Go with TIPs or am I crazy?

[cute fuzzy bunny]

or wild packs of crazed weasels

Dangit, I got me an asset class to go sell now. I was hoping it'd take off when everyone started buyin' to avoid the weasels.

Then I gotta do something about them 2000 weasels I bin stockpilin'.

 

[HFWR]

That's enough weasels for three more Congresses, with some left over for the Dept. of Homeland Defense.

But I digress.........

Seems to me that if you can afford to save 20-30-50% of your income, why not? Of course, tomorrow is guaranteed to no one, so, as with your portfolio, some diversification and rebalancing are required for life to be successful.

 

[Arin38]

But I digress.........

...tomorrow is guaranteed to no one...

Sorry to digress as well, but that line stood out for me from the Clint Eastwood movie (he was a thief and Gene Hackman was a bad guy Prez, can't recall the name as usual) where Ed Harris was talking to Clint. I loved that line. Are you quoting that movie or is this a more historical quote that the movie used

(Important questions here....) :

 

[HFWR]

Yes, stolen from "Absolute Power"; good movie.

 

[work4beer]

LBYM = "Pathologically feverish chasing of ER?"

I think not. FI is half the goal as well. I've saved 40-50% of my disposable income (depending on how you count it) for ten years with no regrets. My house is smaller than it could be, and I drive a 13 year old pickup, but the prospect of being able to do whatever I want in the future, without financial worry is much more enticing than having more stuff now.

It also helps to have friends who either LBTM or live at their means and make less than you.....

 

[greg]

I am concerned that we might be headed into a period of slow
economic growth with rising inflation (stagflation). If that occurs,
it is not likely that stock dividends will keep pace with inflation,
IMHO. If anybody has contrary data, please post it.

I don't have any 'data' regarding alternatives to stagflation, but I like the fellow's theory of bubble history below and how it plays out in and on the market. I would appreciate your opinion, et al, because this article + R. Russell's views have tipped (see, I am staying on topic) me over to the dark side.

http://www.howestreet.com/story.php?ArticleId=1088

He has ties to the gold mining industry, so it's probably prudent to discount that portion. I especially like the 'collapse into debt' part which I liken to to what happened to Japan. Japan wishes it had stagflation.

P.S. I own some TIPS, but not even close to the percentages some of you are talking about. You just never know for sure.

DH w/hat in hand?

 

[laurence]

We're saving ~45% of gross because if we spent any more it would just be for status. I guess I could drive a Porsche instead of planning for ER, but why?
...plus we have a special daughter to take care of and plan for.

 

[Martha]

If you don't live high, you won't get used to that lifestyle. I think that once you get used to a certain lifestyle, it is hard to cut back. Though TH and JG are exceptions.

Also, provided you aren't in poverty, adding more stuff isn't going to make you happier. So unless you are chasing status or trying to meet basic needs, LBYM makes sense.

Human nature might lead us to chase status or be competive to some extent, but as "Will Work for Beer" said, it is easier to LBYM if your friends are living a similar lifestyle.

 

[unclemick]

Flip side - tweaking up can be hard - if you've spent a lot of time in cheap SOB land - when time in the market and 'old age' arrives (aka 62 & SS) presents you with a gift.

12 years in ER on the cheap - makes some habits too pleasurable/painful to break.

Working on it though - with a little urging from the SO -"you can't take it with you."

Me - I'm not so sure

 

[Eagle43]

DW just moved $1000 to savings from checking account, like she does every month. I am not depriving myself of anything, that I can think of, and living off pensions. When SS check comes in, next month, I'll begin again buying I-bonds. The Vanguard Index funds are all up, comparing to 3l Dec 04 balances. And I have LBYM for all of my life. Life is good!

Recommended reading: The Progress Paradox, by Gregg Easterbrook. He depicts how Americans have more and more but seem to enjoy it less and less. He claims that we are bombarded daily by the pessimistic viewpoint when our standard of living is better and better. No head in the sand, but I think he's right.

 

[cute fuzzy bunny]

LBYM came naturally to me really, I didnt have squat as a kid.

Day before yesterday I dragged an old $19 park bench I bought 10 years ago out from under some trees out back where I left it when I moved here. Pressure washed it and put a coat of paint on it that was leftover from when the house was built, so it now matches my front door. Found an old can of black spray paint and touched up the cast iron parts. Dropped it in front of the front door. My neighbor with the boat, rv and all the other toys that just refinanced his home to buy a bigger RV (because his inlaws got a bigger one) stopped by and said "Where'd you get that? Its kind beat up...although it looks better with the fresh coat of paint". I said "its rustic...and free!". "But you can get a new one for $50...". "Right...you know what that $50 will be worth in 20-25 years?". "Oh yeah..."

By the way, he bought the RV six months ago. Just took it out for its first 2 day outing this past weekend. Had to spend $15k to build a gigantic superstructure next to and behind his house to put it in. I've seen boats that got more use and cost less to just sit in the driveway...

 

[laurence]

It's an addiction, much like gambling, in my opinion. People feel good when they buy a big new "thing". Then they get addicted to that rush. Too late they realize it's the getting, not the having, that drives them. Me, patience has always worked well. My friends bought a new powerboat, but now have nothing to tow their wave runners. Gee, I guess we can store/tow/use them for you, yeah I know, heavy burdon on our part, we'll survive.

 

[cute fuzzy bunny]

I discovered it was a pain in the butt to have 'stuff', because you have to store and maintain it and eventually sell it when you finally figure out you arent using it.

I'm nearing the end of 2 years of 'divesting' myself of the overload of stuff i bought when I had a macmansion to put it in, and now all the duplicates of what my wife and I had at our separate houses.

 

[Martha]

I am amazed at the proliferation of ministorage facilities. Peoples houses are full of stuff, so they have to rent a place just to put more stuff. Weird.

 

[cute fuzzy bunny]

I thought about a ministore for about 1.2 milliseconds. A new one opened up offering first two months free and $9.95 a month for a small one about 10x6x4.

 

[Ol_Rancher]

Many real estate spectulators who plan to hold land on major high volume roads will build a mini-storage place on it to produce income for taxes and write offs. Look for most to be high rise office buildings in the future.

 

[Helen]

I am astounded by some posters who claim to be saving 30%-40%- 50% of their income in an almost pathologically feverish chase to ER.  Never would have dawned on me in my 20s and even 30s to set ER as a life goal and to organize my life and finances to achieve it.  Bothers me some that there are so many people in an awful hurry to end their working careers just as quick as they can. 

I am astounded that so few people are not thinking of attaining financial independence.  I wish I had been thinking along those lines in my 20's and 30's.    There is nothing I would rather buy than my own freedom from the workplace.  Having choices of what to do with my time without being concerned about a paycheck is the optimal for me.  The end of a working career is the beginning of something else, something that can be tailored for intrinsic rewards.

I've been working on computers systems for almost 25 years.  I don't regret going into the field, but I'm at the point where I've been there and done that.  I would gladly walk away from the tether of the routine, the cubical, the coworkers, the meetings, the stress, the overtime and the bosses.

I want to be FIREd when I am still young enough to hike, travel and have the mental capacity to enjoy learning.  

Three weeks of vacation time just isn't enough.  If I reach FI before age 56, when I am eligible for ER, I will reduce my work schedule to part time.

In the meantime, I have a fully charted retirement savings plan that is doable without feeling deprived of spending.  I get satisfaction from being on a budget and being in control of my spending as well as seeing my net worth increase.  It is actually more enjoyable to me than the way I lived in my 20's and 30's which was without a budget or savings plans or long range financial goals.

Next year, when our mortgage is paid off, our gross retirement savings rate will be at 43%.  That still leaves us with plenty of money to enjoy life.

-helen

 

[smooch]

We save 55% of our gross income. I get the greatest pleasure out of not spending money - it's almost become an addiction. My husband is now part time at 59, and I will retire in 2 years at 57 when we pay off the mortgage. We have so many things we want to do. Simple things, but they beat working every day.

 

[greg]

Donner, I love the smell of duration in the morning . . . it smells like victory.

I was rummaging around in My Yahoo this morning and found this old asset allocation model I had put under the heading "Martha if I die do this." Kinda control from the grave--if possible. It's from a goldbug board, about two years old. The modeler said it could protect from stagflation and hyperinflation:

Clipper Fund 30%
Hussman Growth 20%
Hussman Income 20%
PRPFX 10%
PRNEX 10%
BearX fund 10%

Rebalance once/year. I substituted I Bonds/TIPS for the BearX fund in my orders to Martha.

 

[cute fuzzy bunny]

She takes orders? Hmm...

 

[unclemick]

Right now it's Lifestrategy cons with auto deduct to checking.

If I croak - Target Retirement with auto deduct to checking.

DO NOT DO SOMETHING - JUST STAND THERE! Go spend the money.

She has shown no interest in investments in 29 years and has no plans to change.

 

[Spanky]

.....retirement savings rate will be at 43%.
........saving ~45% of gross
....DW just moved $1000 to savings from checking account, like she does every month.

Wow, that's a great saving rate. After income tax, medical and dental insurance premiums, life insurance, vision plan, social security, 401K contributions, I can only save 15% of take-home pay.

Spanky

 

[ESRBob]

Spanky, Don't forget your 15% is 'after SS and 401k' -- certainly the 401k is savings, too, and you might even think of the SS as savings if you are really trying to be nice to yourself.-- you should at least get it back if you live long enough, and if you don't then it didn't matter! So re-calc at least with the 401k and you might feel better.

 

[greg]

She takes orders? Hmm...

a'Hoye there (just a reminder) 'th--First, I want you to know that you caused my first ever two- handed spew. I was reading your mountain-stock portfolio response with a mouthful of Diet Lime Coke and out it came. My hand reflexively went up to protect the keyboard. It, the spew, ran down to my elbow, and I caught it in my cupped hand. I sat there puffing up with pride about the catch when some of it, the spew, ran between my fingers and fell on my pants. Dang!

So, Martha and I have a complex relationship. I guess one could say that it's a type of co-dependancy, somewhat like a woodtick and a leg. No, no, no. That's too simple. I guess the relationship is more like our government structure. I'm the Supreme Court, and Martha is the Executuve and the Legislative. It's my job to find Truth, wherever it might be hiding. Once found and explained, Martha's job is to interpret it and issue forth with laws and rules that EVERYONE has to follow, but mostly me. Some parrying and thrusting occasionally happens. For example, I know and have explained to her that $6.95 Monster Burger meals from Hardee's are bad, and they are bad universally in both time and location (except for large areas of Africa--but I'm not going there). So, when we go to Hardees and I order a Monster Burger meal, Martha rolls her eyes and looks at me as I attempt to avoid all contact. . . . I end up getting a small burger and diet pepsi. We both win but in a sometimes awkward fashion. At least that's her interpretation of events. But don't forget that all is contingent on the intial discovery of Truth. Sometimes both of us are paralysed for days just waiting for a Supreme Court decision.

So, yes, she always does what's right. IMO

 

[Mr._johngalt]

a'Hoye there (just a reminder) 'th--First, I want you to know that you caused my first ever two- handed spew.  I was reading your mountain-stock portfolio response with a mouthful of Diet Lime Coke and out it came.  My hand reflexively went up to protect the keyboard.  It, the spew, ran down to my elbow,  and I caught it in my cupped hand.  I sat there puffing up with pride about the catch when some of it, the spew, ran between my fingers and fell on my pants.  Dang!

So, Martha and I have a complex relationship.  I guess one could say that it's a type of co-dependancy, somewhat like a woodtick and a leg.  No, no, no.  That's too simple.  I guess the relationship is more like our government structure.  I'm the Supreme Court, and Martha is the Executuve and the Legislative.  It's my job to find Truth, wherever it might be hiding.  Once found and explained,  Martha's job is to interpret it and issue forth with laws and rules that EVERYONE  has to follow, but mostly me.  Some parrying and thrusting occasionally happens.  For example, I know and have explained to her that $6.95 Monster Burger meals from Hardee's are bad, and they are bad universally in both time and location (except for large areas of Africa--but I'm not going there).  So, when we go to Hardees and I order a Monster Burger meal, Martha rolls her eyes and looks at me as I attempt to avoid all contact. . . . I end up getting a small burger and diet pepsi. We both win but in a sometimes awkward fashion.  At least that's her interpretation of events.  But don't forget that all is contingent on the intial discovery of Truth.  Sometimes both of us are paralysed for days just waiting for a Supreme Court decision.

So, yes, she always does what's right.  IMO

Reminds me of when I was a young man, i.e. lots of partying and thrusting,
after which I was paralysed for days..................


BTW, I enjoyed the woodtick/leg reference. The sort of thng that sticks with you.

JG