years 1-3.

The goals I set are usually time bound by 1 year and 3 years.

For example I want this salary by year 1 or this salary by year 3, so if I miss one goal, I can find ways to achieve a more realistic mid term goal.

In my case this year the goal was 1 months expenses in EF, and 3 months expenses in EF by end of next year. Already hit 1 year goal and close to meeting 2 months expenses already.
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