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      08-21-2024, 03:29 PM   #23
TboneS54
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I don't save (much), I invest. I started in earnest in 2009, right at the bottom of the market, so I'm pretty lucky.
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      08-21-2024, 04:09 PM   #24
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Originally Posted by TboneS54 View Post
I don't save (much), I invest. I started in earnest in 2009, right at the bottom of the market, so I'm pretty lucky.
One would argue that investing is saving and maybe even make the case that investing is better than saving. The old school definition of saving typically means either keeping cash under a mattress or having it in a savings account. Both are bad moves when you look at how inflation erodes the value of the dollar every year. One would argue having the money in a CD or high yield savings account isn't that much better.

You have to do something that preserves the actual value of your money by having it in instruments that outpace the rate of inflation.
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      08-21-2024, 04:20 PM   #25
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My wife and I take it very seriously and have invested since we were in our early 20s when we started our jobs. I'm 50 and she's 49. I make substantially more than her and our household income is maybe 50-70% compared to what most of my friends bring in. Folks that live in the moment and don't have much in the way of savings and investments may be really sorry when their health goes south and they have to retire much earlier than they thought and cannot live that high dollar lifestyle. Divorces have the same affect.

My wife and I have always lived in moderately sized and priced homes throughout the years. We routinely refinanced when rates were good and we did shorter loan terms. We live in a very safe area of southern Kansas City which has exceptional public schools. I've driven fun cars and modded all of them, but not never had anything "expensive" until I bought my M235 in 2016 for $47K. All cars prior to that were $15-$30K and I held on to them for 3 to 8 years.

We paid off our home in 2012 and I fired our financial advisor that same year (best decision ever) and I moved all our money to Vanguard minus my work current work 401K. I manage everything now and have tripled our money in that time. My wife and I have numerous brokerage and retirement accounts, nearly 1.5 years of living expenses in a money market bringing in 5% a year, and our two kids have fully funded 529s. In October 2022, I bought my "fun" second car, a 2011 Cayman. I always wanted a Porsche and I figured that was a cheap and easy way to get into the brand to see if I like it.

My wife and I have always liked nice things, but we both see the comfort of living within your means. We travel, I have my toys, my wife gets the stuff she wants, and the kiddos are happy and have way more and seen more places than my wife and I ever have.

I am absolutely retiring in about 3 years when my daughter goes off to college (son is already there). My job has always been a means to get money and nothing really more. I won't miss it at all. I have lots of hobbies. I play various sports and work out, I like working on cars, working on the house, etc. When my daughter leaves, we're downsizing from a 2400 sq ft home to some like a 1200 sq ft home in some nearby rural area. We aren't about upsizing. To us, we've learned that more crap you have can consume you, your time, and your bank account. That ain't for us. Less stress and crap to maintain, the better.

For the last year, my 19 y/o son had been wanting to open a Roth IRA and start investing himself. He was able to open an account recently and he's so excited to learn and invest. Proud dad moment.
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      08-21-2024, 04:28 PM   #26
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My wife and I take it very seriously. We have a pretty aggressive retirement goal (around 55). We're 36 and 34 now. I'm the main earner and I max out my TSP (military 401k) and my Roth IRA. She does about 18% of her pay to her 401k and maxes her Roth. We've also been pretty lucky with real estate. I sold my first house in 2021 that I purchased in 2014 for more than double what I paid and even more than what I owed. We own two homes now, one that's a rental. Both have a ton of equity.

We've tried to find a balance between meeting our financial goals and enjoying our money. I think we've done pretty well. I own a G80 M3 outright and have a pretty extensive firearms collection, the two being my main hobbies. She doesn't have too many hobbies, but loves clothes. We're able to save, live comfortably, and enjoy ourselves, which is awesome.
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      08-21-2024, 04:30 PM   #27
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Been saving since I was 15. Hasn’t prevented me from still having fun and doing a lot of what I want. It’s engrained in my financial outlook.
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      08-21-2024, 04:31 PM   #28
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Originally Posted by vreihen16 View Post
Feel free to "like" that post. I made my bed, and I have to sleep in it (or in a cardboard box under a highway overpass). I'm a good example of a bad example, and hope that sharing my mistakes will help someone else avoid being in the same position.

One thing that I did do right is buy a modestly-sized house right after I got married. I've been paying the mortgage at an accelerated rate, and it will be paid off in December even with the involuntary retirement. If Zillow can be believed, it's worth $100K more now than what we paid for it. That includes the 2008 housing bubble pop, that caused house prices to tumble and many who purchased houses that they couldn't afford with jumbo mortgages to walk away in foreclosure.

Paying rent to someone is just paying the landlord's mortgage on their appreciating asset. I'll only be paying taxes and utilities for housing starting in January, and we can sell at any time to build down south where the taxes and cost of living are much lower than in NY State.

Don't think that I don't kick myself daily for turning down the mother-of-all offers to buy a brand new E36 M3 Lightweight (stripped track/racing version with no AC or radio) back in 1995 for $19,800 when the dealer wanted to unload a special order that the buyer backed out on, but in reality that dream car would be worth 12 cents per pound as scrap metal today given how my younger self would have thrashed it in competition.....
The whole homeownership thing is sort of a controversial topic these days....at least with me. I think one has to really look at their situation and see if buying a home makes actual financial sense; especially with the current housing market. I wish I remembered the video I saw where the author did an analysis of two fictional people. One bought a house and focused on that as their main means of investment. The other rented and used the money that would have gone into a house for investing into the stock market. The renter in the long run made out better than the one that bought the home.

A guy by the name of Jaspreet Singh that has a Youtube channel called Minority Mindset has a similar thinking as me with a home. It's a liability first and a required expense for a place for me to live in. Aside from the cost of borrowing money to buy said property which results in interest payments, you have property taxes, possible HOA/condo fees, insurance, maintenance, and one could argue utilities as often utilities are rolled into monthly rent. And with those expenses, you can be assured they'll all go up over time. While one can write off some of the interest paid, that wouldn't offset the expenses typically. Need to replace a roof? You're looking at a few thousand to possibly $20k and beyond. HVAC needs to be replaced there's another few thousand. Hot water heater goes bad, that's a few hundred to a couple thousand. Then one can say the appreciation in the value of the home should be factored in. But the appreciation is only paper until it's realized by selling the home which also costs money to pull out through realtor fees.

Don't get me wrong. I'm not totally against purchasing a home. But it has to make sense and not done because it's what society says is what you should do.

For me, my two homes are just diversification of my total assets. My monthly mortgage is very low compared to my monthly income. I think it's about 25%. I bought my primary home in 2001. Based on homes that have sold recently in my neighborhood, my house has possibly appreciated by $400k over what I paid for it in 2001. My vacation home purchased in 2012 to what similar homes have sold for in that development has appreciated by about $100k.

With paying off a home, there's something to be said about holding on to a mortgage. As I said, having money locked into a home makes it illiquid and requires you to spend money to get it out. Also depending on how you do it, there is going to be some lag time before you can actually get the money in hand. As where with stocks, I just call my broker with a sell order and the money will be in my account by the next day. Also the performance of the home appreciation and the returns from investing in the stock market isn't even close. For me, my investments have far exceeded the appreciation of both properties I own combined by a large margin. The other aspect is the cheap money aspect of a proper mortgage. I refinanced my primary home before rates shot up. I'm locked in at 2.874% for 30 years. That's cheap money and it makes no sense financially to pay it off early. My vacation home has had a 3.25% 30 years fixed rate since I purchased it. Still crazy cheap money. I'd probably shoot to have this one paid off when I retire because I just don't want the obligation of having to have payments on that house in retirement. Heck I may just sell both homes and consolidate down to something else that would be bought outright.
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      08-21-2024, 04:41 PM   #29
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If saving more for retirement meant delaying your dream car by years, would that be worth the sacrifice to you?
Absolutely. I retired at 45 after hiring a CPA a few years earlier who put the financial independence bug in my ear. It was an easy sell. Deferred gratification is among the shortest paths to achieving financial goals. Winning a Powerball or Mega Millions lottery is likely the shortest.

Even after assembling a retirement plan, I bought an M6. After having fun with it for a year, I sold it and got a Nissan Sentra to help bring the retirement date forward. After retiring, I got back into cars in the way I had with motorcycles when I was much younger: track/street, race, and now street/track.
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      08-21-2024, 04:49 PM   #30
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^Our paid off house had a 3% 15 yr mortgage at the time we last refinanced but we just wanted to be free and clear of a house payment as we wanted no debt whether it be a house or car.

I don't even really consider our house when considering retirement as I need a place to live. Our house is worth double what we paid back in 2006. I suppose that's decent.

I do agree though. Home ownership isn't for everyone. There are lots of costs that go into owning a home. On average and over the course of 10 years, you're looking at $500+/mo in additional costs when considering maintenance, repairs, equipment to maintain (lawn mowers and such), etc. compared to just renting. Some months and/or years are better or worse than others. Then there's insurance, property tax, etc. Painful.
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      08-21-2024, 05:49 PM   #31
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Quote:
Originally Posted by zx10guy View Post
The whole homeownership thing is sort of a controversial topic these days....at least with me. I think one has to really look at their situation and see if buying a home makes actual financial sense; especially with the current housing market. I wish I remembered the video I saw where the author did an analysis of two fictional people. One bought a house and focused on that as their main means of investment. The other rented and used the money that would have gone into a house for investing into the stock market. The renter in the long run made out better than the one that bought the home.

A guy by the name of Jaspreet Singh that has a Youtube channel called Minority Mindset has a similar thinking as me with a home. It's a liability first and a required expense for a place for me to live in. Aside from the cost of borrowing money to buy said property which results in interest payments, you have property taxes, possible HOA/condo fees, insurance, maintenance, and one could argue utilities as often utilities are rolled into monthly rent. And with those expenses, you can be assured they'll all go up over time. While one can write off some of the interest paid, that wouldn't offset the expenses typically. Need to replace a roof? You're looking at a few thousand to possibly $20k and beyond. HVAC needs to be replaced there's another few thousand. Hot water heater goes bad, that's a few hundred to a couple thousand. Then one can say the appreciation in the value of the home should be factored in. But the appreciation is only paper until it's realized by selling the home which also costs money to pull out through realtor fees.

Don't get me wrong. I'm not totally against purchasing a home. But it has to make sense and not done because it's what society says is what you should do.

For me, my two homes are just diversification of my total assets. My monthly mortgage is very low compared to my monthly income. I think it's about 25%. I bought my primary home in 2001. Based on homes that have sold recently in my neighborhood, my house has possibly appreciated by $400k over what I paid for it in 2001. My vacation home purchased in 2012 to what similar homes have sold for in that development has appreciated by about $100k.

With paying off a home, there's something to be said about holding on to a mortgage. As I said, having money locked into a home makes it illiquid and requires you to spend money to get it out. Also depending on how you do it, there is going to be some lag time before you can actually get the money in hand. As where with stocks, I just call my broker with a sell order and the money will be in my account by the next day. Also the performance of the home appreciation and the returns from investing in the stock market isn't even close. For me, my investments have far exceeded the appreciation of both properties I own combined by a large margin. The other aspect is the cheap money aspect of a proper mortgage. I refinanced my primary home before rates shot up. I'm locked in at 2.874% for 30 years. That's cheap money and it makes no sense financially to pay it off early. My vacation home has had a 3.25% 30 years fixed rate since I purchased it. Still crazy cheap money. I'd probably shoot to have this one paid off when I retire because I just don't want the obligation of having to have payments on that house in retirement. Heck I may just sell both homes and consolidate down to something else that would be bought outright.
We own two houses, primary residence & the house next door which we rent out. Very similar houses but because we have owned the primary residence since 2006, they are paying rent close to double our house payment (includes insurance, property tax) & it will continue to rise. Yes you can potentially make a lot more money in the stock market if you get it right, could also lose a lot more. People are buying houses, renting to others & making money at it.

Any decent landlord has the renters paying for all the expenses you listed, whether property taxes or a new roof, difference is landlord takes in money each month & needs to budget for potential expenses. Renter just pays the payment which continues to go up.

As for owning a house long term over renting, I am assured that I will soon not be paying for the house, increases can only consist of property taxes/insurance/maintenance. The house next doors renters will continue to see rent increases (that the market will allow) that are based on the value of the house/insurance/maintenance/property taxes. Their payments will likely increase a lot more than mine.

I personally would work towards buying a house, maybe only a decent investment but also comes with the security of being unlikely to be priced out of an area in the future & an end goal of paying off the house and the total cost to live there per year dropping like a rock.
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      08-21-2024, 05:55 PM   #32
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Overall, renting's been noticeably cheaper for us. We've owned three homes and own the one that we now live in.

We made a substantial down payment, and mortgage payments, HOA dues, and property taxes take well under 20% of our annual income. Renting was taking 21% without our ever having to put another dime of our own money into the place.

Before moving in, we spent a fair piece of change fixing-up our home. Half of the mortgage payment goes to principal, and the HOA will replace the roof and 62 sq. ft. of double-pane skylights late next year. Years ago, I would have spent some time keeping track of how much financial sense this purchase has made, but luckily we're in a circumstance and at an age now where that's no longer necessary. In that context, planning well ahead starting over 40 years ago has paid off in the way it was supposed to.

Our view is that we were very lucky in a long list of ways to have been born in the late 1940s.
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      08-21-2024, 06:03 PM   #33
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The earlier you start the better (compounding!), but it's never too late to start. The key part is pay yourself first and invest wisely.

I started in my late 30s and I went from negative to a 7-figure net worth in 10 years through a combination of saving as much as I could and investing it in low-cost index funds in a bull market. During this time I still drove a (lower-end) bmw and took a nice vacation or two every year.
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      08-21-2024, 07:39 PM   #34
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Some retirements aren't planned or wanted. Fortunately, I knew going in that I would be fired at 56. I had a plan to stay on in a staff position, UNTIL, a coworker my age had a cardiac event (heart attack). I decided then and there I wasn't giving my life to the FAA. Like I mentioned somewhere in another thread, 7 or 8 of the 50ish controllers I worked with at LAX have died in the last few years; 3 so far this year. I would have been one of them in March 2018, 100% blockage in my left-main artery. My cardiologist said there was no medical reason I was alive, and the rotator cuff surgery I had 3 month prior should have killed me. Anyway, fortunately, I have a very good retirement.
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      08-21-2024, 08:21 PM   #35
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Two key concepts mentioned more than once in this thread:

1) The Rule of 72 (a compounding primer), and

2) Pay Yourself First (the fundamental Financial Success 101 concept).
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      08-21-2024, 08:45 PM   #36
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This thread has got me to thinking. During the earliest days of the internet, I came across an internal document from one of the country's top financial firms, J.P. Morgan & Co. Having worked in the industry, it was clear this document was basic training material for new sales people (aka "Account Executives").

There's a lot of cold calling involved with a job like that, and much of the material was devoted to how to identify what kind of person you're speaking with as early in the conversation as possible. To prepare the document, I had the impression that J.P. Morgan had hired top-quality psychologists.

The bottom line was this: 15% of potential clients were blessed with the foresight necessary to engage in a conversation about how to achieve financial independence and, more importantly, exhibited an ability to follow through over time by sticking to a general plan to which they had agreed. This group was the only one J.P. Morgan was interested in as clients. Another 15% of potential clients were incapable of seeing past the next week or the next $100. A fundamental part of the account executive's job was to quickly and successfully identify people with these traits.

Everyone else fell in-between those two groups and were also not of interest to the firm.
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      08-21-2024, 10:48 PM   #37
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The more you save now the more you will have later, Im a fully registered FA for the past 5 years now and seen first hand what compound interest can do down the road. I will say put investing in your future first, compound interest in one of the greatest wonders of the world. I love my toys but I love markets and investing just as much.. I am lucky enough to enjoy my hobbies and invest in my future.
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      08-21-2024, 11:22 PM   #38
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Quote:
Originally Posted by David70 View Post
We own two houses, primary residence & the house next door which we rent out. Very similar houses but because we have owned the primary residence since 2006, they are paying rent close to double our house payment (includes insurance, property tax) & it will continue to rise. Yes you can potentially make a lot more money in the stock market if you get it right, could also lose a lot more. People are buying houses, renting to others & making money at it.

Any decent landlord has the renters paying for all the expenses you listed, whether property taxes or a new roof, difference is landlord takes in money each month & needs to budget for potential expenses. Renter just pays the payment which continues to go up.

As for owning a house long term over renting, I am assured that I will soon not be paying for the house, increases can only consist of property taxes/insurance/maintenance. The house next doors renters will continue to see rent increases (that the market will allow) that are based on the value of the house/insurance/maintenance/property taxes. Their payments will likely increase a lot more than mine.

I personally would work towards buying a house, maybe only a decent investment but also comes with the security of being unlikely to be priced out of an area in the future & an end goal of paying off the house and the total cost to live there per year dropping like a rock.
As I mentioned, it's all based on individual circumstances. While rent can and does increase, so does the other expenses I mentioned. My neighbors had their HVAC systems replaced for $7k and $14k respectively. If you're unlucky with having to come out of pocket for a new roof, that's another expense. I got a rough estimate for the replacement of my roof and it came in at around $17k for just architectural shingles. Look at how insurance rates have sky rocketed in Florida. You have instances of homeowners having to pay $6k+ per year on insurance. I would wager that rent increases generally won't exceed those aforementioned costs.

Many of the home maintenance/repairs I can do myself. So I'm fortunate with that. I was staring at possibly replacing my french door/bottom freezer refrigerator at one point to the tune of $2k but was able to repair the ice maker, water dispenser, and the constantly iced over evaporator coil myself. I got lucky that a friend works as a HVAC/plumber tech. He hooked me up with his contractor's discount at his supplier and only charged me nominal labor to totally replace my aged out HVAC system. I only had to pay $5100 all in for an upgraded HVAC system in both BTU and tonnage over my old one.

Something else not mentioned when comparing putting money into a home or investing. Dollar cost averaging with investing can actually accelerate the compounding we're all talking about. This comes into play when you are disciplined in constantly putting money into the market. Markets will dip or correct which creates a value/everything is on sale situation. This allows one to buy more shares at discounted prices which then accelerates the compounding effect when the markets go up. You don't have that with a home. If you're really a savvy investor, you would have cash on hand to buy more when the market dips/corrects.
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      08-21-2024, 11:43 PM   #39
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Originally Posted by IndyRed128i View Post
If saving more for retirement ment delaying your dream car by years, would that be worth the sacrifice to you?
Yes. Because if you do it right with a good savings plan, then you will be able to retire earlier and not only buy your dream car, but also the tools to keep it in good order. And be able to go to the places you dreamed of. And if done right, also leave a little something for those that you love.

///Rich
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      08-22-2024, 07:04 AM   #40
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I wish I had someone wise to teach me to save more when I was young, but also learn to balance it and live life. Compounding interest and time is the largest advantage to wealth.

If you put $100 per month into savings from 18, it'll be worth over 1M by the time you retire in 50 years with a modest return.
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      08-22-2024, 07:20 AM   #41
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Quote:
Originally Posted by omega2733 View Post
If you put $100 per month into savings from 18, it'll be worth over 1M by the time you retire in 50 years with a modest return.
To put it into perspective, that's just skipping one $3.33 cup of over-priced coffee per day to be a millionaire at retirement.....
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      08-22-2024, 08:19 AM   #42
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LOL - if you are driving your dream cars instead of planning for retirement - you better enjoy them to the max while you are young then. I've always "paid myself first" and nothing came before my planning. I could only think about buying a house or cars or whatever with what is LEFT after I invest.

I've still driven fun cars and kept multiple cars for the last few decades, but having a "fun" car is part of my retirement planning. Now I have a nice nest egg, my house is paid off, and all 3 of my cars are paid off.

But I am not one who can "worry about it tomorrow" so if I was I might have made other choices. I sleep like a baby because I am mostly debt free, have a nice egg saved, a little passive income and can let off the gas some and enjoy life without the worry of retirement or debt hanging over my head.

But THAT is what was important to me. If having dream cars when you are young is what is important to you - and you know you won't regret it later - then go for it!
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      08-22-2024, 10:33 AM   #43
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Love this thread!

If I could humbly make a couple book recommendations that I loved and fit the convo:

The Psychology of Money is maybe my favorite on compounding, staying invested, staying simple, etc. Just Keep Buying was also great on these concepts.

Die with Zero was great and sort of the opposite, about enjoying life along the way and not torturing yourself by sacrificing too many life experiences just to max out savings because some people aren’t even able to spend it all in retirement. In short, your three profound life resources are time, money, and health: when you’re young you have time and health, when retired you have time and money, but in your late 30s-early 50s you might have the best reasonable combo of all three so live it up
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      08-22-2024, 11:28 AM   #44
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Quote:
Originally Posted by IndyRed128i View Post
If saving more for retirement meant delaying your dream car by years, would that be worth the sacrifice to you?
Yes. Drove little economy cars for decades. If I had any thoughts about
“dream” cars in my younger years, it wasn’t much. Maybe a 1974 Capri
with a 2.8L V-6. Big deal. Still didn’t buy it. Drove my Capri 1600 for 14
years.

Now that I’m retired, I have no regrets waiting. Saving while waiting. ��

And PS, I don’t consider waiting for a dream car a sacrifice. I wasn’t riding
a bicycle or horse.
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