The value of LBYM

[athena53]

Quote:

Originally Posted by Jerry1 Value of LBYM to me was during the housing crisis. I never once worried about losing my house or being underwater. There were times when DW and I were a bit envious of some of the houses we’d seen.

For me, it was when my company was acquired. DH and I looked at the numbers and figured that if it too me 6 months to find another job (and that was probably a high estimate given my field and my network), we'd survive, so I stayed around to see how it would work out. The new parent company was actually far more capable of running our company than the previous parent company and I lasted there another 6 years. I saw others bolt immediately for other jobs, unable to take the risk of a period of unemployment.

The new parent matched the 401(k) 100% on the first 6% and also added another 6% even if you put in nothing because we weren't eligible for the DB plan they'd stopped offering. One coworker would withdraw it immediately when it went in at the end of the year, pay the Stupid Tax, and spend the rest.

[Ronnieboy]

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Originally Posted by REWahoo ^ Sad but true. Many years ago I managed a mfg. plant with ~100 employees. A large percentage of them did not participate in the co. 401k plan even though the company matched dollar for dollar the first 3% and $0.50 per dollar on the next 3%. I talked to a number of them about why they weren't taking advantage of free money and got three basic responses: 1. I need every last cent I can get my hands on to live. (This was reinforced when we had a glitch in the payroll system resulting in a 24 hour delay in the auto-depositing of paychecks. Panic and a near riot ensued.) 2. I don't trust the company to keep their hands off any money I contribute to the plan. They might swipe all my savings. 3. I won't ever be able to retire so I don't need to save/invest for the future.

4. But 65 years old is sooooo faaarrr awaaaaay!! <- is the one I hear a lot

You'll get there eventually (most of them).

[Ronnieboy]

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Originally Posted by karen1972 I find it most telling when people have a medical emergency, several people in my home town had go-fund-mes and fundraisers for medical bills and I was like What?? How can they need a go-fund-me if they just went on that elaborate vacation and built that new house? Yes paying the out of pocket max is painful but it shouldn't be begging for money painful, not when they have good jobs and good insurance and obviously enough money to get nice things.

^

This is a moral issue to me. Or lack thereof.

Some people feel the need (or at least don't feel any guilt) to let others pay (via go fund me, etc.) for their bills when it isn't fun for them or if it will cut into their fun time/vacation(s) that they deserve/stuff that they want even when they could afford it by sacrificing their upcoming vacation. You always seem to hear the following excuses: "We deserve this trip because we work so hard" "Our children shouldn't have to be punished by not going on the trip" "These big companies/Hospitals, etc can afford to take less for my bills (deep pockets)" "We HAD to upgrade/remodel our house, we've lived without an update for far too long"

Reading the OP about how the nurse spouse will try to go home early and not pick up extra shifts just blows my mind....I hate to say it but it seems like this generation.....damn millennials or whatever their called now.

[michelek]

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Originally Posted by RAE Sad story, but I wouldn't exactly say they got into this situation quickly. Yes, he lost his job unexpectedly, but multiple decisions they had made for several years leading up to the job loss really set them up for something like this to happen. When you carry that kind of debt load, bad things are almost certainly going to happen to you at some point. All it takes is a job loss, a medical emergency, or some other unexpected event to occur, and you are in deep trouble. I say "unexpected" event, but we all know that these things do occur in people's lives all the time, so you can't really say they are unexpected, either. It would be unexpected (in my view) if everything went perfectly, all the time......that's just not real life.

Beautiful.

[PandaBear]

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Originally Posted by ivinsfan The WP has an excellent personal finance columnist/ blogger..I always read her live chats. Last weeks live chat even had a mention of this board.. She had a nuclear fallout from something she wrote. Basically she said with Summer approaching if you have debt other then mortgage/car payments, you don't DESERVE a traveling big time getaway vacation. You might want it but you don't DESERVE it. She said people do deserve time away from work to recharge but stay home, go local, drive to visit family. IOW if you book a vacay on your CC cards or have 100K in student debt you can't justify spending on a destination vacay. People went insane, called her every name in the book. To her credit she didn't back down and said I wouldn't be doing my job if I said anything different.

We travel quite a bit now and have nice vacations. But when the kids were little, we had a new mortgage and I had reduced my hours to part time. The kids went to a parent Co-op preschool (excellent but inexpensive) and our vacations were camping and using my parents timeshare. We always vacationed, but it was cheap. One year there was a 7-11 near the timeshare and we made our meals (no going out). But each evening we’d walk to 7-11 and the kids got a slurpee. Boy, they thought that was great!!!

[pb4uski]

They need to immediately talk with a lawyer and see if there is some way to get their $25k deposit back.

Tax at 12% and penalty at 10% would be $5,500... if they can get their $25k deposit back and pay off that 401k loan then that would be ideal.

Then lots of other work to do.

[CRLLS]

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Originally Posted by Clone My focus with the students was this: On your first day, you are going to be presented with a pile of papers to go through. Make sure you sign up to defer at least the amount required to get the company match. Then, whenever you get a raise, take a piece of that and add it to the amount that you are deferring. And, if you get a big bonus, put some of that in as well. Hopefully it put some of them on a path that they may not have otherwise taken. An additional piece was to max your HSA account.

^ this

One day you lived on x dollars. Come raise time, you will get, say 3% more. Certainly you can manage to increase your living expense 1-1/2% more, and start sacking away 1-1/2% That is how I got started when 401K's came into being. Each year I took about 1/2 of the raise and added it to my 401K withholding.

The other thing about LBYM is that your "needs" were less for all those years during accumulation that a certain lifestyle was ingrained in your brain. By the time retirement age is near, the dollars required to sustain your lifestyle are less. This makes the target nest egg lower and more quickly attained. It is a double win IMO.

[RetMD21]

I think some people must feel a competitive pressure to post on Facebook about things they have spend money on. I don't want to contribute to their difficulties. Although I post travel pictures I try to tone it down. I didn't mention or show a picture of the seaplane that got us to an island last month.

[Amethyst]

You sound exceptionally kind.

Although it is kind of a nuisance to fiddle with, FB does offer an option to display your post to some friends...and not others.

I have well-off friends, who can afford all their trips and toys, and I love to see what they are up to even though we can't afford the same level. I would hate for them to keep these interesting things from the Amethysts "because they don't have as much as we do."

Same with the body-building lady friend, who surely has some overweight or physically compromised friends and relatives. I don't know if she shows her competition photos to "all friends" or screens them. But I like seeing them, even though I could never achieve what she has.

Quote:

Originally Posted by RetMD21 I think some people must feel a competitive pressure to post on Facebook about things they have spend money on. I don't want to contribute to their difficulties. Although I post travel pictures I try to tone it down. I didn't mention or show a picture of the seaplane that got us to an island last month.

[Teacher Terry]

Unless it’s a dire emergency go fund me bugs me too. Now if you need a organ transplant even with insurance you may need help. People will ask for funeral costs. Unless a young family has a child die paying for a funeral shouldn’t be a surprise. We always had savings when young because you never knew when you might get laid off, etc. All but one of our vacations involved driving across the country to visit relatives and friends when we were raising the kids. The stuff I see on Facebook is unbelievable. It’s fine if you can afford it but many can’t. Most of our friends live within their means.

[brett]

There are many in their 50's who have yet to learn this lesson (and probably never will) notwithstanding all the learning opportunities that they may have had in the past.

[The Cosmic Avenger]

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Originally Posted by ivinsfan The WP has an excellent personal finance columnist/ blogger..I always read her live chats. Last weeks live chat even had a mention of this board..

Yep, that was me! I hardly ever miss a chat.

[ivinsfan]

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Originally Posted by The Cosmic Avenger Yep, that was me! I hardly ever miss a chat.

No way...small world!!

[The Cosmic Avenger]

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Originally Posted by Music Lover But there are some exceptions. 10 or so years my brother was looking for a new vehicle with the full intention of buying it outright. Then he found a last year model, still new but in an ugly colour. It was priced way below retail and they offered him 72 months financing at 0% so he took the deal. But I'd guess that most people who take financing for that long do so because they can't afford a shorter term. And I don't think anyone offers 0% financing any longer.

We were offered 0% financing two years ago by Subaru, which was really surprising because it's such a popular brand! When I think of 0% financing and cash back, I think of brands that get their market share based on loyalty or low price. We actually had the cash saved up anyway, and I was thinking about CD rates and such when I realized that that amount was just about what we had left on our mortgage! So out of our former monthly mortgage payment, about 1/3 of that goes towards the car loan, 1/3 towards saving to replace the older car, and the rest...well, it was a little breathing room in our budget, but now it is going towards stable fees!

[Amethyst]

I only know a few people who aren't frugal and/or who can't meet their obligations. As I've said before, I know even more people who started out frugal, then inherited and now are living the high life...but she still shops at Wal-mart.

Of those few financially irresponsible people, my observation is that vacations and eating out are sacred to them; they would consider life a grim and trackless desert without them. The notion that $5,000 spent on vacation could have been invested,doesn't click with them. The interest on $5,000 won't buy lunch, and the time horizon for growing such an investment seems too long. Meanwhile, they need some fun. Heaven help the one fellow who did get into investing...naturally, he gravitated toward day-trading, because it looked like such a fast return!

They also crave to give money and help to friends and family, even when they aren't meeting all their own bills. It is just how they see being a decent person. When the wheels come off, they say "$#!+ happens, what can you do." And there's always bankruptcy to wipe the slate clean!

[Souschef]

I know I have posted this before, but it bears repeating. There are going to be people who are a train wreck because of poor financial decisions.
My cousin blew through a $1M inheritance and is in deep yogurt now. I do rot rejoice at her plight, nor do I feel pity for her.

[iloveyoga]

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Originally Posted by RobbieB Loosing my job shortly after buying my first house was an eye opener. Taught me to not buy too much house.

I remember many years ago the realtor and lender showing us how much how we could afford and it was way too much!! I did not understand all the pieces at the time, but I knew how much we could spend each month. We bought a house for about half of what they suggested.

[joeea]

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Originally Posted by Moemg Does the term Schadentreude mean anything to you ?

I'm guessing you meant to write Schadenfreude.
And I'm sad that you would find pleasure in their misfortune.

[joeea]

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Originally Posted by REWahoo From the viewpoint of the employee they were being asked to take a 6% pay cut. The concept of delayed gratification was so incomprehensible it completely masked the value of added compensation.

Delayed gratification is a powerful concept that is rejected by many.

- We all know people who treat their tax refunds as found money rather than money to be saved.
- We all know people who decide to start their social security benefits the day it becomes available at 62.
- We all know people who buy far more house than they need.
- We all know people who expand their lifestyle each and every raise

Etc, etc.

Should we ridicule such people? Or feel bad for them?

[EarlyBirdly]

The real problem is that these type of people are allowed to breed indiscriminately.