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So this might be interesting to some of you, especially if you are in debt or have problems saving money.

I used to spend money as fast as I got it. The more I made the more I spent. I have a buddy who is a doctor who introduced me to frugal living websites, the concept of FU money, and basically treating every dollar you earn as a trooper who can earn more money for you. And once you spend it on something stupid, its gone forever. Understanding that is very important. I had already been investing my money, and contributing my 401k and so on, but the way I used to handle things essentially followed something like this:

Income - money for bills - money towards savings and investments = play money

Essentially I felt that so long as I was paying my bills, and saving x amount of money each month, I was fine to do whatever I wanted with the rest, which I called my allowance. I had some set rules, like once my money was in savings or investments, I wouldn't withdraw from it to pay off the credit card or buy stupid stuff. I had to do that with the play money. Once and while I would have to break that rule, but for the most part I stuck with it. Once I became a home owner, the formula changed to set money aside for home maintenance and HOA fees and that sort of thing. Basically imagine a paycheck coming in and immediately splitting off into several accounts. I thought I was doing okay.

It wasn't until I started reading about others online on how they cut wasteful expenses and saved money and so on did I really wake up to how much I wasted, not just on bills but also with my play money. I rarely carried any of it forward to the next paycheck. I just assumed so long as I was saving SOME money, I was doing okay. The reality was, that I could have been doing much much better, and it didn't take long before I took a long hard look at how I spent my money and what I spent my money on did I start to feel like a big idiot.

There is a lot of great advice online, and I def suggest you read as much as you can. Some of it simply won't apply in your case, and that is fine. Not everyone lives within biking distance to work, or likes to hike for free instead of a hobby that costs money, and so on. But there is a lot of things you can do to try to save money.

One of the things I did was create this really interesting and comprehensive excel workbook on my phone that tracked all my income and bills. I actually have income from several sources, but I never really totaled what those were until tax time. I actually had no idea what my net worth actually was. And my bills? Waste all over the place. I don't track things like gas or groceries, or random times I eat out or even on hobbies. That's a lot to track and I am not ready for that. Right now its just the predictable stuff like water and electricity.

One of the things I wanted to know was patterns. My bills go up in summer, and not just do to running the AC, but for a whole host of reasons. So not only would I track month to month, but I would compare this month to the same month a year ago, and see if I was up or down. I am not going to lie, it took awhile to go through my bank statements to plug in what those values were for a couple of years. But once all that was done, all I had to do was plug in what a current bill was, and excel would take care of the rest.

So on any given day, I can see what money I have coming in (whether its paycheck, dividends, pension, etc), where my money is going (401k, bills, etc), as well as plug prices for my stock portfolio and even what I own on my home and my estimated equity in it. At any given time I can see my net worth, and better yet, the gains I have made since the beginning of the year. Everything has a percentage next to it, representing the gain or loss since 1/1/2018.

The most important thing, is my money saving rate. And this comes from different sources. Its not just a paycheck in my case, but 401k matching, pension contributions, dividends, bonuses, what I actually put in savings per month, and I get a monthly savings rate. That rate is what I have become fixated on. This year its bounced from 71% (a stellar month) to 11% (when I had some expensive vet bills), to an average of 41%. Yes, I am actually saving 41% of my income this year. And where will most of that go? Investments.

Which brings up the point I brought up in the beginning, about every dollar you own being a little trooper who can either work for you to make more money, or be spent and never come back. There are some things that you will just have to spend money on, there is no way around it. But you can control things like the kind of car you drive, or if its really worth having the Ultimate TV Cable Package with HBO. In order to save, you have to learn to cut. Or at least in some cases, just bring your bills down.

One example I would like to share is how last year I got hit with a double whammy. Both my AC and pool pump broke. I had already set money aside for both, so I didn't have to carry any debt, but I was also able to upgrade to more efficient machines. I got a 14 Seer Heat Pump for my AC, and a variable speed pool pump. My AC typically ran close to $300 during the summer. And that is kind of low, my neighbors run over $350. Before I got the new units, I actually installed a programmable thermostat because I would forget to turn the AC up in the morning, and the AC was keeping the house at a nice 74 degrees during the day when no one was home. Total waste. Now the air is at 80 during the day when no one is home, and its starts cooling the house at 5 when I leave the office, and by the time I walk in, the house feels great.

What impact did all this have? My Aug 2018 AC bill is $130. Yes it costed some money do this, but in the end the new units will have paid for themselves a few times over. Remember when I said I compare current month to same month in a previous year? I am also tracking year to year. I saved $700 alone on my month bills in 2017 over 2016, and in 2018? I am already at $800 and the year isn't even over yet. This at a time when inflation and the cost of utilities, insurance, and so on is constantly going up.

I am sure I will hit a point where i can't improve anymore, and then will look at what else I can trim on. And I do have some big ticket items ahead to deal with.

But the important thing is understand that it all adds up. Every bit of it. Each saved dollar now can be invested, and actually earn me money versus wasting it. I recommend everyone buying this book: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926 - A Simple Path to Wealth. Its a really great book explaining how simple investing your money can be, and the yields it will return after 20-30 years. And that book is just a start and not all of it applies to everyone, but it will probably introduce you to a bunch of other books and concepts that will empower you.

** Some books complete horsegak: I read a book called Extreme Retirement that was a fairly interesting book, highly technical and scientific along with theoretical, only to mention in the last chapter that the guy (after only working for 5 years in a high paying field) and his wife lived in a 290 square foot shoe box. I am not interested in living in a 290 foot shoe box. **

There are times when you can beat the market, but there are times when you will get hosed too. Collins and even Jack Bogle (the guy who created ETFs) will correctly state that the vast majority will not beat the market over 20 years so why bother trying. The important thing to understanding when investing money is to be diversified and that the money you set aside early is the most import amount of all. Its time in the market that yields the greatest returns, If you have the mindset, 'well I'll invest when I save more money', and put it off, you will have less time in the end to have your money grow. The reason I call myself an idiot is because I did the math on what my little empire would look like had I not spent all that play money on stupid crap when I was younger, and just invested it and forgot about it, and I literally want to pull my hair out. Over the last 40 years, the US Stock Market has returned an average of 12% (regardless of being down or up in individual years). Do the math on what just a $1000 looks like after 20 years:

Year: 1 Starting: 1000 Rate: 0.12 Gain: 120 Total: 1120
Year: 2 Balance 1120 Rate: 0.12 Gain: 134 Total: 1254
Year: 3 Balance 1254 Rate: 0.12 Gain: 151 Total: 1405
Year: 4 Balance 1405 Rate: 0.12 Gain: 169 Total: 1574
Year: 5 Balance 1574 Rate: 0.12 Gain: 189 Total: 1762
Year: 6 Balance 1762 Rate: 0.12 Gain: 211 Total: 1974
Year: 7 Balance 1974 Rate: 0.12 Gain: 237 Total: 2211
Year: 8 Balance 2211 Rate: 0.12 Gain: 265 Total: 2476
Year: 9 Balance 2476 Rate: 0.12 Gain: 297 Total: 2773
Year: 10 Balance 2773 Rate: 0.12 Gain: 333 Total: 3106
Year: 11 Balance 3106 Rate: 0.12 Gain: 373 Total: 3479
Year: 12 Balance 3479 Rate: 0.12 Gain: 417 Total: 3896
Year: 13 Balance 3896 Rate: 0.12 Gain: 468 Total: 4363
Year: 14 Balance 4363 Rate: 0.12 Gain: 524 Total: 4887
Year: 15 Balance 4887 Rate: 0.12 Gain: 586 Total: 5474
Year: 16 Balance 5474 Rate: 0.12 Gain: 657 Total: 6130
Year: 17 Balance 6130 Rate: 0.12 Gain: 736 Total: 6866
Year: 18 Balance 6866 Rate: 0.12 Gain: 824 Total: 7690
Year: 19 Balance 7690 Rate: 0.12 Gain: 923 Total: 8613
Year: 20 Balance 8613 Rate: 0.12 Gain: 1034 Total: 9646

This is just $1000 over 20 years with no additional contributions. Imagine what $20k, $50k, or $100sk will look like after compounding. The Stock Market will not return consistent 12% gains every year, I want everyone to understand that, I am only using 12% as its the overall average over 40 years. But feel free to plug in whatever numbers you want and do the math. Then imagine making additional contributions, or being able to start off with more tha $1000.

This is how people retire. And you do not have to be rich. Its not just about what you earn, but what you spend. We spend a lot in the west. Most of the people around the world don't have gak and are happy people. You would be amazed how few material possessions you actually need. And this coming from a guy who is eclectic and has too much myself. The absolute important thing though is to try and stay out of debt. Live within your means. Debt is paralyzing, and trying to keep up with the Jones's will bury you. As Warren Buffet says, "If you spend money on things you do not need, you will end up selling the things you do need."

But also before retiring, its about being financially independent. Its also about having F-U money for when you hate your job and want to leave, but most people can't because they live paycheck to paycheck. Most people tie themselves down because they are a slave to the system because they cannot control their spending.

Everyone's situation is different, and I am just writing all this so that maybe a couple of you might start thinking about yours.

Great post!

Sure, but when do I buy my precious plastic soldiers to lead my fantasy armies on the board ?

 Sarouan wrote:
Sure, but when do I buy my precious plastic soldiers to lead my fantasy armies on the board ?

Not saying you can't have hobbies, I certainly do. Just be sure you are getting something from them. I would say the soldiers on the board are being put to good use. The ones in boxes in the closet to never be used are not.

Even the notion of saving 41% of my income is laughable, unfortunately. And that's without aircon or pool bills... :p

Haha I've spent my last year's savings on a warlord.

Crispy78 wrote:
Even the notion of saving 41% of my income is laughable, unfortunately. And that's without aircon or pool bills... :p

If you came to me last year and said I could do the same I would have laughed. I didn't even know what my monthly savings rate was last year, as I didn't track it. The important thing is just to find out what it is. Plug in the numbers. Its information. And the more you know the better you can plan. Its the only way to be able to set goals.

And remember its not all about saving X dollars. The percentage is a big key. Most financial advisors recommend saving 20% of ones income in order to retire, and for many that is difficult.

I love to tell this story. Many years ago I paid off 17k in credit card debt. I let the whole world know because I learned a valuable lesson and it took a couple of years and a life style change to do it. I was surprised how many friends approached me on the side and asked if I could help them. One of those was my friend Laura. Laura admitted she was 60k in CC debt. Most of it from a 2 year stint in NYC when she lived the life she couldn't afford.

So I say yes, and we meet at her apartment and I starting making a list of all her bills. She is barely even paying for groceries at this point and is in constant use of her credit card. I tell her she needs to cut her cable. I get a 'Oh I can't cut my cable' response. I then see she has a home phone line and a mobile phone. I tell her to cut her land line. She says she can't because she needs the land line for people to call in from the gate to her complex, as the apartment complex call box wont call long distance area codes like her mobile phone has. So I tell her to change her number to use a local area code, and I get a 'Oh but I like having my 601 (Pennsylvania ) area code...' (we live in Florida).

I told her I couldn't help her if she didn't help herself. She was making all sorts of stupid decisions and couldn't afford dumb things like a landline. But she was thinking emotionally and not logically. And it wasn't till we added everything up and could see everything that we agree that debt consolidation was her only option.

And she did it. Took 5 years and a struggle, but she remains debt free.

But imagine had she not taken control. Had not sat down and looked at the data logically. She would have just continued in a downward spiral. Most of us are smarter than to put us in the same situation she did, but believe it or not there are many others who are in far worse of shape. There are people who live paycheck to paycheck in mansions who do not have a pot to piss in.

Everyone situation is different. Try not to focus on the numbers of others, but your own, and set some goals. If you are only saving 5%, figure out how you can save 6%, and go from there. Before long it just takes over and your eyes will be open and you'll be well on your way.

 KTG17 wrote:

 Sarouan wrote:
Sure, but when do I buy my precious plastic soldiers to lead my fantasy armies on the board ?

Not saying you can't have hobbies, I certainly do. Just be sure you are getting something from them. I would say the soldiers on the board are being put to good use. The ones in boxes in the closet to never be used are not.

This is me. A long time ago a buddy and I each got a box for Assault on Black Reach. He got my Orks and I got the SM. Now they sit in my closet mostly unbuilt doing nothing. :(

What is money?

 KTG17 wrote:

 Sarouan wrote:
Sure, but when do I buy my precious plastic soldiers to lead my fantasy armies on the board ?

Not saying you can't have hobbies, I certainly do. Just be sure you are getting something from them. I would say the soldiers on the board are being put to good use. The ones in boxes in the closet to never be used are not.

Never's a long time. I recently got out and built some old metal Tau Stealth suits I've had kicking around for a decade.

I agree with most of your points, though. My biggest regrets are probably tied to Kickstarter products that I lost interest in because it took so long for them to get made. Probably would have been far better spent on my mortgage.

Imagine a person buying meals over the course of a weekend. At breakfast lunch and dinner they get 50 cents for every dollar they currently have to represent payout from investment, then receive $2 to represent money left after expenses. On one extreme spending the money each meal immediately they would have only $12 of food the whole weekend. On the other extreme saving everything for the last meal would be $41.50 worth of food but mean being hungry up until then.

What is the right way for this person to spend their money?

I've been sorting through a lot of my 40k stuff. Since I've transitioned away from Horus Heresy and Competitive 40k games, I've realized how little of this stuff I need. And how much of it was still in boxes and untouched. So, I resolved to start selling it for fair prices. I won't make my money back, I know...

...except I have a friend who's an outstanding painter, who's offered me a finder's fee for sending him commissions. So, I kind of am making most of my money back.

Well of course you don't really need much to live and that it greatly depends on the person and where you are living. Thing is, sparing money just for the sake of it is useless in the end. After all, when you die, the worms eating you won't care about it.

But hey, to everyone their purpose in life. I for myself am investing in worthless plastic soldiers, that only have a value for me. I know they are garbage to others people. And I know I could instead invest money to gain more money. But that's not my point in life.

What would be a greater topic is managing your goods. Focusing only on money is a mistake, because money in itself does nothing. Live in Venezuela and know the harsh truth about it. However, managing your goods so that you use what you can and need is much more useful for your life, IMHO. It's true that buying more models than you can build and/or paint isn't really that needed, unless of course you're investing for the future time you will spend with them later.

I think everyone should be taught finance at school, at how compound interest works.

Herzlos wrote:
I think everyone should be taught finance at school, at how compound interest works.

This, this right here sums up everything. This should be pretty much compulsory in schools, instead we get the whole "drugs are bad and love other cultures" in citizenship class. We should be teaching them valuable life skills like job hunting, how to finance, etc.

Some great points and a good introduction on how investing can be a powerful tool to save for your future. For those in the UK who want to learn more I found these websites useful:

https://forums.moneysavingexpert.com/
http://monevator.com/

We've probably all heard stories about people losing a lot of money by investing in stocks. If you think long term though and diversify correctly you should be a lot wealthier than holding your money in cash.

 Sarouan wrote:
Well of course you don't really need much to live and that it greatly depends on the person and where you are living. Thing is, sparing money just for the sake of it is useless in the end. After all, when you die, the worms eating you won't care about it.

True, saving (and investing) for the sake of it doesn't have much of a point. However most of us are saving so that we can retire when we want to.

I am happy to see some of you guys thinking about this. And some interesting points have been posted.

 John Prins wrote:
Never's a long time. I recently got out and built some old metal Tau Stealth suits I've had kicking around for a decade.

Believe me, I understand. I think most of us on dakka to some degree hoard gaming stuff. For me its not just gaming stuff either, I have spent years tracking down old anime model kits from the 1980s. I prob will never build them all. Its like they are there because they were so hard to find and if I ever want to build one, I can just go to my closet and pick one off the shelf. There is nothing wrong with a hobby per say, its just if something, or anything for that matter, starts to have an affect on your finances. Every decision comes with a sacrifice, so put some serious thought into your decisions. Remember GW WANTS you to spend spontaneously. They all do.

I agree with most of your points, though. My biggest regrets are probably tied to Kickstarter products that I lost interest in because it took so long for them to get made. Probably would have been far better spent on my mortgage.

You know, there have been some great, great debates among people who argue both sides of the debate on paying off a mortgage early. Because rates have been low for so long, the more contemporary argument is to NOT pay off your mortgage early, but to invest that extra money. Let's say you have a mortgage loan at 4%, and there are a number of places you can invest but lets stick with the stock market, which has returned 12%. Their argument is that yes, you are paying a lot with 4%, and the sooner you pay that off, the less you'll pay in the long run, but if you just invest that extra money, over the course of the loan, which you should gradually pay off, you come out 8% higher. Of course, try telling that to anyone who lost their home in the Great Recession. There are pros and cons to both sides. My Dad told me when he got a home loan in the 70s, he got an 11% and was happy to get it! 11%!!! That is just impossible for many of us to imagine these days, and in a situation like that, you WANT to pay off that loan.

And there is also the peace of mind that comes with paying off a home. My retirement plan is based on not having a mortgage by then. I would LOVE to be mortgage free now, and I could actually do it. But I would rather keep that money invested. The compromise is that I just pay about an additional amount to the principle each month. And I have my whole amortization schedule on my phone too. I know exactly what happens if I modify that extra payment, and what it does to my payoff date.

In the end though, and I def recommend you read up on some online debates on the pros and cons, just remember its ultimately your decision and for you to do what you are comfortable with.

 NinthMusketeer wrote:
Imagine a person buying meals over the course of a weekend. At breakfast lunch and dinner they get 50 cents for every dollar they currently have to represent payout from investment, then receive $2 to represent money left after expenses. On one extreme spending the money each meal immediately they would have only $12 of food the whole weekend. On the other extreme saving everything for the last meal would be $41.50 worth of food but mean being hungry up until then.

What is the right way for this person to spend their money?

It's always up to the individual. First they have to set their goals. If they are trying to save, and the money is scarce, either they have to find a way to bring in another revenue stream or increase it. Or, they can look at the food they are eating and decide if they can bring those costs down. When I was young and living on my own for the first time, I was dirt poor. I went to the grocery store with $20 to last me a week. I stood in the isle and depressingly looked at my options: peanut butter, jelly, bread, generic cereal, etc. I didn't use a credit card. I didn't beg my parents for money. I sat there acknowledging the fact that this situation sucked and that I would never allow myslef to be put in that situation again, and then ate peanut butter jelly sandwiches and generic cereal for a week. I've been down from time to time, but never like that again. But that moment taught me two lessons, (1) I was going to have to work with what I had, and (2) I was also going to work at that never happening again.

If someone has been lucky to be able to coast their whole life by just getting by without any drama, they actually might have a hard time with this than most realize too. But the reality is they haven't hit rock bottom, nor experienced any kind of wealth, so not knowing what one of the other feels like, they lack the motivation to change their situation. I think a lot of people fall into this category.

And you know what is crazy about that extra revenue stream I mentioned? Think about this: Decades ago typically our dads worked, and mom's managed the house. Now both parents work. And you know what they are saying now to get ahead? Get a side gig. WTF. Think about that for a minute. To get ahead, get a side gig. I do not want a side gig. I don't live to work, I work to live. How did we go from one parent working to both and adding in a side gig? Materialism really. Yes some things have gotten more expensive, but now everyone wants a certain home, car, shirt, etc. I don't think people realize what that cost is doing long term to their lives. And remember, a lot of the world looks at our middle class as the life of luxury. The middle class creates a great deal of waste.

 Adeptus Doritos wrote:
I've been sorting through a lot of my 40k stuff. Since I've transitioned away from Horus Heresy and Competitive 40k games, I've realized how little of this stuff I need. And how much of it was still in boxes and untouched. So, I resolved to start selling it for fair prices. I won't make my money back, I know...

...except I have a friend who's an outstanding painter, who's offered me a finder's fee for sending him commissions. So, I kind of am making most of my money back.

I have gone through this, and are actually going through it now. I am spending money on old WFB stuff. But I am also selling older stuff to make room for it and finance it. That's kind of my compromise. But I don't always wait till I find something new to get rid of the older stuff. I just naturally hate having too much stuff that I can't appreciate it all. And trying to decide what I can live without, taking time to list it on eBay, etc, does take time I don't want to spend on a Sunday. I find that assigning something to a Tier, 1 being the most important I can't live without, or 2, to Tier 3, being a nice to have, helps group what is important and what isn't, and helps me unload the Tier 3 crap. I just have way too much in Tier 1 that needs my attention.

 Sarouan wrote:
Well of course you don't really need much to live and that it greatly depends on the person and where you are living. Thing is, sparing money just for the sake of it is useless in the end. After all, when you die, the worms eating you won't care about it.

But hey, to everyone their purpose in life. I for myself am investing in worthless plastic soldiers, that only have a value for me. I know they are garbage to others people. And I know I could instead invest money to gain more money. But that's not my point in life.

What would be a greater topic is managing your goods. Focusing only on money is a mistake, because money in itself does nothing. Live in Venezuela and know the harsh truth about it. However, managing your goods so that you use what you can and need is much more useful for your life, IMHO. It's true that buying more models than you can build and/or paint isn't really that needed, unless of course you're investing for the future time you will spend with them later.

I respectfully disagree with all of your points. For one, its not just about saving it for the end, but also a rainy day, or better yet, F-U Money. I hope everyone understands what I mean by F-U money. F-U money is when you have had enough of your boss, and you aren't tied down by living paycheck to paycheck so he doesn't have you by the balls, so you can say F-U I am out of here. Find a new job can take some time, so you need money to get you through that time. Having that money is HUGE to my well being. I feel I am actually happier in my job, which I love, because if it ever did start to suck to the point where I didn't want to do it anymore, I could walk out that day (not that I wouldn't actually not give notice or anything). F-U Money is a powerful thing. It puts you in control of doing the kind of job you want to do, and not one you have to do.

Also, you are not investing in plastic soldiers. Plastic soldiers, while making you happy, do not create any wealth. Its just a hobby, and hobbies are fun to have and everyone should have one. Its just if you are spending too much on any hobby today that is preventing you from accumulating wealth for the future, then its bad.

As far as Venezuela is concerned, I would say you are wrong again. Do you know why? Because anyone who did have any money left a long time ago. You know where most of them are now? Miami, Florida. At least the really wealthy ones. Many went to other countries. But anyone who had any wealth bolted a long time ago. The ones that remain are the ones who had no money set aside. Same applies to Syrians, etc.

There is also another reason to have wealth: during times of crisis, the dollar is king. People who get by on debt are screwed. I am still scarred by the Great Recession and it affects every financial and career decision I make today, and I DID AMAZING DURING THE RECESSION. I had cash when most people didn't. Friends I had who had money were buying other people's boats for half their value from those who needed to sell them to make mortgage payments. Not having money saved up is why people lost their homes. I am scarred from what I saw other people go through. Warren Buffet: "Be fearful when people are greedy, and be greedy when people are fearful." He has made a killing having cash during economic downturns as he has been able to buy stocks at discount. Then he sold a lot of it when people started having money again and buying things at a premium. Its almost comical.

There are a whole host of reasons as to why you should build wealth. Ultimately its to enjoy your final years in retirement, but there will be bumps along the way, and you should save for that.

 Valkyrie wrote:

Herzlos wrote:
I think everyone should be taught finance at school, at how compound interest works.

This, this right here sums up everything. This should be pretty much compulsory in schools, instead we get the whole "drugs are bad and love other cultures" in citizenship class. We should be teaching them valuable life skills like job hunting, how to finance, etc.

Agree completely. My friend is a single mother who has a 20 year old kid going into college for the first time. Dad is not in his life, and he lacked direction until he heard about Cyber Security, and wants to pursue that. I am pretty sure he knows little about it, but wanted to know what classes he should take and so on, so his mom ask me (Software Developer), and her other friend who actually does Cyber Security over to her house for dinner where we could talk about college. I happen to have another friend with me who was interested in going, and on the way, I said, "You know, its cool that he has picked Cyber Security and all, but lets be honest, everyone changes their major 5-6 times in college. Even if he is excited now he will be exposed to new things in college, and while I am happy to answer any tech questions he has, I am thinking without his Dad around, we should both give some life lessons and advise him on some things to keep a check in the back of his mind about." Things he prob should learn from his Dad, but who isn't around. My friend totally agreed.

So after dinner, talking about college, classes, internships, and all that, I brought the convo to his next 10 years of life. We hit finance, investing, why you should own a black suit, etc. We knew he wouldn't understand all of it, and we wrote a lot of things down on a cheat sheet, but the point was to place a seed in his head he could later go back to. I thought we might have hit too much, but his Mom said he loved it, and hopes we do it again, to which we will.

I am amazed what education has become in the US. I feel lucky I had the electives I did. I think THOSE are the classes that made who I am today, not the basic required ones. And one of the electives I took in High School, was finance, where we did things like learn how to balance a check book. Most peeps don't use those today as everything is on debit, or credit cards, but I am willing to bet most people have no idea what most of the information on a statement even means these days. To the benefit of the banks btw - as they want each and everyone one of you to continue to be a mindless slave.

And that is what financial independence is all about: not being a slave to the system. Who knows if you will even live to retirement? No one knows. Even I have no idea myself. But like planning for many things in my life, I have to plan for that as well. I would love nothing more than to just paint models whenever I want in retirement. And I can't do that if I am a slave to the system.

BTW, remember that chart I posted above with investing $1000? Imagine if at the beginning of each year, you deposted another $1000...

Year: 1 --- Balance: 1000 --- Contribution: 0 --- Rate: 0.12 --- Gain: 120 --- Total: 1120
Year: 2 --- Balance: 1120 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 254 --- Total: 2374
Year: 3 --- Balance: 2374 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 405 --- Total: 3779
Year: 4 --- Balance: 3779 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 574 --- Total: 5353
Year: 5 --- Balance: 5353 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 762 --- Total: 7115
Year: 6 --- Balance: 7115 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 974 --- Total: 9089
Year: 7 --- Balance: 9089 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 1211 --- Total: 11300
Year: 8 --- Balance: 11300 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 1476 --- Total: 13776
Year: 9 --- Balance: 13776 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 1773 --- Total: 16549
Year: 10 --- Balance: 16549 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 2106 --- Total: 19655
Year: 11 --- Balance: 19655 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 2479 --- Total: 23133
Year: 12 --- Balance: 23133 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 2896 --- Total: 27029
Year: 13 --- Balance: 27029 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 3363 --- Total: 31393
Year: 14 --- Balance: 31393 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 3887 --- Total: 36280
Year: 15 --- Balance: 36280 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 4474 --- Total: 41753
Year: 16 --- Balance: 41753 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 5130 --- Total: 47884
Year: 17 --- Balance: 47884 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 5866 --- Total: 54750
Year: 18 --- Balance: 54750 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 6690 --- Total: 62440
Year: 19 --- Balance: 62440 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 7613 --- Total: 71052
Year: 20 --- Balance: 71052 --- Contribution: 1000 --- Rate: 0.12 --- Gain: 8646 --- Total: 80699

See the difference? That is how you invest. But its the money you invested early is the money that yields the greatest returns. Thats why everyone tells you to get started early. The longer you are in the better.

Look at what happens with $5000:

Year: 1 --- Balance: 5000 --- Contribution: 0 --- Rate: 0.12 --- Gain: 600 --- Total: 5600
Year: 2 --- Balance: 5600 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 1272 --- Total: 11872
Year: 3 --- Balance: 11872 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 2025 --- Total: 18897
Year: 4 --- Balance: 18897 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 2868 --- Total: 26764
Year: 5 --- Balance: 26764 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 3812 --- Total: 35576
Year: 6 --- Balance: 35576 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 4869 --- Total: 45445
Year: 7 --- Balance: 45445 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 6053 --- Total: 56498
Year: 8 --- Balance: 56498 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 7380 --- Total: 68878
Year: 9 --- Balance: 68878 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 8865 --- Total: 82744
Year: 10 --- Balance: 82744 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 10529 --- Total: 98273
Year: 11 --- Balance: 98273 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 12393 --- Total: 115666
Year: 12 --- Balance: 115666 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 14480 --- Total: 135146
Year: 13 --- Balance: 135146 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 16817 --- Total: 156963
Year: 14 --- Balance: 156963 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 19436 --- Total: 181399
Year: 15 --- Balance: 181399 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 22368 --- Total: 208766
Year: 16 --- Balance: 208766 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 25652 --- Total: 239418
Year: 17 --- Balance: 239418 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 29330 --- Total: 273749
Year: 18 --- Balance: 273749 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 33450 --- Total: 312198
Year: 19 --- Balance: 312198 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 38064 --- Total: 355262
Year: 20 --- Balance: 355262 --- Contribution: 5000 --- Rate: 0.12 --- Gain: 43231 --- Total: 403494


or $10,000

Year: 1 --- Balance: 10000 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 2400 --- Total: 22400
Year: 2 --- Balance: 22400 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 3888 --- Total: 36288
Year: 3 --- Balance: 36288 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 5555 --- Total: 51843
Year: 4 --- Balance: 51843 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 7421 --- Total: 69264
Year: 5 --- Balance: 69264 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 9512 --- Total: 88775
Year: 6 --- Balance: 88775 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 11853 --- Total: 110628
Year: 7 --- Balance: 110628 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 14475 --- Total: 135104
Year: 8 --- Balance: 135104 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 17412 --- Total: 162516
Year: 9 --- Balance: 162516 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 20702 --- Total: 193218
Year: 10 --- Balance: 193218 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 24386 --- Total: 227604
Year: 11 --- Balance: 227604 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 28513 --- Total: 266117
Year: 12 --- Balance: 266117 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 33134 --- Total: 309251
Year: 13 --- Balance: 309251 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 38310 --- Total: 357561
Year: 14 --- Balance: 357561 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 44107 --- Total: 411668
Year: 15 --- Balance: 411668 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 50600 --- Total: 472268
Year: 16 --- Balance: 472268 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 57872 --- Total: 540141
Year: 17 --- Balance: 540141 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 66017 --- Total: 616158
Year: 18 --- Balance: 616158 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 75139 --- Total: 701296
Year: 19 --- Balance: 701296 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 85356 --- Total: 796652
Year: 20 --- Balance: 796652 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 96798 --- Total: 903450

*** EDIT: Holy crap. I realized in the 10,000, I put the contribution in year 1, when I didn't meant to. So when I went back to edit it, look at the difference:

Year: 1 --- Balance: 10000 --- Contribution: 0 --- Rate: 0.12 --- Gain: 1200 --- Total: 11200
Year: 2 --- Balance: 11200 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 2544 --- Total: 23744
Year: 3 --- Balance: 23744 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 4049 --- Total: 37793
Year: 4 --- Balance: 37793 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 5735 --- Total: 53528
Year: 5 --- Balance: 53528 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 7623 --- Total: 71152
Year: 6 --- Balance: 71152 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 9738 --- Total: 90890
Year: 7 --- Balance: 90890 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 12107 --- Total: 112997
Year: 8 --- Balance: 112997 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 14760 --- Total: 137757
Year: 9 --- Balance: 137757 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 17731 --- Total: 165487
Year: 10 --- Balance: 165487 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 21058 --- Total: 196546
Year: 11 --- Balance: 196546 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 24785 --- Total: 231331
Year: 12 --- Balance: 231331 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 28960 --- Total: 270291
Year: 13 --- Balance: 270291 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 33635 --- Total: 313926
Year: 14 --- Balance: 313926 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 38871 --- Total: 362797
Year: 15 --- Balance: 362797 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 44736 --- Total: 417533
Year: 16 --- Balance: 417533 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 51304 --- Total: 478837
Year: 17 --- Balance: 478837 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 58660 --- Total: 547497
Year: 18 --- Balance: 547497 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 66900 --- Total: 624397
Year: 19 --- Balance: 624397 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 76128 --- Total: 710524
Year: 20 --- Balance: 710524 --- Contribution: 10000 --- Rate: 0.12 --- Gain: 86463 --- Total: 806987

That extra 10 grand in year 1 meant a difference of 100k after 20 years. Investing early is so important.

For many years I thought I would never be able to retire. I knew I wasn't putting enough in my pension fund, but debt, a house and raising a family left me little extra to put to retirement.

Or so I thought...

Fast forward a few years and I found the Dave Ramsey Baby Steps plan. Finally, a simple plan that shows you exactly what to do and how to do it.

I'm now on Baby Steps 4,5 & 6 (although 5 & 6 are both completed).

I no longer hope to retire at State Retirement age of 67 - I am now debt free and will be retiring at 60.

If only I had found Dave many years earlier.

I highly recommend his Baby Steps and believe they work for everyone.

 Reavsie wrote:

I no longer hope to retire at State Retirement age of 67 - I am now debt free and will be retiring at 60.

fething awesome. Congrats on taking control.

I highly recommend his Baby Steps and believe they work for everyone.

Never heard of the guy but I will check him out. It’s always good to get ideas from multiple sources.

El Torro wrote:
Some great points and a good introduction on how investing can be a powerful tool to save for your future. For those in the UK who want to learn more I found these websites useful:

https://forums.moneysavingexpert.com/
http://monevator.com/

We've probably all heard stories about people losing a lot of money by investing in stocks. If you think long term though and diversify correctly you should be a lot wealthier than holding your money in cash.

 Sarouan wrote:
Well of course you don't really need much to live and that it greatly depends on the person and where you are living. Thing is, sparing money just for the sake of it is useless in the end. After all, when you die, the worms eating you won't care about it.

True, saving (and investing) for the sake of it doesn't have much of a point. However most of us are saving so that we can retire when we want to.

I think a lot of the risk in stock investing is putting too many eggs in a basket by trading individual conpanies; company goes bust and you've had it.

I've started putting some money into a managed fund (so someone else decides where to invest for a tiny fee, split across shares/bonds/property and a couple of different risk profiles). Still fairly risky in the short term but should only trend upwards and should be safe enough over 15+ years if I'm flexible about when I withdraw it.
That suits me as the idea is to save up for a car/apartment/college for my kids.

 KTG17 wrote:

 Reavsie wrote:

I no longer hope to retire at State Retirement age of 67 - I am now debt free and will be retiring at 60.

fething awesome. Congrats on taking control.

I highly recommend his Baby Steps and believe they work for everyone.

Never heard of the guy but I will check him out. It’s always good to get ideas from multiple sources.

He also had a popular radio show and podcast. I like his baby steps and his books, but my main issue is that his show has a ton of politics mixed into many of his answers. I don’t think you would have an issue with that though (not meant as a dig against you, he just leans very right-libertarian).

I was lucky and started investing when I was in my teens, now at 26 I am starting to near 30,000 dollars in my retirement accounts. I do have the majority of my money invested in single companies, and a few mutual funds though but it has worked out pretty well for me. Especially when I picked up cyber defense firms when Russia started hacking the crap out of everyone.

I wish I could get started with investing too. But the big problem with investing is that you need money to be able to do that. Which I unfortunately do not have, since every last penny goes to paying for my tuition, rent and other expenses. I hope once I get a job that I will be able to get in as well.
So much for being a commie I guess.

 Iron_Captain wrote:
I wish I could get started with investing too. But the big problem with investing is that you need money to be able to do that. Which I unfortunately do not have, since every last penny goes to paying for my tuition, rent and other expenses. I hope once I get a job that I will be able to get in as well.
So much for being a commie I guess.

Depending on your job, a lot of the time they have retirement accounts, IRAs, Roths etc., that they will match ie) 2 percent is taking out of your paycheck to put into the account and they will match it. So it might be easier to start than you think and it is something to consider when job hunting. Now that information is for the states and could be vastly different for people in Europe etc.

That is how I got a big boost to my accounts in the past when I worked part time at a company for 3.5 years they had a retirement package I forgot about and when I quit I found out I had around 5 grand in that specific account

 d-usa wrote:


He also had a popular radio show and podcast. I like his baby steps and his books, but my main issue is that his show has a ton of politics mixed into many of his answers. I don’t think you would have an issue with that though (not meant as a dig against you, he just leans very right-libertarian).

Yes, I can happily ignore his political and religious comments as the plan is solid. The politics are not so relevant to me living in the UK. Not religious myself, but the values promoted by most religions are pretty acceptable to most people (IE killing and stealing are wrong) so that didn't put me off too much.

My wife is a Vicar so Dave's beliefs on that front reduced her initial resistance to looking at this stuff and was largely responsible for bringing her on board.

In the UK, better employers will add to your pension savings.

For example when I was at Sony, I paid in 5% of my salary and Sony matched and doubled that to a total of 15%.

You can't touch the money until you're 55, so it's locked in long term and also is diversified across a range of investments. If your employer offers one of these schemes it is well worth joining for the free money.

Another thing to look for in a pension scheme is a low fee charged by the fund manager. If returns are a few percent a year, a scheme which charges 2.5% of the fund per year as a fee, might sometimes see you going backwards. There are schemes around which charge 0.5%.

Pension contributions (up to a point that's far beyond a normal salary) are also tax free, and you can do things like salary sacrifice to pay them before deductions (thus saving lots more tax).

I used to be worried about having all that money lost in a pension, but it also turns out that on death your spouse can get a lump sum from it anyway.

I still don't put away anything like enough (I'm at ~9% between me and employer).

Conventional wisdom is that you should put away half your age as a percentage of your salary. In other words a 30 year old should be contributing 15%. That's easily do-able if you're in a scheme with a good employer's contribution, not so otherwise.

This is a great idea..... as long as you are healthy or live in a country with nationalized health care. Otherwise, you are only saving money to give it to the Health Care companies.

However, it is never a bad idea to "Pay Yourself First" as they say.

 KTG17 wrote:

As far as Venezuela is concerned, I would say you are wrong again. Do you know why? Because anyone who did have any money left a long time ago. You know where most of them are now? Miami, Florida. At least the really wealthy ones. Many went to other countries. But anyone who had any wealth bolted a long time ago. The ones that remain are the ones who had no money set aside. Same applies to Syrians, etc.

Can you smell the political bias behind this topic ? No ? Well, I do.

It only works if you agree with a very specific point of view about how mankind should behave. Save for yourself, and feth the others, to put it bluntly. That's why this system is toxic on the long term. It only makes money with money that sleeps - it doesn't help the economy since it's money not spent. It only benefits the richs, those who already have money. Never the poors, because it's their fault they are poor - they never saved money, after all, right ?

There are a whole host of reasons as to why you should build wealth. Ultimately its to enjoy your final years in retirement, but there will be bumps along the way, and you should save for that.

Yes, that's the big point for those like you advertising this way of viewing things. I'm sure that the one who died prematurely because he wanted to save for his final years did indeed enjoy a lot his savings...in the grave.

Projecting in the future with a screwed up and unstable system will never end up good for the majority of people. As for yourself ? You won't care, because the point is to make yourself comfortable. Not the others.

Anyway, enjoy your riches. Like I said, the worms won't care.