financially?

Im 27 and...lets just say im not financially stable. It would be open to interpretation what financially stable is but let me say that I dont even have 0 in my savings and I have to go into it every month.

Maybe stability would be if you are building steadily in your savings? i dont even know if its a given that people have savings accounts.

12/8/2011 3:33:05 PM

Tough to define since "financially stable" is very open to interpretation like you said.

I started putting money into separate savings/money markets and contributing to a 401k the first paycheck from my first job out of school. I was making good money and saving well but I was starting basically in the red (all I had left in my bank account was the remains of my college loans) and wouldn't have considered myself financially stable.

I think the point where I really started to feel financially stable would be not long after I got married. This was about 2 years out of school for me, so I had two years of building up my own savings, I just started maxing a Roth IRA, and now I was only slightly increasing household spending while bringing in a second income via the wife. She makes about 1/2 of what I do, but she is also a great saver and the 2nd income really puts financial worries a little further from the mind. Also My wife worked a LOT in HS and college (and was great about saving it), had major scholarships in college, and her dad helped her some with college a well. She graduated with zero debt and a good chunk of change in the bank because of her discipline.

Since then we continually work hard to keep up the savings trend (maxing Roth IRAs, maxing 401ks, and still setting some untouchable money aside each month) but I think that getting married, and buying a house, while still having a healthy emergency fund was the turning point.

It definitely takes discipline and it also takes effort to find the middle ground between being smart with your money and still enjoying your life.

[Edited on December 8, 2011 at 4:22 PM. Reason : ]

12/8/2011 4:20:32 PM

i've been pretty stable since i graduated college at 21. in college i worked 20+ hours/week while i was a full-time student. my junior year i lived with my parents in cary for almost a year and took the bus to/from school every day until i could buy a $3k car at which point i moved in with some friends closer to campus and rented one of their closets for $100/mo and slept on the living room couch. for all this, i managed to graduate with no student loans, credit card debt or car payments. no savings either (and a crap gpa), but then once i was able to start working full time after graduation, things have been pretty stable ever since.

i'm by no means anywhere near where i want to be financially now despite making several times what i did out of college. of course now i have a mortgage, car payment, wife's student loans, a family to feed, medical bills and kid's education to pay for. just funny how back in school when i was making $6.25/hour i always thought "man if only i could make like $10/hour i'd have so much more relief from financial stress" and now that just seems laughable

[Edited on December 8, 2011 at 6:42 PM. Reason : .]

12/8/2011 6:15:55 PM

not until student loans are paid off... and I suck with money. If I make more, I spend more. Although I am making many many many times more than I did in grad school, I have a lot more expenses and do more, at the end of the month its about the same as then.

12/8/2011 7:36:49 PM

I would say I am pretty stable at 25, I have some money I have to pay back my parents that they loaned me for grad school but I have that budgeted out to pay off in less than two years without any trouble at all while still putting money away for savings, donating to charities, contributing a decent amount into my 401k, etc.

Before I would say I am financially stable though I would like to pay off the money I owe my parents and have enough for at least a 10% downpayment on a nice house and be done with this whole renting thing.

12/8/2011 8:35:56 PM

21. I started working when I was 18. Moved out right when I turned 19, becoming completely financially independent. I've never put myself in over my head financially. I used to be extremely frugal at that age as I created my nest egg. I had to be in order to survive financially. Looking back, the intial struggle helped me to respect financial stability, seek it, and ultimately conquer it within my comfort level.

[Edited on December 8, 2011 at 9:51 PM. Reason : .]

12/8/2011 9:46:01 PM

I'd say 22 fresh out of college with my first full time job.
I maxed out my roth IRA that year and then my 401K the following year.

12/8/2011 10:02:04 PM

Although I have plenty of money in the bank, I won't feel financially stable until I'm consistently putting a decent amount of money every month into savings and I've got over 6 figures in savings. The law practice I started this year is still a little inconsistent. Not putting enough away every month and some months I dig a little into my savings. I think it will be a year or two until that happen I've built my practice to where I'm "comfortable" and maybe 5 years until I hit that mark in my total savings.. I'm lucky I saved so much money bartending in law school...or I think I would be in a very tight spot right now.

This will be the 7th year I've maxed out my Roth IRA...but I picked up a decent sized mortgage this past year and I've still got my law school loans.

[Edited on December 9, 2011 at 7:44 AM. Reason : .]

12/9/2011 7:42:06 AM

I haven't really stressed about money since college. And even then it was only about stupid stuff like will I have enough to drink adequately at the bars tonight.

Even since I graduated and started working, I've always had enough to do what I want to do and buy what I wanted whenever I wanted. Admittedly, I don't really have many needs or wants for big expensive toys. I paid cash for my car 8 years ago. I live in an average apartment. The most expensive think I've paid for recently is an engagement ring.

Being financially stable comes down to one simple truth: Earn more than you spend.

12/9/2011 8:12:28 AM

my magic number is 3mil ... so, no I am not financially where I want to be.

That said, financially stable since I started working an internship in college. Never really had ANY debt, but also worked jobs since I was 12 (paper route, captain stanleys seafood, csc computer labs, and then Cisco).

12/9/2011 9:38:48 AM

31 here and not financially stable, which kills me. Got irresponsible with credit cards for several years trying to live outside my means and those chickens have come home to roost, plus the gf is going back to grad school so she can't work full-time and I'm carrying more of our expenses than before. I am saving some for retirement (mandated through job but I'd like to think I'd be contributing even if it wasn't mandatory) but it's going to be a while before I feel comfortable or stable.

My definition of stable would be not carrying any debt other than a mortgage and car payments, having at least 6 months of salary (ideally 12) set aside for an emergency fund, making sizable contributions to retirement each month, savings account (aside from emergency fund) increasing steadily, and still having enough left over to not pinch pennies.

[Edited on December 9, 2011 at 10:51 AM. Reason : g]

12/9/2011 10:50:18 AM

^im in your boat...somewhat

I just didnt work meaningfully in HS and college until late in my Junior year because I did sports year round and I didnt actually drive until my senior year of college

in HS i worked at Hardees and I spent my check every week on I dont even know what so I went to college and lived off grants and aid disbursement leftovers up until late junior year, never really thought about money in a meaningful way

and now im in the boat im in, i dont even know the difference between all these types of accounts, no idea what im spending and no concept of trying to save money versus spending for immediate satisfaction. Ive picked up some very cost intensive hobbies that unfortunately i cant live without. I take out the bare minimum of taxes throughout the year so I dont ever get a return on my income tax. I barely have a concept of when automatic payments deduct from my checking account, needless to say i dont plan around them.

I get paid once a month, a pretty good salary that I should be able to live off of, and I do have money that goes into my savings. The problem is that with my spending I am always approaching the red by the end of the pay period. So when I go into my savings instead of getting just enough to get what I need to pay for, I have to have IT ALL, so I will zero out my savings and go crazy spending it until thats gone. It is a victory and im extremely proud if I reach payday with 120 bucks in my account.

I used to make the excuse that I had to get used to budgeting being paid once a month, as all my other jobs were biweekly payments. Unfortunately thats a crock of shit not only because I should be more than used to this payout given its been four years, but my ass has never budgeted in the first place. So I get embarassed when people talk money because I have no idea whats goin on. No clue about the 401K i have, no clue about shares and stocks that I havent even considered investing in.

Its not that I'm doin bad, when i blow all my money i have everything I want and bills paid. I just know that if i dont get some brains about this i will be an abject loser that couldnt retire if i wanted to. I also know that if the car breaks down or my cats need to go to the vet im fucked. Fuck if I get a flat tire it becomes a dilemma and I get nervous as to how i will survive the pay period. Im not even joking lol. Its the wrong way to live, I just had to pull the last 85 dollars of my credit card balance in an advance just to pay the remainder of court fees for rent that I owe because I failed to give 60 days notice before i moved out.

I dont even want to LOOK at my credit score. that is not the definition of stable no matter how many cool vacations I go on.

Wouldnt you feel bad that you cant even speak with your GF or BF about your finances because youre embarassed? Basically after the 23rd I am forced to become quite miserly. I get paid on the 15th

[Edited on December 9, 2011 at 11:51 AM. Reason : g]

12/9/2011 11:50:56 AM

Quote :

" Ive picked up some very cost intensive hobbies that unfortunately i cant live without."

If it's a hobby, you can live without it.

12/9/2011 1:38:45 PM

ok but you know what i mean

12/9/2011 3:30:40 PM

Got a late start when it came to being able to generate enough income to significantly become stable. That said, it really makes me wish I hadn't started so late (or took so long to graduate ) because I'd be better off now.

Right now, I'm not stable because I'm still paying off debt. Wife went through a job transition, and her lost income forced us to leverage our credit card, so now we're working on paying that down. Still paying off two cars and school loans.

I think the biggest adjustment since getting married has been the increase in medical bills. I never go see the doc, but the wife has seen her share of ailments and has a vitamin regiment for her health that really eats into our ability to significantly save. I put money into an HSA, but it's not enough. She's working on being more selective about the supplements she takes, and she's helping where she can.

We want to buy a house, but we don't have any significant savings from a house or emergency savings perspective (a game-changing event could really put us in a bind). I have been putting enough money into my 401K to get the company match, and there's a decent chunk of change in there, but I obviously don't want to touch it.

In a couple of years, the cars will be paid off, school loans should be close to done, and the credit card debt should be minimal. Then I can finally take all that extra cash and improve the emergency fund and be ready to start house hunting. So yeah, hopefully stability by 30!

12/9/2011 11:01:12 PM

Quote :

"ok but you know what i mean"

No, not really. I worked all throughout college to avoid getting into credit card debt and post college I read everything I could regarding mortgages, 401ks, IRAs, investing etc in order to educate myself. It just seemed like part of growing up at the time. You really should sit down and read some material on these things. It's not like back in the day when everyone had pensions and only bankers and traders needed to worry about investing. That type of mentality can pass in college and maybe even your 20s, but approaching 30 you should take some time to research economics and the market just as you would sports, weather, or national news. As far as getting paid once a month goes, you need to develop a system which works better for you. I've read about people who go so far as to divide their money into envelopes for each week and they aren't allowed to use the next envelope until the week is over. I just can't envision constantly running out of money by the 23rd and not making a change, especially if you have a "good salary." It sounds like you need to work on self control. This "have to have it all" attitude is going to eventually get you in trouble. That's not to say you should live like a miser but you shouldn't sacrifice your future to subsidize your expensive hobbies today. Cut back on the "cool vacations" and there's always the option of getting a second job if you find it's too difficult to scale back the life to which you've become accustomed.

12/10/2011 1:53:56 PM

I feel very comfortable with my income. I have no debt. Im paying mortgage on a house. And I drive a 1996 model vehicle with 187k miles on it. So no car payment for the last 5 or so years. But I'm pretty fucked on my retirement monies. I do plan to start getting more aggressive on retirement plan in the next month or so.

12/10/2011 7:30:42 PM

I've been "stable" since pretty much my first couple of paychecks after I graduated college and went into the Marines..as in, I at least maxed out my Roth IRA, never went overboard with high-interest debt, never was in a place like "Man if I get a flat tire, I'm fucked, because I'm broke and the cards are maxed out!" I had a car loan, but usually had a thousand or two bucks in the bank and always maxed that IRA (though never cared about saving anything beyond that). I think I made something like $37k my first year out of college, and I felt like i was just rolling in the dough, haha.

When I got a girl pregnant a year or maybe 18 months out of college, it became apparent that my finances were about to take a beating, particularly once I got sued for child support, and under ridiculous Florida statutes, watched a full quarter of my income immediately disappear. I initially started getting interested in personal finance for shorter term reasons--I couldn't really work a 2nd job, so I wanted to try to make money with money. I very quickly realized that to do that at any meaningful level, you have to already HAVE a whole lot more money than I did...but in my reading on the subject, I learned a whole lot and resolved to really buckle down--I might not be able to solve my immediate financial issue, but I realized how fucking rich I could get over time if I started doing the right things ASAP.

Once I paid off the $5,000 of legal bills I incurred in my paternity/custody case, I started investing significantly in the stock market. I put all the saving and investing on auto-draft on payday, and never, ever missed it. I started putting away savings in a "rainy-day"/house down-payment fund (which I ended up pulling, to date, another $10,000 out of for legal expenses against my ex).

By about 3-3.5 years out of school, I was totally debt-free (though I had to sell my new sports car and buy a beater pickup) and had, I think, something like $10,000 put away in the bank (plus somewhat more than that in my IRA). That was a pretty big landmark--but I was pretty austere in my living--I was making about $50k/year by then, but driving a pickup that I paid $2700 for and splitting a house with 2 other friends, and I distinctly remember not being able to go to the movies with some friends one night because it had been a bad month (for unforeseen expenses), and I didn't have enough money to do it without dipping into savings, which I was determined not to do.

From there, though, I made about $10,000 by moving all my shit from WA to NC (as opposed to having the gov't pay a commercial mover to do it), and then went on my first deployment. The morning after arriving in Iraq, I got promoted to Captain, which was a bigass pay bump. Between the pay increase and 2 deployments where I lived essentially expense-free (minus child support and a few incidentals) for 13 months of my life, I put away a metric shitload of money, and then had enough to start trading stocks and options, and started making money with money. Oh, and i've made thousands of dollars by buying and selling cars--and in the process, had all sorts of neat toys for free. When you finally get to the point where you have a pile of cash sitting around, you can pounce on great deals--when some guy gets in over his head and has to either unload his sports car or motorcycle for a song, or face getting evicted from his house, well, you pretty much set the terms of the deal.

Now, it's taken years and a lot of hard work and a LOT of going without at times, and some of it is just due to my pay increasing, but now I don't worry about money. At all. Haven't since prob 28-29 or so (32 now). I'm still extremely frugal in terms of not being wasteful, but I'll buy some seriously expensive, nice stuff...I just make damned sure I'm getting the most for my money (from spending thousands on a new stereo and shopping hard for the best deal, to buying generic brand stuff at Wal-Mart to save 42 cents). The nicest thing is that if I blow a tire or my computer dies or whatever, it's inconvenient and it sucks, but a few hundred bucks is ultimately inconsequential. It isn't going to affect my life in any way whatsoever, so while I don't like it, I don't have to stress about it or forego anything else. Shit, the engine in my Waverunner blew up, which will be a few thousand bucks to repair, but even that isn't going to affect anything. It just fucking sucks.

12/11/2011 1:15:54 AM

at any rate, BigHit, if you want to get your finances wired-tight, I would say that what I found was the #1 stunna was to set a saving/investing goal and have that shit automatically drafted out of my paycheck on payday, where you never even see it. It'll sting a little at first, but then you just kinda adjust to it (by trimming in other places that you didn't really think you could--it becomes a lot easier when you have to, haha). The trick is that in your mind, it has to be non-negotiable. You have to just resolve that come hell or high water, you are not going to stop saving/investing and pick it back up later when finances aren't tight.

If you have debt...I don't mean student loans or a car payment at 4% or something--I mean higher-interest debt like credit cards, then make that the first goal. After that, start having money taken out of your pay and put into a savings account until you amass a few thousand dollars--enough to live on for a few months if the shit hits the fan (and enough that when your computer dies or your car needs to be fixed, you don't have to put it on a credit card). Once you have that, you can take the money you've pulling out of your paycheck and fund a Roth IRA...you want to get to where you're maxing it out ($416/month, I believe). Once you're doing that, then there are a variety of options if you want to do more (you do if at all possible).


having rock-solid finances is totally doable for anyone with a half-decent salary. you can't get there by doing all the same stuff your friends and peers are doing, though, because most of them are fucking clueless and/or have no discipline in that realm at all. Just like you can't get/stay in MMA shape by living the same lifestyle as your average soft-batch fatass American, and you don't get well-versed and smart by focusing on tabloid news and reality TV shows, you aren't going to have shit-hot finances by mirroring the broke-ass Joneses.

[Edited on December 11, 2011 at 1:35 AM. Reason : ]

12/11/2011 1:25:01 AM

I'm 30 and about as unstable as a 3 legged chair. I've about sold everything I own, with the exception of sentimental pieces, and since that's been gone, I've lived frugally off of my credit card... by necessity, not by choice.

Until I find employment, it will remain this way. But I'm not feeling too sorry for myself just yet - something will come along. The law of averages has got to kick in eventually.

12/11/2011 2:32:10 PM

I've always been okay between being a saver, parents paying for undergrad, and parents letting me use their old car for last 7 years. I built some decent savings in 2 years after undergrad but it went down to nearly nothing between the stock downturn and doing grad school full-time for a year. It's all been good since I got my current job 2 years ago at age 25. I'm close to nothing again between buying a house, furniture, and ring, but the future looks bright. I've always put about 5% in 401k.

BigHitSunday, you say that your income is good, you get paid on the 15th and are miserly after the 23rd? Just what are you spending your money on that week? It sounds like if you can adjust your thinking to be less boom-or-bust you'd be okay.

12/11/2011 4:08:30 PM

Nice response Duke. I second the auto draft.

12/11/2011 7:33:21 PM

I third the autodraft.

I think I was finiancially stable once my husband and I started living together, so about 25. This is also when I got a good bump in salary (went from 25K to 45K in about 18 months). At this point we started pretty much saving my salary. Hubby pays bills and I pay groceries and my gas. We had no credit card debit for awhile (we still will once hubby gets paid for a side job... only have any cause our dog needed surgery and it was the weekend so we couldn't get money out of savings. Instead of taking out of savings we're waiting on a payout from a side job.). We were able to pay off my car and before I had my son we were putting 1500 - 2000 in savings each month. Both of us contribute to 401K/403B and hubby is contributing max amount, and I am contributing over employee match. All in all we've been doing pretty good.

A lot of this is about to change as we'll have to readjust expenses due to childcare costs and so savings contirbution will be significantly less. But it's nice to know if we need something done to house, lose a job, etc we have some money to fall back on.

12/12/2011 2:16:55 AM

I think BigHitSunday's expensive hobbies are his gym memberships and everything that entails. His gyms and training for fighting is really expensive. And that's a main part of his life...not really an option to give that up.

12/12/2011 7:55:12 AM

Felt like my wife and I were on our way (around age 26) before she became so sick and lost her job. Tough roads now.

12/12/2011 8:24:51 AM

yea it will hurt, i need something other than an accessible account to put savings in, otherwise i will treat it like a second checkin account as i do at the moment.

ive gotta do like you said and learn about finances.

^^yea you would think that but all I do is cut expenses to be able to fund all this other stuff. I am good at doing just enough

12/12/2011 10:18:08 AM

Quote :

"yea it will hurt, i need something other than an accessible account to put savings in, otherwise i will treat it like a second checkin account as i do at the moment."

have a direct draft go to a separate bank from where you have your current accounts. Don't attach any debit cards to that account so the money is still available should you need it, but you have to actually make a trip to the bank to withdraw it...it forces you to think about the withdrawal a little bit more, and put forth more effort to get the cash out.

A Roth would be a good choice for an account like that, since you'd be building some retirement savings in at the same time...You can withdraw up to what you have actually contributed penalty free.


As for the OP, i've been pretty stable since I started college. I've always had enough money saved that i can cover any unexpected expenditures and live for 6-12 months w/ little to no income. Finished undergrad with ~9,000 in loans (but worked two jobs and covered all my own expenses all throughout school), but that was never really a big burden, and that was paid off a few years ago. Now i'm in grad school, and I'll have a whole new set of loans to pay off starting next year, but hopefully the degree will pay for itself in a few years.

Bought a house 3 years ago (at 100% financing) and I'm down to 80% LTV. I've always been pretty frugal, but I do splurge occasionally and I still go out regularly and go on vacations. Where I am lacking is the retirement accounts...I contribute and get company match, but I haven't contributed as much as i should have in the past few years (401k and roth, but I am vested in my company pension plan, however meager that may be). Also, my savings has been pretty stagnant over the past few years too, with paying down the mortgage and school (I try to comfortably pay for what I can out of pocket before using the loans). But, all in all, i'm pretty satisfied.

12/12/2011 11:06:54 AM

Quote :

"The trick is that in your mind, it has to be non-negotiable. You have to just resolve that come hell or high water, you are not going to stop saving/investing and pick it back up later when finances aren't tight."

This is basically what it comes down to.

I had to go through hell to figure out that this was the key - it's not about how much money you make, it's about how much of that money you want to keep.

12/13/2011 8:25:00 AM

Parents always taught me to "pay yourself first". Thats easiest done for me by automatically setting a percentage of every paycheck aside to go into savings. As far as I'm concerned, that money never existed... So now, I'm just used to living off of my paycheck where: paycheck = net pay - savings percentage.


To answer the OP, I would say ~ 24 or 25.... When I had finished grad school, had my first career type job, and had a few paychecks under my belt. I have always had a job since I was 14 though. Now, no school loans, no CC debt, no debt to bookees, etc. just a car note now.

12/13/2011 8:34:54 AM

Quote :

"Bought a house 3 years ago (at 100% financing) and I'm down to 80% LTV."

Quote :

"Where I am lacking is the retirement accounts...I contribute and get company match, but I haven't contributed as much as i should have in the past few years "

Guessing you are prepaying your mortgage? Maybe you could take some of that cash and put it in the 401K instead?

12/13/2011 9:31:52 PM

Quote :

" have a direct draft go to a separate bank from where you have your current accounts. Don't attach any debit cards to that account so the money is still available should you need it, but you have to actually make a trip to the bank to withdraw it...it forces you to think about the withdrawal a little bit more, and put forth more effort to get the cash out. "

That's exactly what I did, because I was afraid of having too much access to savings. It makes it so hard to get money out - you have to actually think about it.

12/13/2011 10:19:04 PM

Quote :

"yea it will hurt, i need something other than an accessible account to put savings in, otherwise i will treat it like a second checkin account as i do at the moment. ive gotta do like you said and learn about finances"

You don't need to "learn about finances", you need to change your mindset where you spend money as fast as you get it. Stop behaving differently whether it's been 3 days or 3 weeks since payday, build up an emergency fund, pay off any high-interest loans, and put a few percent towards retirement (company 401k?)

12/14/2011 8:43:41 AM

Quote :

"Guessing you are prepaying your mortgage? Maybe you could take some of that cash and put it in the 401K instead?"

Yep (a mixture of paying the mortgage down and home upgrades to increase the value)...My goal was to get the ltv down to 80% so I could refinance to a fixed (started with SECU's 100% arm) w/o pmi. Now that I've accomplished that, i'm shifting that extra $ to the 401k contribution.

12/14/2011 10:17:52 AM

Smart move.

12/14/2011 4:51:22 PM

21. Never have had to worry about money, since. Big change from the years before that.

12/16/2011 9:34:25 AM

It hard to define stable for me. I'd say I'm doing ok in the financial sense, closing in on 20K saved in a money market for an eventual down payment on a house (put in $300/mo). Also, have a decent amount in the 401k at the moment (over 10k), but need to step up the contributions--only 6.5%, enough to get matching. I have no car payments (bought w/ student loans) or student loan repayments (paid off over 6 months ago). However, I current make peanuts in my entry-level state job (with SC). I'd like to think I'm doing great with what I make, but I'd be comfortable with making more---enough to take a trip every now and then without having to worry about the expenses.

Ultimately, I would like to be stable with a house. I'm tired of living in rentals, especially apartments. I would get one here in SC, but I can't see myself wanting to settle in the Columbia area. I'd rather move back to near Raleigh (or at least NC) and eventually get a house there. Hopefully the job market is on it's way up, and more meteorology/environmental jobs become more available.

[Edited on December 16, 2011 at 12:30 PM. Reason : ]

12/16/2011 12:29:38 PM

Quote :

"and now im in the boat im in, i dont even know the difference between all these types of accounts, no idea what im spending and no concept of trying to save money versus spending for immediate satisfaction. Ive picked up some very cost intensive hobbies that unfortunately i cant live without. I take out the bare minimum of taxes throughout the year so I dont ever get a return on my income tax. I barely have a concept of when automatic payments deduct from my checking account, needless to say i dont plan around them. I get paid once a month, a pretty good salary that I should be able to live off of, and I do have money that goes into my savings. The problem is that with my spending I am always approaching the red by the end of the pay period. So when I go into my savings instead of getting just enough to get what I need to pay for, I have to have IT ALL, so I will zero out my savings and go crazy spending it until thats gone. It is a victory and im extremely proud if I reach payday with 120 bucks in my account."

Sounds like you need to read a few books or get some help with personal finance, and I don't say that in any kind of demeaning manor.

I'm gonna go along with what EMCE said. Pay yourself first. For me, every time I get paid I transfer a hundred dollars or so AUTOMATICALLY (Twice a month) to a high yield savings account (ING Online - also takes 3 business days to transfer back to your account so prevents 'impulse buying'). I ONLY use it if I NEED it. The money I leave in my checking account is all of the money I have for the month....the savings isn't part of the equation.

As far as when I felt financially stable, I've always saved and been 'okay'. I bought an affordable house and had a 'shit hit the fan' fund, but I was never ballin' or worryless if I were to lose my job or something. I had a 401(k) the day I started my job, I now have a Roth IRA as well. I never "budgeted", I just had an idea of how much my bills would be and how much i could reasonably spend per month. My mentality never changed whether I just got paid or if I was 3 days before payday. Anything leftover at the end of the month went to savings. Prior to getting married (5 years after graduation), i had about 6 months of zero income living expenses in savings, and a good bit (6 more months) in stocks/brokerage funds (not counting retirement funds).

It gets easier once you're married with 2 incomes, but that still doesn't mean personal finance will take care of itself. At some point, you have to think about your well being and your future. You should absolutely have a 401(k) and other retirement savings if you have an income. You don't want to wake up at 50 when it's too late and wish you hadn't thrown money away back when you were in your 20's. Save a little now, or save a LOT more later. Compound interest is your friend. Seriously, invest early and as much as possible.

Pay yourself first. You'll be surprised at how quickly you adjust to living on less money and you have to make it a point to pretend that money doesn't exist unless you desperately need it.

[Edited on December 17, 2011 at 2:09 AM. Reason : ]

12/17/2011 1:53:05 AM

26 and it was because I worked in the disaster field and made lots of money in a short time (wasnt perm) and then at 29 got a perm job which could end up the job I retire from.

12/26/2011 11:44:16 PM

Quote :

"Guessing you are prepaying your mortgage? Maybe you could take some of that cash and put it in the 401K instead?"

Why is that better? I know that stocks are "supposed" to be better in the long term, but with paying the mortgage you guarantee saving on 4-6% interest. With the 401k you have to hope for stock growth higher than that, right?

12/27/2011 10:10:19 AM

Well, first off if, you have a loan much above 4% you should probably refinance. I'm at 4.75% and been looking to finance around 3.875%. That's crazy cheap money. It's even better if you consider the tax benefits. Then my 4.75% loan is really 3ish%. Long term with a balanced portfolio you should be able to crush this number. The number you usually seen thrown around is 10.5% ytd avg return for the stock market, but even with a more conservative estimate, you should beat 3ish% no problem, so unless you're attempting to get rid of PMI or retire soon it's probably not in your interest to prepay your mortgage.

12/27/2011 11:05:55 AM

also, you have to take into account that all the taxes on your 401k are deferred, which increases its attractiveness/realized gains....even moreso if you're in a higher tax bracket.

12/27/2011 1:31:26 PM

At about 25 I was pretty stable and a couple of points before that.


However, I recently left my cushy job and condo in Raleigh and moved to the bay area. Working much longer hours in a more expensive city for less pay. I'd rather risk stability on independence than be stuck in a rut, but I've always been a risk taker. I may end up at 40 with nothing, but I know for certain I've had a more interesting run than most. Maybe you should go for that?

12/27/2011 1:44:59 PM

^^, ^^^

yeah, it's not even arguable. paying extra on a mortgage is stupid, unless you have PMI. you should be looking to finance it for a full 30-year term, and I wouldn't put down a dollar beyond what I had to for avoiding PMI.

12/27/2011 7:36:58 PM

All very good points, but can you point me to a web app or a formula I can put in Excel or something so I can run the numbers?

12/28/2011 8:50:42 AM

Quote :

"Long term with a balanced portfolio you should be able to crush this number."

It's just as likely the US waddles through a couple of lost decades thanks to poor policy moves. The 7% historical number included decades where the US blew up everyones mfg bases and the influence of crony capitalists was less so.

However, we won't know for another 30-50 years who will be right. This time it may not be different after all.

12/28/2011 11:33:21 AM

even assuming a less than 5% return, the tax benefits and employer matches (if you're fortunate enough to receive them) make traditional IRA's prudent investments when compared directly to paying down principle on a mortgage of 4% or less.

12/28/2011 12:36:16 PM

Damnit Chance keep your babble in the stock market thread.

What about Brazil or Asia Pacific? Do you think everything is going to implode at once?

Quote :

"All very good points, but can you point me to a web app or a formula I can put in Excel or something so I can run the numbers?"

I'm not sure what you mean. I can't predict the future. If you are borrowing money at X then you need to decide if it's worth the risk to get higher return Y. If you have a credit card at 29.99% or a mortgage at 3% then these are easy decisions. Other scenarios are less clear cut.

12/28/2011 9:29:18 PM

I know the obvious stuff like use employee matching and pay off high-interest. I don't want general wisdom. I want to be able to calculate putting extra:

$100/month towards early mortgage payment. When the house is paid for, put $X/month pre-tax equivalent of that into traditional 401k.

vs.

$X/month pre-tax equivalent of $100/month into traditional 401k all along. No additional payments on mortgage.

How much money will I have in 40 years? (All interest rates and tax rates can be variables.)

12/28/2011 10:56:39 PM

Technically, if you think the stock market will return more, on average, than the your interest rate on your mortgage, then you'd be better off putting it in a 401k I suppose.

It gets super complicated with the fact that 401k's reduce your taxable income vs the fact that (for now) mortgage insurance is tax deductible.

Not sure such a calculator exists. It really comes down to how you think the future will go. One thing to consider is that the bank can take your house in a bankruptcy if something unforseen happens down the road. They can't touch your retirement accounts (I believe in extreme circumstances with the IRS , maybe)

Just to make it more complicated, I'd say you should probably take your company match in the 401k and put anything above that into a Roth IRA, not a 401k...that is, if you choose against paying off your mortgage. IRA's (Roth IRA specifically) is a much better vehicle than a 401k for various reasons.


[Edited on December 29, 2011 at 12:24 AM. Reason : ]

12/29/2011 12:18:22 AM

At an absolute minimum(barring any unknown high interest debt) id tell someone to get the company match in the 401k then max their Roth IRA. Beyond that is where you can start deciding if you want to go back and max your 401k or pay more down on your mortgage imo (if you can't do both).

12/29/2011 8:14:59 AM