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Middle class folks, how did you play it? (Retirement/housing/fun money)

Discussion in 'Bad Dog Cafe' started by naveed211, Apr 7, 2021.

  1. Stringbanger

    Stringbanger Telefied Ad Free Member

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    A few contingencies involved for sure.

    Take my neighbor across the street for example. He is 86 and he still works every day. (He drives cars at an auto auction). He still does his own yard work, and he maintains a two-story post Victorian home.

    He doesn’t talk to us as much as he used to, so I’m not sure why he works every day. Does he need the money? Is he bored?

    I am approaching the entrance to the bridge of retirement, but I still am not sure when it will happen.

    My wife retired a year and a half ago.
    She sleeps in late, gets up, goes down stairs, and flops on the sofa and watches TV.

    She waits on her wheelchair-bound daughter, and she does cook most of the meals, and she pays our bills.

    She does suffer from occasional bouts with depression, which has been exacerbated by being stuck at home.
     
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  2. Telekarster

    Telekarster Tele-Afflicted

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    I'd say - Do the best you can based on your current level of understanding, and be prepared for change... good and bad... and deal with that change as it comes, because sometimes change comes without warning. Bottom line IMO - Live.
     
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  3. PastorJay

    PastorJay Friend of Leo's

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    Put as much away as you can afford. Ten to fifteen % of salary/work income is a good goal. Use whatever tax-deferred plans are available to you. IRA, pension, etc. I didn't do that nearly aggressively enough--although having 3 kids under the age of five put some serious constraints on our ability to save.

    And I'm okay. But it could be much better. The day that you determine you could afford to retire your life changes. In a good way.

    Confession: I used to look somewhat enviously at folks younger than I am who were retired, even though after leaving law practice I was theoretically doing what I would do if I could retire.

    Now that I can afford to retire, it's truly by choice that I'm still employed full-time, which gives me a very different perspective on life.
     
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  4. stormsedge

    stormsedge Friend of Leo's

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    It is not hard, but it is a mind-set. We had to make a few lifestyle changes...although nothing significant. I retired at 55 with no debt except the house, which we paid off a year later. Six words...Dave Ramsey, do what he says:cool:.
     
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  5. EsquireOK

    EsquireOK Poster Extraordinaire

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    Those income numbers are lower middle class, if middle class at all.

    I myself grew up with a single parent living check to check, and have made less than that every year except a couple. Yet I feel that I could retire at age 50 if I really wanted to (though I do not).

    I did military service young, eight years, and saved my money like crazy while enlisted. When I got out, I moved in to my mom’s lower level for $500 monthly rent (cheap) while I went to school on the GI Bill. The Bill covered my rent and more, so I was still able to save, even as a civilian student. When I started working in the field I had studied, I bought cheap housing. Mobile home, cash, in a rent controlled trailer park. My total expenses are EXTREMELY low (easily under $1000 a month), and my future housing very secure, so I am able to spend on my hobbies. I feel pretty well set, even though I have always had a lower class income.

    Point being, the key is to make choices that keep your overhead down. Make financial decisions that allow you to do that. It’s more important than how much you make. Hustle ways to keep your expenses down. Growing up pinching pennies gets you really good at coming up with ways of doing this.
     
    Last edited: Apr 7, 2021
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  6. Mark the Moose

    Mark the Moose Tele-Afflicted

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    I would reiterate a few things above. First, money issues are usually problems in behavior and patterns of thinking more than the math. Most millionaires in America are teachers, police officers and fire fighters...not CEO's and hedge fund managers.

    1. Practice gratitude. Every day.

    2. Decide where your money is going to go each month. A good plan will keep your daily decisions in harmony with your long term decisions. In some circles they call that plan a "budget". Otherwise, you're making decisions base on whims and emotions. Either way, you're going to decide so why not decide all at once each month with a clear head and an eye towards the bigger picture.

    3. Save 15% of your income for retirement. Start early and you'll be filthy rich when you retire.

    4. Avoid debt. There are cheap interest rates out there, but the problem isn't math it's behavior and patterns of thinking.

    5. The line between needs and wants gets fuzzy. Learn to be really matter of fact about what a need is. Needs are about survival, everything else is a want. There's nothing wrong with having things you want, but be honest about those things.

    6. Buy a home if you can. It will be tough up front, but it stabilizes your biggest monthly expense.

    If my wife and I had nailed these six things 20 years ago it would have changed our lives in drastic ways. Good luck.

    Check out Mr. Money Mustache, the Ramsey network (he's an acquired taste), and the F.I.R.E movement.
     
  7. lathoto

    lathoto Tele-Meister

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    You have to have your money right and you have to have your mind right. If you don't get your money right you will never get your mind right. Figure out how far you can live above the poverty line. For example, two people, 400% above the poverty line is 70K a year. Two things: get out of debt and save more. In the meantime, go see a financial planner.
     
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  8. Telekarster

    Telekarster Tele-Afflicted

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    ohhhhh..... I like this very much
     
  9. P Thought

    P Thought Doctor of Teleocity Ad Free Member

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    Middle class, :lol: how quaint.

    I don't see how any family (with any kids) in the income range you mentioned can follow the current "bootstrap" method of retirement saving, especially while there are kids in the household, and for many that time lasts longer than it used to.

    I am lucky to have had a public employee retirement program, even pared back as it was throughout my teaching career, which combined with Social Security makes retirement fairly comfortable for me.
     
  10. naveed211

    naveed211 Friend of Leo's

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    I hear ya. I think these days it’s considered anything from 41k-120k. So it’s definitely on the lower end overall, I suppose.

    Though again, it goes much farther in, say, the Midwest versus NYC or California.
     
  11. ArcticWhite

    ArcticWhite Tele-Afflicted

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    Don't have kids.
    They will bleed you dry.
    At any age.
     
  12. Mr powers

    Mr powers TDPRI Member

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    Besides a house and a car don't buy anything until you actually have the money.

    Keep track of how much comes in and how much goes out.

    After that it's luck:
    If you're lucky you won't get divorced or get laid off a bunch of times.

    One more thing: don't buy too big a house or too nice a car.
     
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  13. BigDaddyLH

    BigDaddyLH Tele Axpert Ad Free Member

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    They're my retirement plan!

    What's in your diaper? (Hah, I use that threat with them too often.)
     
  14. naveed211

    naveed211 Friend of Leo's

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    Too late!

    But true.
     
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  15. Fendereedo

    Fendereedo Poster Extraordinaire

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    Mind your business. :twisted:
     
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  16. buster poser

    buster poser Friend of Leo's Platinum Supporter

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    Good advice we got very early, "buy a home as soon as you can." We did that at 25, a small condo, then a junky home we fixed up, and finally the "nice" home we're in now. The equity has always helped and I have never borrowed against it.
     
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  17. phart

    phart TDPRI Member

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    I'm not qualified to offer financial advice, but I WILL pass along advice my uncle (a retired executive at a regional bank) emailed me years ago at the beginning of my career, which turned out to be the best advice I ever received. I'm 39 and have been following this advice since 2009, and now have nearly $450,000 in my 401(k) from a decent but relatively modest income, despite the handicap of me being a complete idiot (in other words, I'm the perfect person for this kind of "set it and forget it" investing). I'm lucky to have a workplace with a good retirement contribution match. In the words of Einstein, the most powerful force in universe is compound interest. Wealth snowballs overtime, so 1 dollar today is worth, well, a bunch of dollars when you retire.

    So I think I'm in good shape for retirement, but still, financially it's tough! The wife and I both have student loans, we have two young kids (day care is a certain five-letter word) and a mortgage. We economize where we can - our cars are older and paid off and I'm a reckless DIY-er. I play my lonely MIM Tele through the same SS Crate 1x12 I've had since MIDDLE school!

    The TL;DR is "read Warren Buffett and invest in Index Funds". The dates here are old but the advice is the same. If you want to learn more, I highly suggest reading several Berkshire Hathaway (Buffett's company) annual letters (https://www.berkshirehathaway.com/letters/letters.html). They're relatively light reading (...relatively...) and you can skim, but be sure to pick up the places where he talks about personal investing and index funds generally. Good luck!



    "When it comes to investing, there is no better investment advisor than Warren Buffett. If you are a student of finance, his company's annual reports (Berkshire Hathaway) are considered required reading. Over the last several years he has provided some insight for individuals on what he considers the best way to invest.

    1996 Annual Report "...the best way to own common stocks is through an index fund".

    1997 Annual Report "...Most investors will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the majority of investment professionals".

    2008 Annual Report "...I would just have it all in a very low cost index fund from a reputable firm, maybe Vanguard. Unless I bought during a strong bull market, I would feel confident that I would outperform. If you buy equities across the board through index funds and you do it over time so you don't put your money in at the wrong time, that's probably the best investment most people can make."

    I could go on, but I think you get the point. Research shows that 4 out of 5 investment funds (mutual funds) failed to beat the market return (ie the index fund) for five year periods over the past 75 years. When you think about it, the reason is fairly simple. If the market average return is 7% and the investment fund charges a 1.5% fee to manage your money (fairly standard), that means the funds have to earn 8.5% to get the market return. Said another way, the mutual fund needs to outperform the market by 21% (1.5%/7%) just to break even with an index fund. While some funds can do this in the short term it is very difficult to do it longer term.

    My guess is that when you met with the Investment advisor, he was pitching you on all kinds of proprietary funds that all came with big management fees to them and probably never mentioned an index fund. The reason for this is that the management fee on an index fund is 6 bps versus the 150 bps on the funds. Over the course of your investing life, this small amount adds up to huge dollars.

    Given your age, you have a long investment horizon and should be comfortable taking some risk (ie I would invest in the stock market and not make any allocation to fixed income). As you get older, you can cycle in some fixed income.

    The key is to keep up with regular contributions and dollar cost average over time. While you are going to experience some ups and downs with the market, history would suggest this strategy will allow you to outperform 4 out of 5 professional investment managers over time."
     
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  18. El Serio

    El Serio TDPRI Member

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    These principles have worked for me:

    Get a degree/training that will lead to a real job, don't borrow money to do it, work your way through.
    Purchase a modest house as soon as possible, pay a little extra every month
    Never borrow money to buy anything other than a house, including vehicles.
    Learn to fix things
    Only eat out occasionally, cook most of your own meals
    Don't try to keep up with others in houses, cars, clothing etc.
    Save enough to get company match from the beginning, increase the amount when you get a raise. You won't notice it then.
    Set aside a specific amount, say 3-5% of your paycheck that you can spend on whatever you want (and equal amount for significant other)
    When you get a windfall, do something constructive with 90% of it (retirement savings, pay down mortgage, home/car repairs, medical bills, save for next car, etc.) spend 10% however you want
    Realize that things will not always go to plan, cars break down, unexpected sicknesses/injuries occur, layoffs happen. Be prepared to deal with setbacks
    Kids are expensive, but I wouldn't trade mine for any amount of money. Remember that spending time with them is more important than buying them everything they want.
     
  19. bgmacaw

    bgmacaw Poster Extraordinaire

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  20. ArcticWhite

    ArcticWhite Tele-Afflicted

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    For me too.
    Also, try not to get cancer.
    It really, really sucks.
     
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