Post: #1

Every other day I'm reading some article about how the average family would be screwed if they had an unexpected $500 expense. 4 out of 10 people aren't on track to retire by 65. More than 80% of people don't have $1,000 in savings.

Most people seem to be really bad with money. Trying to work with a family member who asked for some help with budgeting and investing. Curious what your 3-5 simple tips that everyone should know would be.

I guess mine would be...

1. Have an emergency fund.
2. Save 15% of your income minimum.
3. Don't be afraid of investing, your mony will wither away if it's not growing.
4. If your company offers a 401k match it's stupid not to take it.
5. Think about purchases in terms of how many hours of work that is for you.

I'm curious to hear any other good ones you guys would care to share?

Post: #2

You dont need to live very frugally life is short so enjoy it, but you can spend smart without giving up luxury..

Want that shiny new Benz? Dont buy it new from the dealer, get a decent 3-4 year old one with low mileage for 60-65% of the cost.

Cars depreciate the most in the first 3 years, bear that in mind.

Post: #3

1. Saving is for losers. Make intelligent investment decisons with this money instead.
2. Balance a portfolio depending on age and risk tolerance. The younger you are, the less you have to lose. By the time you're 60, almost all of this should be in dividend paying securities and bonds.
3. Live below your means, always. Doesn't matter if you make a mil a year if you're spending all of it.
4. Learn about hedging and the devices that can be utilised to successfully hedge risk.
5. Game credit cards all you like, but never fall into the trap that is "free money". Get free flights, but always pay off the balance monthly.

Post: #4

1. Realise the state is out to collect half of your labours. Put yourself in a position to minimise this theft.
2. Save as much as you can. Don't be flashy.
3. The easiest way to get rich is borrowing as much as you can where you can put it to work creating yield for yourself.

Post: #5

Be open and listen to advice from the people who've actually made significant money themselves in the real world (and not by selling self-help books and putting asses on seminar seats). If you listen too much to random average yuck smucks' theories you are in risk to be sent in the wrong direction.

Post: #6

1. Never spend more than 25% of your salary on accommodation.
2. Never spend more than 20% of your annual salary on a car. Save for a year n pay in full
3. If use debt make sure it's for an asset that either rises in value or will generate income greater than it's repayments
4. Precook meals and freeze them. They might be a bit boring but if you have enough variety your food expenditure need not be expensive.
5. Keep a minimum balance in your account 2-3 months expenses should be enough incase you need to find a new job
6. All extra money above point 5 should be invested unless you have a need to continue saving, E.G. point 2

Post: #7

Agree on all that's been said, I'll copy the ones that match my own:

1. Never spend more than 25% of your salary on mortgage/rent. Some conventional wisdom says 33%, but this is too high. If you need to live in a worse part of town with roommates, do it.
2. Never spend more than 10% of your monthly income on car payment. I actually break this rule and spend 12.6% on my car.
3. I personally recommend saving 6 months living expenses in cash or otherwise accessible assets. 2 months minimum.
4. Buy in bulk
5. This is a dumb obvious one, but I think a minority of people do it: Budget. Get a mint.com account and budget every last expense, so you can see in front of you where you can cut expenses or understand how much you need to make to live the life you want.

Post: #8

Why the number 25% for accommodation budget?

Post: #9

I always think I should put money in investments but I'm too scared to do it.

Post: #10

you're not going to save shit from your salary unless you're pulling 60-100k++.

Figure out how to turn that $1,000 extra you get every month into a scalable business. Move into a higher paying career. Airbnb a room then scale.

See if you're good at trading or investing....

Better off trying to make 10k a year (or more) extra than trying to cut $100/month.

Post: #11

1. Do everything you can to maximize your income. If you're not making 100k+ a year, you're not really trying very hard or you've chosen a really shitty field.

2. At the end of the day, busting your ass and working hard will pay off. The benefit may not always be immediate, but you'll develope an edge that other people don't. This will translate into a higher yield career.

3. Quit eating out. It's a waste of money.

4. Quit drinking. It's a waste of money.

5. Don't finance vehicles if you can help it. It's a crappy investment all the way around.

6. Don't do credit cards. The whole point of a credit card is to make money off of you, how the fuck could that work in your favor???

7. Be really careful about buying a house.

8. You can't outsave a shitty income.

Post: #12

1. Investing in index funds such as VTSAX (or VTSMX). Started stashing money away into this about 3 years back, when S&P was ~1700.

2. Always having 12 months of living expenses saved up.

3. Staying away from impulse-buying.

Post: #13

Maybe not good for everyone.

1. Live with your parents for as long as you need to become financially independent
2. Learn to program, don't go to university
3. Identify a low-entry, high-traffic niche you can enrich pre-existing data online and monetise
4. Spend virtually nothing - between the ages of 18 and 26 I don't think I spent more than $1,000 year
5. Research economics and markets before you invest. I thought I was very smart from listening to Alex Jones and Peter Schiff when I made my first one in silver. I recently liquidated it with a 49% nominal loss. For investment advice look for people who are not ideological, like Schiff and Bitcoin purists. The best advice will come from people who look at things objectively as possible. Buy into the bubbles, no matter how speculative and sell when the air starts coming out and buy industries that are going to be big in the future.

Bonus: Don't live in one particular country, see ProGambler's comments.
Double Bonus: Follow ProGambler's stock tips. Over 50% up in about 6 months: Vedanta Resources (fat dividends) and Ladbrokes.

Post: #14

Here are some tips that worked for me. I am not rich so take these tips with a grain of salt and choose what works for you. This is not financial or tax advice.

-Live below your means.
-Being frugal and saving money is a good strategy. Increasing your income is another good strategy. Neither of the two is sufficient. You have to do both.
-Keep an emergency fund of at least 6 months of expenses. More if your income is volatile.
-Never borrow money to buy a depreciating asset.
-Don't over-complicate things when it comes to investments in the stock market. Start investing first, figure out optimal asset allocation later. Just open a Vanguard account and start investing 100% in VTSAX (Vanguard total US stock market fund). Later on you can decide if you want to diversify internationally and/or into bonds or other assets.
-When you have decided what your asset allocation should be, write an investment policy statement (IPS) including your target asset allocation and how it will change over time as you get older. Stick to it no matter what happens to the market. Example: 100% stock index funds while you are young, 90% stocks/10% bonds when you are older and still working, 70% stocks/30% bonds when you are retired.
-Don't try to time the market. It's time in the market, not timing the market.
-As a long term index fund investor, don't sell low even if the stock prices drop 50% tomorrow. You only lose money if you sell low.
-Don't bother with any exotic/high risk/speculative investments unless you know what you are doing. Keep your high risk investment exposure low (e.g. <5% of total portfolio, decide what % is suitable for you). Btw, crypto falls under this category.
-When it comes to investments and personal finance in general, always minimize your taxes and take advantage of any opportunity to do so (e.g. 401K, IRA, Roth IRA, HSA). Every dollar you save on taxes adds to your investments and compounds over time.
-Take advantage of employer 401K contribution match and every other benefit you can get.
-Don't listen to doom and gloom guys like those who comment on ZeroHedge. By all means read it and similar sources, but keep in mind that there are always people who predict every day that the economy will crash. Some of them will be right at some point like a broken clock is right twice a day. However, stocks survived two world wars and many other catastrophic events and, on average, kept growing and generating decent returns. It is possible that the economy and the stock market will crash and never recover. However, if it happens, losing money will not be your biggest concern. Those who stayed on the sidelines will not be safe either. Just keep investing conservatively and methodically.
-Follow the news but don't pay too much attention, especially to clowns like Jim Cramer. Their job is to get ratings. They don't have your best interests in mind. They don't necessarily know more about the market and where it's going than you do. Instead of watching and reading financial porn, read all Nassim Taleb's books, particularly The Black Swan and Antifragile. Read them a few times. They will change the way you think.
-Accumulate assets starting from a young age: real estate, stocks/bonds or a combination of both. The world belongs to those who own assets.

Post: #15

-No credit card if you can't afford it
-A first home is not an investment, it's a place you live
-Take steps to minimize tax obligations because the rich sure as Hell do
-All investment entails risk, what really matters/pays is the level of risk you take
-As a young person, take more (investment/ work) risks, you're young. For many young dudes, this means start a small business. You can work less when you get older, but you're only young and indestructible once. If you're not into entrepreneurship, check out working abroad for a Western company, you'll get hazard pay and all other sort of perks (because people with established lives are immobile). Plus it's an opportunity to grow as a person. (Be aware your income can be taxed globally if you're American)

Post: #16

If you're gonna drink and eat out, hit happy hours. In the last city I lived, there was a place that had $3 high-end beers on Mondays all day and another place with $0.50 oysters and another place with $2 fire sale beers during certain hours on certain days. Eating/drinking out at full price adds up ridiculously quickly...and having a spot on lock makes for a cheap date/hangout spot.

If you're investing in speculative markets like crypto, end every trading week in cash. Take profits when you can.

Stop paying absurd amounts of money on cell phone plans. You can easily get a pay-as-you-go plan with unlimited talking/texting and a lot of internet for $40 or less per month. I know a lot of people from very modest means with exorbitant cell phone bills. Why?

Agreed on that rent ratio - I'd move it closer to 20% if you can afford it. This rule can be bent a little if you choose to pay more by living in a central location while getting rid of your car and the expense that comes with it.

Other people mentioned budgeting. Strongly agree on that. Do it every month. I'm a math nerd so I'll take it a step further and suggest to figure out what that budget looks like PER DAY, after your fixed costs.

So say your monthly fixed costs are $2,000 (car payment, rent, all recurring bills) - that breaks down to $2000*12/365 = $65.75/day.

From here, you can figure out how much you want to save per year and then what your daily spend limit is to hit that number.

Say you make $3500/month ($115.07/day) after-tax.

That means that if you want to save $5000/year ($13.70/day), you aren't allowed to spend more than $115.07-65.75-13.70 = $35.62/day on average over your fixed costs.

Sometimes it's easier looking at things on the micro level in order to realize a macro goal.

Post: #17

I've tried to look at a few of the higher level rules like "live below your means" and "have a budget" and reduce them by asking why, why, why until it got distilled.

1. Become an expert at cost-benefit analysis, and being able to determine and understand what true value it, and what something is worth vs it's long term potential cost. Part of me regrets not going away for university and living "that life" in residence etc. However, between scholarships, living at home and a co-op program, I graduated with a couple years expenses saved. Other people not only went away, but went to fancy private universities in the states, and took on 250k in debt. For all intents and purposes I figure we got equivalent educations given that we ended up at the same job. I would at least argue that they aren't 10x the worker I am. Same thing with coffee. 10 cents for instant home made vs $5 at Starbucks. Better, sure. But 50x as good? Coffee every day vs 1 starbucks every 6 weeks?

2. Adopt a "needs based" attitude to finance vs an "abilities based" one. An abilities based one says I can afford the $9 beer at the ball game because I make $100k. A needs based one says I probably don't need to spend $100 on ballgame tickets, I'll go play ball with my friends instead. "What you can afford" shouldn't ever come up. Budgeting then becomes sort of pointless, because you're never just spending money because you can, rather if you need a car to drive to work, then you just pay the gas it costs, regardless of the price, and regardless of your budget, because almost certainly, the cost of not getting to work is more than the cost of gas. Further there is tremendous value and growth in learning to do things for yourself, and saving money is a nice side effect of fixing your own car, doing your own handy work etc.

3. Get ahead of the curve as quickly as possible. You start around 0, and then can quickly find yourself on one of two opposing exponential curves. I remember reading a book in high school about some immigrant who was always pawning then buying back her family gold when money got tight. I remember thinking, even at age 15, how stupid that was. Had she buckled down at the very start and saved $1000 but done everything else the same, she would have over a decade been bouncing between +$1000 and 0 when money got tight, vs 0 and -$1000 as she did. Along with usurious pawn fees at each of those 50 instances, she likely would have had the value of her gold many times over on top had she started smart. In line with above, if your "needs" every exceed your "abilities", or even worse, your "wants", you are generally fucked and a whole industry of pay day loans was spawned.

4. Always be considering worst-case, potential opportunity cost. In my mind, $5 is a days food. $500 is a months rent for a room. If I woke up broke tomorrow, how would a weekend away today vs being warm and dry for a month compare, or a coffee per day vs eating 3 square.

Granted I don't live these by rote and have loosened up a lot as my situation improved, but like Benjamin Franklin's rules of no booze or gluttony etc, I look at these things sort of as a ideal, and just by having them in the back of your head, I think you become subconsciously aware.

Post: #18

When I was in my 20's, my dad taught me to save 10-20% of every pay check. I did that for most of my career....usually through my 401k. Now that I am in my 50's, I have options that I wouldn't have otherwise. Compound interest is like the snowball that rolls down the hill. It gets bigger and bigger and picks up more and more steam.

Post: #19

-Live with your parents as long as possible
-Do not own a credit card and pay for all expenses with cash/savings (I.e. no personal or consumer debt)
-Get two jobs when you are young and work your ass off. The effects of compounding means a year of hard work and saving when you are young is worth many multiple years of sweat when you are older. Alternatively start your own business young and work your ass off in it. Grinding is pointless in the long run but we got to start somewhere to build up seed capital.
-Start saving and investing very early
-Educate yourself and take active control of your investments. No advisor/planner/fund manager/newsletter writer cares about your money as much as you do.
-Take a decent amount of risks (not stupid/crazy risks though) when you invest. The biggest risk of all in the long term is not taking enough risk.
-Borrow (a sensible amount) money to invest. No point playing it so safe that you only get rich when you are too old to enjoy the money. An average wage earner needs to leverage up to an extent if they want to get Rich before old age.

Post: #20

Great thread, many good points.

1. Automate your savings, use direct deposit to put a portion of your pay check into savings, live off the rest.

2. Make a budget. In effect, "give every dollar a job."

3. Hate debt. Despise debt. Get debt free.

4. Don't marry.

Post: #21

You asked for 5, I'll raise and spot you 10 answers.

1. Have a damn plan. Seriously. You need to write out a financial plan and review it on a weekly and monthly basis. A monthly basis to get the high-level stuff, weekly to check in on your investments, spending habits and income. What gets tracked, gets measured. What gets measured gets a chance to make changes in what is not going right, and to keep up what is headed in the right direction.

2. Keep your spending in check. The less you have, the more you need to not waste. Review all your existing bills. Do you have a neighbor you're friendly with? Split the internet bill and share the WIFI. Have family members or friends that you're tight with? Get on a family plan for your cell phone and reduce your monthly cost. Kill subscription services you aren't using. Haven't watched a Netflix movie in weeks? Cancel it and get a library card to rent DVD's. Don't spend on things that you don't use or derive value from.

3. Don't buy a new car unless you are loaded, or have a very specific business need for one. If you have a business, sometimes buying a new vehicle makes sense from a write-off standpoint. It almost never makes sense to buy a brand new car as a consumer. Instead, buy one only a few years old. Already 25% depreciation (and thus your savings), but still tons of life left.

4. Never pay full price for anything. Use cash back websites like http://www.ebates.com, http://www.befrugal.com and others to reduce the cost of purchases through cash back. Still, don't buy things you don't need. Always negotiate on bigger ticket items. You always have the power of the walkaway in any deal if the price isn't right. Learn from Trump on this. Walk away if it is a bad deal.

5. Get your credit to be top-tier ASAP. It will save you countless thousands in the long run. Get great cashback credit cards (4%-5% cash back for gas with Costco, PenFed, etc.), an everyday 2% cashback like Citi Double Cash, etc. Make sure all of your bills are set to auto-pay off cashback credit cards. You're going to pay anyway, so get the rewards. Every six months, ask for a credit line increase on each of your cards, but not if they will hit you with a hard inquiry. Call to find out.

6. Get a personal line of credit, just in case of emergencies or some other unexpected expense. Leverage matters and the best way to have more leverage to get out of trouble (or invest) is to have more access to capital. I've built up $200k worth of available credit that I rarely charge things to. It is always there if I need it. Remember, leverage gives you options.

7. Just like a car, don't buy more house than you can afford. If you haven't been on a strict budget for yourself for a long time before buying a house, becoming a home-owner will be a rude surprise. Buy at least 10% less house (or cheaper!) than you can afford. You WILL have unexpected expenses. Keep your monthly payment manageable, even if you were to lose your job for six months, you should be able to still make payments on a crappy job and/or from your rainy day fund.

8. Don't dump all your investment cash in highly volatile instruments like Bitcoin. Portion out a growth strategy and a stability strategy. Mix it up. Diversity in risk matters. Use dollar cost averaging when investing. Study, study, study, then study some more. Then study. Then invest.

9. Don't be afraid to live with roommates or parents as long as possible. Stack that cash to make the largest down payment on a house possible. A friend of mine has a $350k mortgage that is being paid for each month by 3 roommates. He's basically living in his own house with zero rent bill, while building equity in an expensive part of California. He'll be able to pay off his mortgage early at this rate. While we're speaking of mortgages, learn about how evil amortization schedules are for you, the borrower. Your first several years of a loan are the most expensive. Pay down that extra principal as fast as possible and build equity. You can always borrow against your house if you need funds later on. A 30-year mortgage turns out to cost you twice or three times what the house costs you if you pay it on the original schedule.

10. Last but not least, get a money mentor. Find a wealthy dude who likes sharing his knowledge, and become his confidant and friend. Help him solve his business needs and in exchange, show curiosity and ask questions. Most of what I learned about building wealth you don't find on CNN Money or CNBC. You talk with old money that knows the score. If you're old and wealthy, it is because you're smart enough to outlast the rest. Find a teacher and take notes, then put it into practice.

Bonus, here's even more:

11. Don't go to college if you're not in STEM, or you don't have a full-ride scholarship. The math doesn't square. If you're going to drop $100k of your own money in debt, go open up a business. Being your own boss is a great thing if you're smart and disciplined. If you're not an entrepreneur type, join a trade school and make money with your hands.

12. Sell things you don't need. Besides the regained money from Craigslist, amazon, ebay, etc., you'll clean up your house and be a lot more focused. Making money is largely about focus. Find your niche and focus like a hawk. When you have less crap and distractions, you can achieve your goals a lot easier. Turn off your cell phone during financial planning stages. Use Evernote to spell out your financial future and how to attain it.

13. Sites like http://www.personalcapital.com and http://www.mint.com are great budget and wealth tracking tools. Stay on top of things.

14. Don't hang around people will poor money management skills that show no desire to improve. Part of making money is being around people that don't waste it. If all your friends are club rats that blow money on bottle service, pretending to be rich, but carrying $30k worth of credit card debt....guess what...you'll probably be in debt too you hang out with this crowd. The golf course is a great place to meet real money. Network there and skip the club.

15. Give value to other people. Just like what I and other posters did, share your knowledge. Other altruistic people will be willing to give back. Surround yourselves with a circle of givers, as they can help fund your ventures, or just give great advice so you can grow in knowledge and wealth.

Post: #22

- Dont have kids you can't afford.

- Get a prenup before you get married.

- Take advantage of the power of compounding. In this case, do everything you can to get yourself in a position of having 100k in assets like stocks at around 30 years old. You could never save another dollar, and assuming you reinvest the dividends or distributions if its a mutual fund, you would have a solid ammount for retirement when you are in your 60s- 70s.

- Only buy a home if you plan on living there for a at least 10 years. The expenses of buying and selling are a major detriment to making that a good investment. Also, historically housing does not appreciate much beyond the general rate of inflation.

- Get personal liability insurance, it will help protect you in the event of a lawsuit and is usually only a couple hundred dollars a year.

- Put a freeze on your credit as this will help prevent identity theft. You can always unfreeze it for a few days if you need to get a new credit card. The recent Equifax breech of security shows how easily your financial information can be stolen.

- Don't cosign a loan for anyone, or marry someone with a lot of debt as this debt could become your debt in the event they default.

- Read The Millionaire Next Door, its a very insightful book about the habits and lifestyles of millionaires. Note: The authors of that book did discuss in a later book on millionaires about very high net worth indiviuals (15 million plus) who live in Mansions and have very high end cars and how their lifestlye expenses are usually a small fraction of their networth.

Post: #23

(01-23-2018 05:16 PM)SamuelBRoberts Wrote:  I always think I should put money in investments but I'm too scared to do it.

I know a lot of people feel that way. If it's "invested" it's out there to potentially be lost. Look at it this way, if you don't invest and grow your money it's 100% guranteed to be lost, slowly to inflation so slowly, but your gurateed to lost money. At least investing there's only a chance you lose money and there's upside as well of course.

I currently DCA into a Vanguard Life Strategy Fund and also crypto. I probably have too much cash sitting on the sidelines and I know it's stupid to try to time the market but if the stock market or cryptos go bearish and see a longer term pullback I'm ready to fire, that said I'm still investing currently as well.

Post: #24

(01-24-2018 08:55 AM)jamaicabound Wrote:  

(01-23-2018 05:16 PM)SamuelBRoberts Wrote:  I always think I should put money in investments but I'm too scared to do it.

I know a lot of people feel that way. If it's "invested" it's out there to potentially be lost. Look at it this way, if you don't invest and grow your money it's 100% guranteed to be lost, slowly to inflation so slowly, but your gurateed to lost money. At least investing there's only a chance you lose money and there's upside as well of course.

I currently DCA into a Vanguard Life Strategy Fund and also crypto. I probably have too much cash sitting on the sidelines and I know it's stupid to try to time the market but if the stock market or cryptos go bearish and see a longer term pullback I'm ready to fire, that said I'm still investing currently as well.

Scared money don't make money....

Post: #25

Here are mine:

(1) If you die with debt, you don't have to pay it. This is a great way to beat the tax man too.

(2) If they can't find you, you don't have to pay it. Win-win!

(3) There's absolutely no fun in having a little debt that you can afford to pay the monthly minimums on. There's a whole world of fun attached to debt that you can't possibility afford to pay the monthly minimums on.

You guys can thank me later.