Saving with an I.T job

healthyboy

Hello Guys,

I was wondering if anyone here has any strategies to saving money

I spend about 70 percent of my pay cheq and I still live with my mom and dad,

How much do you guys save and whats a way of cutting cost?

mapletune

[edit] deleted uninteresting content... [/edit]

Anyway, came across this article a while ago and thought it might interest you

Reasons Why You're Poor

The biggest "insight" is the same as planning your future and your certification path: Know your Goals!


When you have a goal to save for, you will find a way to get there.

dave330i

No big secret. Reduce your taxable income by putting as much money as you can into your 401k (preferably max it out), and live below your means. That includes stuff like packing lunch, not paying $5/coffee, etc.

Wife and I max out our 401k and we save most of her income.

demonfurbie

stop buying gadgets that you think you gotta have and pick up a cheap hobby instead like reading from the library (or if ya already have a kindle you can get free books on amazon)

i picked up bushcrafting and soon gonna pick up fishing its gonna be about $35 to get the stuff ill need but i can catch my own food (prob not alot but still) get some fresh air and ill take the oldest with me

blargoe

Stop eating out so much, stop buying new cars, stop spending money on crap you don't need. I know... easier said than done

healthyboy

blargoe wrote: »

Stop eating out so much, stop buying new cars, stop spending money on crap you don't need. I know... easier said than done

I know but, if you stop doing those stuff you will be just an average joe just like how our mothers and fathers were,

paul78

healthyboy wrote: »

.. if you stop doing those stuff you will be just an average joe ...

You have that backwards. If your true goal is wealth accumulation, then sound fiscal responsibilty with your discretionary spending is the only way to avoid being "average". And any savings if invested over a long time horizon will only increase wealth. There really isnt any magic to saving money.

sratakhin

healthyboy wrote: »

I know but, if you stop doing those stuff you will be just an average joe just like how our mothers and fathers were,

And if you buy a new car that you cannot afford, does it somehow make you a better person?
If you are really interested in how to live a fulfilled life without spending all income on crap you don't need, google the guy Mr. Money Mustache.

Xcluziv

Increase Assets.....Lower Liabiliies. Plan and simple!!!!

In addition, have a business of your own (IT Consulting is what I have) so you have a way to write off things on your taxes. 401K is a good idea as well, just know who all aspects of what you can do within the plan....I actuallyknow how to trade and maximize the full range of my 401K...have to know entry and exit points

drkat

You can always sue someone.

Living with your parents and spending 70% of your paycheck sounds like awesomeness... I mean seriously? You're young and living at home and spending cash and living like a rockstar.. awesome! However... you may want to form some sort of spending plan... I hate budgets.. but spending plan

I was able to take care of a wife and kid on $30K a year... so it's doable.. Just set aside X% of your check every week and put in savings.. pay yourself first and that's it. You could start maxing your 401K but dependong on how you much you currently make your take home might not be what you think it is.

I guess I'm middle of the road with all this.... You cant take the money when you go, and you could get hit by a bus tomorrow ... so I think finding a balance is key.

My father for instance, sure he has a 401K but nothing crazy... but that's it.. no savings, no nothing, up to his ears in debt but ya know what?? he's the happiest mofo I've ever met.. pick your battles wisely

Iristheangel

I'm not very sophisticated with my savings. I have an Excel spreadsheet with my paychecks for the next year planned out as well as what I'll be spending them on. I save an average of 40% per paycheck. I don't usually go out of my budget when I get paychecks but it happens. I think saving 30-40% of a paycheck is ideal.

I don't pay for cable since I have a streaming media server and there are plenty of free legal sites where I can watch my show for free. I have a new car but an economic one that gets 40MPG and 100K/mile warranty so I'm saving money on gas and repairs. I do make big purchases from time to time but I time them right: When I wanted to buy a new TV, I waited until Thanksgiving and got a great deal on a 60inch Sony Aquos for $799 (about $500 cheaper than any other time of the year). When I wanted to buy a new laptop, I found a refurbished ultrabook that was only $750 - I couldn't find the same model new or used for less than $1200. My gaming PC was a custom built unit by a guy who bought his parts in bulk and sold it to be for about $600 off Craigslist (i7 quad core, dual graphics cards, 8GB gaming RAM, 1TB HD, internal WiFi, etc). I bargain shop like CRAZY. I write out shopping lists. I avoid impulse buys. Even if I'm buying something that's considered an entertainment item, I'll look for the best balance of performance and price. I won't buy the first deal I come across. I won't buy something unless I have saved X goal in my savings so I can feel good about a small splurge.

It works for me. I'm not living like a pauper yet I'm not spending like I have money to burn.

Edit: What the previous poster said about forming your own business is spot on. From my consulting work on the side, I have about $15K in tax write offs this year alone. Also, education expenses are great tax credits as well

joehalford01

Stop buying stuff. I used this rule for a while when things we're tight. Just don't buy anything for a month and see how much you save, it's pretty awesome. It can be boring though, so cheap hobbies are a must. Unfortunately for me, I haven't been following my own rules lately, I need to simmer down on the spending, .

spicy ahi

There's a lot of good advice offered above. The best thing I can add is to put as much money away in places where it's difficult to retrieve it. That way, you won't be as tempted to take money out on a whim. Sticking it into a 401k is a good place. Another place I put money into is a money market account with limited check writing. The one I have only allows you to write 5 checks a month and it also requires a minimum withdraw of like $1k-2k. It requires a minimum balance, so in the interim you can open a savings account and simply decline the check card (that's what I did at first)

drkat

yeah speaking of hard places to get money out of.. I have an ING Savings and I put like $20 a week in the account automatically and I deposit any expense checks or anything else into it, and since I never log into the account I never see the money.. works out pretty well.. and with .8% not too bad

On another note - saving 40% of your paycheck may or may not be feasible depending on how much you make and what you have to pay out.. I support 4 people including myself so that definitely aint possible.. more power to who can

blargoe

I would say going up to your eyeballs in debt and not being able to meet your obligations would make you the "average joe" these days.

SteveLord

I just started my 401k....4 years later than I could have, but in the end I don't think it will be too bad. Money has also been tight with 4 kids and having no less than 2 of them in daycare at any time. One of our cars was wrecked with 1 year left on it. So now I am tied to another one (used) for up to 6 more years. My car is paid off in September and I plan to go no less than a year before I even consider replacing it. And the main reason I want to is so I have another 6+ passenger vehicle, which do not come cheap. But once that happens, I plan to get a new list of all our debts and then start a snowball on them one by one.

And for those who seem to think the only way people come into debt is because they buy too much stuff, you're extremely out of touch with reality. There are a million unforeseen circumstances that can cause even the most prepared to be backed into a corner.

Iristheangel

I agree with you too, SteveLord. We're all one horrible illness or one unforeseen layoff away from financial ruin. The best thing we can do is try to plan for what we can control. Especially having kids added into the mix adds a million uncontrollable potential financial situations. I commend you for being able to start your 401K. Good luck on everything

kgb

There's no magical formula.

Spend less than what comes in. Put that remainder in a savings account/sock/etc.

That remainder varies with everyone. For some people, there's no remainder, while others have plenty of leftovers.

What I think is the most important thing to avoid is unsecured debt. Credit cards, expensive car loans (face it, odds are unless you live in a big city, you need a vehicle. But, you don't "need" a late model BMW or Mercedes), etc.

When I was 19, I started a well-known Apprenticeship program. My first day, I was teamed up with a soon to be graduate of the program (4yr program). In this program you got a raise every 6 months. He told me, 'Man...when you get that raise, bank it, don't do what I did and everyone else, go out and get a car, etc, etc. Then when you're done, you'll have more than enough to just go buy one.'

Needless to say, I didn't listen. I had a new truck, a new motorcycle, and all that other stuff. But, I really had nothing but debt. It took me many years of busting my hump, working 500-800hrs a year in overtime to get out from under that stupid spending.

You are in a great position, living at home (I assume it's cheap, if it's not, why live there). Just be smart. You don't have to stay in your room all the time and never enjoy/spend any of your money. I personally don't see the sense in being extremely frugal and deny yourself some of the things you want. What's the point in living like that? But, be responsible.

MickQ

As the others have said, spend less.

Whatever the reasons for you spending such a high percentage of your pay, there are ways to save it.
Buy second hand stuff - if it does the job, then it's as good.
Do more free stuff such as exercising in parks instead of treadmills in the gym.
Save petrol by not accelerating and braking as hard when driving. Also, cruising along and hitting the green light sequence is a very nice skill to have.
Stop buying so much new junk that's used a couple of times and then left.

If you think that being able to buy everything is all that matters in life, I'd suggest that you take the time out to smell the roses and have another look.
Money can buy you a night's "friendship", but it can't buy you love; so save it for when you find it.

DEC901

Ya gotta be disciplined and frugal with your geldt!!! It's tough; the suggestions are all solid recommendations but ultimately it's up to you!!!

instant000

Iristheangel wrote: »

I'm not very sophisticated with my savings. I have an Excel spreadsheet with my paychecks for the next year planned out as well as what I'll be spending them on. I save an average of 40% per paycheck. I don't usually go out of my budget when I get paychecks but it happens. I think saving 30-40% of a paycheck is ideal.

I'd say that planning your spending and saving in 12-month increments is quite sophisticated .

Back on topic, one way to guarantee that you save a certain amount is to "pay yourself first". Get something you can stash money into automatically, so you know you'll always be saving a certain amount.

I advocate saving for certain things:
1 - Emergency fund in the clear that can pay off up to six months of expenses (pad it out to a year, if you can).
2 - Retirement investment
3 - Other interest-bearing investment

I also advocate giving, but this isn't a religious forum, so we won't go there

Then, there's bills.

And then, there's entertainment. I like the suggestions of low-cost hobbies. No need to go to the movies for $30, when you can go to the budget movies, for example.

Daniel333

Please post your monthly budget in excel format. Also your region

XiaoTech

If you're spending 70% of your paycheck and you don't have loans, you must be really living it up. It's not hard to cut back. You don't need much money to be happy.

If your spending 70% of the paycheck because you have debt...keep paying it off until it's dead! That's what I'm doing right now. It's nice that the only bills I have to pay are my student loans and CC.

ChooseLife

healthyboy wrote: »

blargoe wrote: »

Stop eating out so much, stop buying new cars, stop spending money on crap you don't need. I know... easier said than done

I know but, if you stop doing those stuff you will be just an average joe just like how our mothers and fathers were,

You have two options:

1) Live dolce vita now
2) Make savings for future

Either or, the choice is yours

P.S. What's wrong with "how our mothers and father were"?

powerfool

If you have a problem spending your money on things that you can no longer appreciate by the time the next paycheck rolls around, then you will always be in this situation unless you can "hack" your budget. This sort of technique isn't new and is described in many of the popular personal wealth books. Automatically buy things of value with each paycheck. Part of this is a 401(k). Part of this is a savings account that you essentially forget about... part of it is stock purchases via Sharebuilder where you can buy fractional stocks.

If I lose my control, nearly 65% of my after tax income can go towards silly things that have little long-term value, like food. Now don't get me wrong, I love food, and my waistline can vouch for me on this. I would go out to eat for breakfast every day at Panera and get the sausage, egg, and cheese on ciabatta and an espresso drink and spend $8.... then I would do something proportionately the same for lunch and spend $12. At dinner time, we would go out to eat at least four times a week and we could easily drop $100+ with our family of five.

I don't know if that is you or if you have another sinkhole where the money goes. So, I started with breakfast. Here is what I do:

At Sam's Club, I buy: Rose brand canadian bacon for about $6 (this is about 40 slices), 2x Bagel Thins for about $4 (this is 20 bagels).
At the regular grocery store (Meijer, for me), I buy: Sargento Ultra Thin Cheddar ($4 for 20 slices) and Eggland's Best Organic eggs ($3 for a dozen).

I make that for breakfast every morning. It has about 22g of protein (very good) and and 275 calories (which is rather low for something like this). And best of all, it is about $1.10/day. I usually have that with a bottle of water and my supplements (Vitamin C, Vitamin B-Complex, CDP Choline, extra Vitamin B-5, Omega 3 Krill Oil, Zinc, Bromelain (pineapple extract), and a loradatine (generic claratin). The supplement regiment is expensive, but I would do that regardless.

From there, we started being conscious about dinner. My wife has celiac's disease, which is a gluten allergy (wheat, barley, etc). She loves baking, but this has caused a huge problem that probably led to us spending more because it is so difficult to buy things that are gluten free. The easiest way to do that is to buy fresh meats, fruits, and veggies, and skip as much processed food as possible. So, we eat a lot of good salads and then come up with recipes to make things. We do buy a log of easy to cook stuff at Sam's club (probably a week's worth to last us an entire month); we do this when we are busy... everyone eats this except my wife... she usually has a single serving microwavable gluten free meal on those days.

With just those two things, we save about $1600/month, which is crazy when you think about it. We still go out to eat 3-4 times a month (which is still a bit excessive), but that is also about experiencing different new things and spending time together. And doing it more seldom makes it more of a treat or reward than it being the norm.

Also, I drive 60+ miles a day for my commute. I paid off my modest car a few years ago and I was still spending about $250/month in fuel costs just for me. I was beginning to accumulate a list of maintenance items on my car that was topping close to $1500 (some of it was body work, and this was me doing all of the work myself). The car was approaching 200k miles, which is pretty good for an early 2000s American car. Anyhow, I had long wanted to get a Volkswagen TDI of some sort because they get great fuel economy. So, I had started saving up for a car and saw an ad at work for a 2002 VW Jettta TDI (same year as my current car, and about 15k miles fewer). I paid $4k cash for the thing, which was a bit high. Anyhow. I spend about $100/month in fuel now. I did make a 1 liter test batch of biodiesel and I am considering making it larger batches, but that is a lot of work for saving about $75/month (as it would cost about $25/month to make it assuming free waste vegetable oil).

I spend $400/month in fuel for my wife, and I bought her a new vehicle last year that is about $400/month in payment. I am thinking of trading it in a year for a new (or slightly used) VW Toureg TDI, as it is about the same size as our Chevy Traverse. The Traverse has been a disappointment. It is rated 24 mpg highway and 17 mpg city. We each drive 95% highway miles and she is only getting 19 mpg. We got it past the break-in period without much improvement. I was hoping for at least 21-22 mpg. The Toureg TDI is rate at about 28 mpg highway and it actually gets pretty close to that mark. Of course, the wife wants an Audi... I told her she would have to wait until she is working to get that (she is a full-time nursing student, at the moment). The Audi Q7 TDI is the equivalent to the Toureg. I told her she could get that, or if she tops $60k/year, she can buy the new Porsche Cayenne turbo diesel that is coming out for the 2013 model year... 400 hp, 30+ mpg highway. But, she has to earn it.

Now, that Traverse was the first new car I have purchased. I usually buy modest vehicles that are 2 years used and drive them until they are ten years old, or older. I think that I will continue that with her (but maybe it will be a new vehicle, instead) and then I may eventually get a newer VW Passat TDI and keep the Jetta around to lessen the miles on the newer vehicle.

Honestly, for you, you probably need to start taking a look at where your money goes. It is hard to say where you can cut expenses without knowing what you are wasting cash on. If you are still living with your parents, however, there is no way you should be spending more than ~$200/month on any financed vehicle for probably the next ten years, if not longer. Ideally, you wouldn't finance a vehicle, but that doesn't work out for everyone (I am only able to get down to one financed vehicle for my family... so I am not perfect, either). Best wishes.

MickQ

@Powerfool: Different 4x4s, same chassis

HLRS

If a person doesn't have a 401k is that bad? I know one person said he was against it because they money worth now is much more than in the future. so he rather invests in some other area. Money is always deflating down.

demonfurbie

@powerfool, i know about driving i have a 150 mile a day commute and i had to get a new car (nissan versa) and i asked about the mpg ratings they said the highway mpgs are calcuated at 55 mph the standard highway speed not the interstate (70+) which most people now consider the highway.

and i wanted a tdi jetta but i couldnt come off that much cash this time, next time i most likely will

dave330i

HLRS wrote: »

If a person doesn't have a 401k is that bad? I know one person said he was against it because they money worth now is much more than in the future. so he rather invests in some other area. Money is always deflating down.

Don't listen to him.

Iristheangel

Inflation is usually between 2-4% while the rate of return for a 401K usually averages around 5-15% depending on the economy. In most cases it will be greater on average than the rate of inflation. Money being "worth less in the future" is the exact reason why you should invest today. Depending on your employer, they will match your contributions to your 401K to a certain percentage. This is free money if you are willing to invest.

spicy ahi

HLRS wrote: »

If a person doesn't have a 401k is that bad? I know one person said he was against it because they money worth now is much more than in the future. so he rather invests in some other area. Money is always deflating down.

If the company you works for offers a match, then it's a no brainer. All the money they match is free money that you've "earned" off the bat just for investing. Everything else earned is gravy for the most part. As with everything else in life, there are limitations and other things you need to learn. But on the whole, a 401k is a sound method of putting money away. El Goog could bring up a plethora of sites to help you learn more about 401k's to make a decision for yourself. I personally like 401khelpcenter and the IRS 401k website. They helped me learn a bit more about it. As for your friend, he may be right that there are better investments out there than a 401k, but they involve time and research that most working stiffs don't have the time or inclination to spend time on. I barely have enough time to keep up with learning and certifying in IT. I don't know where I'd get the time to learn about and effectively manage investments on my own to boot!