Post: #1

My goal is to maintain 12 months of living expenses and never go below that as long as I am making/earning money. Anything beyond that I'll just save/invest, or spend on travel and vacations.

Right now, I have about 8-10 months. A year ago, when I was married and had a family, we only had 1-2 months in the bank (ugh).

What about you guys?

Post: #2

Does it include investments? If so 100+. If not less than 1. I pay off my Credit Cards then drain my bank account every month to invest more.

I'd assume it doesn't include investments though due to volatility which leaves me at less than 1.

Post: #3

I thought that the general rule was to have around 6 months worth of expenses saved up for emergencies and such.

Post: #4

One-two I guess it depends how your business is. I'm lucky in that I work in a family run practice so my expenses each month are relatively predictable. There really isn't much a need for me to have cash sitting around. In the case of an emergency I can sell some shares. (Not ideal but it's life) Plus in Canada with OHIP, most medical things are covered. As to driving, I could just put repairs on my credit card and pay it off within 30 days.

The math of keeping 25k liquid over a lifetime versus investing it is pretty bad. With 8% returns with an initial investment of $25,000 you'd be a millionaire in 47 years. Older people due to medicare should probably have more liquidity.

As a young person though, there shouldn't be many unpredictable expenses that make you unable to pay off your credit card at the end of the month. This only typically is an issue if you are stretching your income i.e. you have a high rent compared to your income, car payments etc.

Post: #5

I always figured that the statement included investments and other semi-liquid assets. Whether it's in cash or stock is a petty detail. I don't think the spirit of '6 months saved up' is to have it in cash, rather just to have options other than a pay day loan or credit cards which in 30 days you'll only be able to make the minimum payment on.

When I read articles like this: http://business.financialpost.com/2014/0...ss-survey/

which say that 51% Canadians would be in financial trouble missing one pay check, in conjunction with 50% saving less than 5% of each paycheck, I don't get the feeling they'd be in trouble because they have $500k tied up in the blue chips, and merely a shortage of cash. Rather, it's because they have a net worth hovering around 0. Having to log into an etrading platform and sell a few shares to make rent isn't how I would define someone in financial distress.

That said, I always felt the whole idea of '6 months saved up' was silly. Because it almost gives you a license to be wasteful once you have that amount saved. You've provided a buffer if you get temporarily pushed out of the rat race, but you're not free of it. I always felt a much better play was to live simply, save voraciously, and constantly move closer to financial independence. Then a year or two of not working are basically non-events as they can be partly, largely, or completely financed by your investments.

Post: #6

Well funded State pension. I can temporarily run out of money for up to a month, but can never really go broke because my pension can't be attached completely, even by the IRS, child support ( I have none in USA) or debtors. Whole "doom and gloom pensions are hopeless" is addressed in another thread.

It's a lot better than being an old guy in the USA, but I would recommend trying to fund your own pension and retiring by 45, better able to enjoy non-Anglosphere girls.

Post: #7

The big problem Canadians have is trying to buy too much house. Spending 5x your salary on a house is ridiculous but lots of Canadians do just that. They buy it thinking of as an investment as they hear about Joe and Sally who bought their house 20 years ago for 300k and now it's worth 1 million. The problem with the house as an investment theory is, they're paying a mortgage at say 5% on it. Between that plus inflation any true gain in value is much smaller than originally perceived if at all. The only big advantage is the leverage it gives you if you have a small deposit percentage-wise and it increases in value relatively quickly.

Post: #8

50ish

Post: #9

Depends where you're spending the cash because as we all know, your money goes a lot further in third world shit holes then it does back home. That being said, I could live for three years in Colombia on the cash and easily accessible funds that I have now and that's living large, I could probably live in Canada for just as long on the same amount but would be pinching pennies. I worked my ass off to earn what I have and will always keep this much in the bank, I didn't grow up with a lot of money and know the value of a dollar and would have no problem going back to my pre-oil bucks days. That being said, I've spent a lot of money on traveling and partying over the past few years and it could have been spent much more wisely but the way I look at is this: would this ten grand (I know it could be 20K+ in 30 years) that I spent in my 20s/30s give me as much pleasure as it would in my late 50s? I don't mind working until I'm 63 instead of 60 to have a few kick ass years while I"m young, fuck it, YOLO!

Post: #10

My goal is to become a millionaire, retire at 30 and live off interest. Then I can completely disconnect from the internet and live life the way it was meant.

I have 6months saved at the moment and growing.

Post: #11

So let's say you have $20k in cash in a savings account... some of you are saying you rather invest a good portion of it within a taxable account rather than keeping it all in cash? And then when you need the cash, you simply sell and cash out?

Post: #12

Scotian, with your income I'd assume you can probably save / invest 24-48k a year and still travel 6 months a year, it's all relative. With that type of saving assuming you start from zero and invest averagely within 15-25 years you'd be in pretty damn good shape financially..

A guy making 36k though is a different story.

Becoming a millionaire by 30 mathematically requires a lot of luck, a successful business, some level of inheritance, a really early start to high paying jobs, a well above market return on investments and / or a highly aggressive savings plan (think "Early Retirement Extreme" I.e. 65-75% of your net). An employee is highly unlikely to reach that level. I think Wall Street Playboys did the math on investment bankers and it showed that with a 50% savings rate it would take them 11-15 years to become a millionaire. That's probably the highest paying job an employee is going to get right out of school.

CleanSlate, it depends how your financial situation and setup is. Investing it means you have to be able to accept volatility. A lot of people unfortunately can't and panic when the market starts going south. I don't really care if the market goes south, all it means is I'll be able to buy more shares than usual.

Savings plans / cash don't keep up with inflation. Your money is losing value overtime. Becoming a multimillionaire doing that would be virtually impossible without a windfall or an exceptional income for many years. Look at it this way how many under 40 year old's do you know actually netting before taxes $400k+ a year. (That's probably about 0.1% of the under 40 population in America) Realistically to become a multimillionaire by just saving you'd need atleast 10 years at that type of income but probably closer to 20 or 25.

I consider the money invested untouchable unless it's absolutely necessary.

Post: #13

(03-11-2015 09:08 AM)lavidaloca Wrote:  CleanSlate, it depends how your financial situation and setup is. Investing it means you have to be able to accept volatility. A lot of people unfortunately can't and panic when the market starts going south. I don't really care if the market goes south, all it means is I'll be able to buy more shares than usual.

Well, I have a pretty high risk tolerance... when the economy tanked in 08, I bought a few more shares than I normally did, and my 401k is doing well. Same with my Roth IRA. But these are all retirement accounts with a long horizon, I'm not sure I would feel the same way about money that I may need anywhere between now and 5 years from now.

So here's my financial situation. Without disclosing my actual income, let's say I have a decent job with good health insurance, and I rent a nice apartment close to work. My company matches my 401k up to 6%, so I take advantage of that match, but I don't contribute more than that. Instead, I max my Roth IRA in order to diversify the tax benefits.

After my pre-tax retirement contributions, my rent is 30% of my take home pay. I spend another 20% of my take home on essentials, like groceries, gas, utilities, renter and car insurance. My car is paid for. Yet another chunk of my take home goes straight to my Roth IRA. That leaves some money I can spend on entertainment, and some money I can save each month.

I'm living comfortably, not pinching pennies, but not high on the hog either. I can easily save about 1000/month without feeling it cuts into my entertainment or hobbies. If I wanted to tighten my belt, I can save 1500/mo. If I needed extra cash or liquidity, I would stop my Roth contributions and push it to about 2000/mo.

What do you think?

Post: #14

This is a horrible reality check for me.

I'm 28 and only debt I have is my car (which should be paid off by summer) and student loans.

I've got no 401K, no savings, no investments.

I really to start planning this shit out asap, does anyone have a starters guide or could guide me in the right direction .

Post: #15

(03-11-2015 03:10 PM)kaotic Wrote:  This is a horrible reality check for me.

I'm 28 and only debt I have is my car (which should be paid off by summer) and student loans.

I've got no 401K, no savings, no investments.

I really to start planning this shit out asap, does anyone have a starters guide or could guide me in the right direction .

Sure, http://www.reddit.com/r/financialindependence/wiki/faq

Post: #16

You are way ahead of most people CleanSlate.

I like using the calculators at bankrate.com, specifically the simple savings calculator.

It allows me to plug in various numbers and figure out a high and low end of where I'll be 10, 15+ years from now. It also allows me to figure out the difference additional money invested makes. Compound interest is your best friend.

Check it out.

http://www.bankrate.com/calculators/savi...lator.aspx

Post: #17

A bit over 12, but it's growing fast. My goal is 360

Post: #18

I'm starting late. Just turned 26 and have started saving this year. I was earning a low starting salary for 3 years before getting a 1/3rd increase towards the end of last year. I've managed to save 1 months worth of salary so far and want to get about 10,000 this year from my base salary. My bonus is discretionary but will use to pay of a bank overdraft, which is 2000, and any additional money will use for holidays and luxury stuff.

Post: #19

I took a big hit about a year and a half ago when I became self-employed and semi-location-independent. I only have a bit over six months now but I expect that to grow over the next year or so to the point where I'll have around two years' worth of living expenses in case something goes wrong and I'm left with no immediate income. A move to a cheaper place with lower taxes could in its planning stages although I doubt I'll leave London in the next year or two.

Oh yes, I'm so privileged you literally can't even.
Interested in joining the FFL? I tried (and failed).

Post: #20

Haha, I have ZERO, and am living month to month as I spent a lot of my earnings and savings traveling to different countries in Asia and Europe. I set my life up this way as had I decided NOT to pursue my sales oriented location independent lifestyle, I probably would've had a year's worth saved up but would also be 15 pounds heavier, driving two hours everyday in traffic, living my dreary office job working 50 hours a week in a sausagefest city. Fuck that!
I'm in commercial real estate so one deal can last me 6 months to a year (maybe even 2-3 years if I were to travel to lower cost country such as Thailand or Phillipines)

Post: #21

Part and parcel is that inevitably we will save for periods and then spend. At the beginning I thought I was saving for traveling, but now i think I want to build something more sustainable and maybe put a few thousand into a business idea that I can do in my part time.

I guess I will want to keep a large part of my savings for a rainy day, and then perhaps invest some in starting a new business. Online is probably the way to go, but hell, have zero idea what kind of business it would be.

Post: #22

Planning on saving when I start my career but not really at at a point where I can save much

Post: #23

12+

But that is investment. Cash? Whatever is in my wallet and coming down the pipe.

I just dumped another whack of cash into my business, and will be doing so for the next year at least. Cash in = Cash out. I dont mind playing this game as its exciting, but it certainly puts perspective on things when my corporate buddies are sitting on 12+ months and pulling in steady $10,000 a month paycheques.

Its at those moments when I realize that if this business fails I will be back to zero again, only this time a bit older.

Also when business is good and I am living a more expensive lifestyle that 12+ months means a drastic cut of luxury in order to live that long. Which I guess is the whole point.

Post: #24

http://wallstreetplayboys.com/investing-priorities/

I currently have $3k saved as emergency, plus a grand or so in my travel fund, which is automatically taken out of my paychecks.

Anything over $10k is idiotic. Most 20-25 year olds should aim to have $5k saved and the rest put towards eliminating all debt. "Six months living expenses" is also ridiculous. Any money over your determined emergency cash is best spent investing. If you're really out of work for six months then you should be selling assets.

Post: #25

Very interesting results. This has been an educational thread for me. Although the sample size is small, I see a bit of stratification between the 12+/entrepreneur poll results vs the <3 month crowd. About 40% with less than 3 months and about 40% with 12+, and only 20% in between. Also the 12+ crowd seems to lean strongly towards investing a large portion into assets like stocks and funds or businesses.

I should start modeling that behavior of the 12+ crowd.