Saving with an I.T job

paul78

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.

It's not actually money that is deflating down. In general economics terms, you are experiencing inflation which is the rise of the prices of goods and services. The reason why people suggest a 401k plan in the US is because of several factors.

1. A 401k plan reduces your tax burden because what you deduct from your paycheck reduces your taxable income.
2. Any proceeds derived from investments in a 401k plan is non-taxable income until you retire. This has the effect of increasing the compound growth of the account over time.
3. The rules of a 401k plan encourages savings since you cannot easily withdraw funds without a penalty. (some exceptions exists for certain reasons which are quite reasonable)
4. Many employers will contribute a percentage of employee contributions to a 401K plan.
5. If you do not know anything about investing, most 401k plans are managed using mutual funds so it can be an easy way to learn for the future.

It often surprises me to hear when people in the US who are eligible for 401K plans do not contribute, especially if their employer will also match contributions. That's simply just turning-away an employment benefit which is part of someone's compensation.

Other countries have different mechanisms to encourage savings - one that I find interesting is the system of Superannuation in Australia. In Australia, employer's pay a portion (currently 9% but will change to 12% next year) of the employee's salary directly into the fund. I'm sure that the members of TE from Australia can probably comment more if they find mandatory savings good or bad.

Roguetadhg

Buying things, cars, eating out isn't the only way to find yourself in an eye-ball height debt. It's going to be a really hard slap of reality when it hits...

For me, it was illness. I had to goto the ER (Fiance forced me to go) to have my arm looked at.. morphine, drugs, and surgery added up to 4K. in debt. Per doctor - I was Dying. I've seen doctors bills much higher, such as a heart attack which can go upto 760k. - At this point it's hard to not think "They should've just let me go" because of the hardship and stress for a family. It's something you really do not want. Not to mention, I like my solid food. I don't want pizza juice through a straw.

Recently My Fiance got put on temp leave (Client needs went away), so she's without a paycheck, making me the sole breadwinner. I've already planned for this when she started work, and told her we're moving out when the lease is up. She didnt believe me she'd be laid off due to manager / rumor promises. I was right.

For me. In terms like these, thinking outside of the box to try to get above water is the only way I can think of. My hobby is studying for certifications or other books, and going to the gym.

I have an excel sheet of my bills, what is paid, how I get paid, I track everything financially.

What I suggest, and it may take a month or two - Open an excel sheet or even open office. put down the bills, separately. Put down your pay. I use tabs labeled:
"Bill Calendar" - When are things due?
"Bills" - Tracks What company, date due, amount, total amounts, paid towards bill, Account information, address to mail bill, telephone numbers. For each bill.
"Bill Tracker" - When things get paid. I definitely need to rework this layout though. It's combersome.
"PayChecks" - Tracks Pay dates, Pay Rate, PTO time, hours listed, Gross / Net pay printed, and calculates the Gross / Net pay. Exemptions - as well as what all is taken out, for what tax. With the tax amount, im able to check the printed amount against what it should be. Just in case.
"Gas" - How much I spend in gas. I keep the crumpled receipts, and put them in. Date.

However, these are my tips for everyone, generically speaking:

1) First Your bills: Can you lower your bills? Are there any alternatives?
Phone: I use a tracfone, instead of a monthly phone contract.
-- 90 Bucks for an iPhone w/ 450 minutes.
-- 80 bucks, 900 Minutes. Double Talk time. There's even a phone with Triple talk. I use my phone as a phone.
I bought an iPod Touch for the applications I might need.

Cable: Do you really use that cable TV? How about using Hulu, Youtube, Netflix or some other Video service?
Internet: Downgrade the speed?
-- Despite the arguments from an AT&T rep who have stated that they watch Netflix and can't live without the Tier 3 speed and warned me of impending doom if I downgrade to Tier 1... I downgraded and there wasn't any noticeable difference. I seen a loading bar once, at the start of the movie. I just put it on pause, and get a drink. Come back and play.

Rent: Can you downsize your apartment? Relocate?
Car Insurance: Increase deductibles? Different company. This isn't so easy sometimes. Take the time to think if you could actually do with a higher deductible. I mean this as "Can you get your car out of the shop?" Mine's at 250. 500 Bucks is a lot of money to find if you don't have it.

Gas & Car: Could you walk or ride to work? There's more to a car than just adding gasoline - Oil, Checkups, possible colissions... Evey mile you put on the car is a mile closer to more money spent. I count Gas as a bill, since it's needed and it's steady

I know, finding alternatives take work, and it takes time, and hell it's unthinkable to go from "ZOMG SPEED 33 Mbps" to "2 Mbps".

2) Your Income. You can probably boost it and give yourself a small raise.
- How much do you make before taxes.
- How much do you make After taxes. (What you actually get)
- What gets taken out per paycheck?
- Keep track of each pay check. I recommend this.

Most people allow 0 tax deductions in hopes for a large refund. I recommend claiming everything you can, and get a small refund back. I clam 2.
What do I mean? Here's 2 paychecks that'll show you what I mean:
1308.44 (Pre-Tax) 0975.35 (Post) - 0 Exceptions
1268.69 (Pre-Tax) 1021.80 (Post) - 2 Exceptions
Yes, you see right. I made less money one check, and got to take home more money. Brilliant! Difference: 46 bucks. What could you do with 46 bucks? I could put gas in my tank from Empty.

I've heard you can claim more than 2. My fiance tells me I should claim 3. If you claim too much, you may become the focus of the government's attention by way of an Audit. Usually isn't an issue unless you try to get money back for traveling, and stuff that is well beyond my knowledge.

3) Put the money away before you get to use it. Make it a habit to take 5% of your check away into the bank. Before you do anything else with it when you get home.

4) Put money in your wallet. Put 20 bucks inside, Make a decision to use what you have and not a plastic card. For me, having money in my wallet and the act of seeing myself pull out green paper made me thing "Is this really worth my time at work for an hour?"

5) Buy in bulk, and Buy less. Yes. I said buy less.
While in the grocery store, buy the larger containers.
Anything perishable - fresh fruits, meats, fish - unless you can freeze them, don't buy in bulk. I only buy 3 bananas at a time. If I buy more, the bananas may goto waste.

While eating out, order the small portions of food. Not only is it going to probably be healthier, it'll be cheaper.
- I used to spend 11 bucks at Wendys. Not going to lie, I look like I'm a pregnant man.
- I now spend 4 and some change. Half-size Salad, and non-bottled water (Free).
Warning...Tap water may not be free everywhere. Check before you assume that it is.


It takes practice and discipline. And you won't be able to do this over night. But just do your best and if you keep thinking about it the more you do it, the more it snow balls better for you.

When you look at your bills - the bills that you really think you can't get rid of. You may. But you may not like getting rid of those bills.

Oh. If you have loans and credit cards, and bills of that nature. Take out the small loans first. Taking out the small reoccurring bills that you collected along the way, gives you more hope. It's like the light at the end of the tunnel. This also frees up money faster, allows you to put the money somewhere else. I'd put the money I freed up right back into the next loan.

I don't have a budget. Likewise, I don't have a diet plan. Both of which means 1 thing: I can't have nice things. I like having nice things! Yes, I **** on both the money and food, but I do right most of the time and fight the urges, the cheating are my rewards for doing right

What to do with savings? Buy medical insurance (see 4k Bill), Cisco Equipment, Have a savings account.

powerfool

Roguetadhg wrote: »

1) First Your bills: Can you lower your bills? Are there any alternatives?
Phone: I use a tracfone, instead of a monthly phone contract.
-- 90 Bucks for an iPhone w/ 450 minutes.
-- 80 bucks, 900 Minutes. Double Talk time. There's even a phone with Triple talk. I use my phone as a phone.
I bought an iPod Touch for the applications I might need.

StraightTalk offers unlimited voice, text, and data for $45/month. You need an AT&T capable phone, as it uses AT&T's network. I am thinking about switching when my contract expires. However, I would only be savings about $20-35/month on all of my phones.

Also, keep in mind that it is more valuable to save a dollar than it is to earn another dollar (although I wouldn't turn down either!). When you save a dollar, it is tax free... and when you earn a dollar, it isn't... for some people, depending on where you live and how much you make, that extra dollar of income may only be worth about $0.50.

If you have your choice of retirement vehicles, give a Roth IRA a serious look. You use taxable income to invest, but earning are withdrawn tax free. One of the great things about a Roth IRA is that you can go the self-directed route and use those funds to buy essentially any investment that you want (e.g. gold, a McDonald's franchise, a rental home, etc.). If you choose wisely, you could have something that creates an ongoing cash flow. Then, when you finally pass on, you can bequeath the IRA to your progeny and it is still tax free income; just install a good work ethic ("The reason my family has lasted for such a long time is that none of us is permitted to think he is born a d'Anconia. We are expected to become one." --Francisco d'Anconia, Atlas Shrugged)

halaakajan

Invest in Gold The estimated prediction is that Gold will go up by 100-130% in 5 years.

Roguetadhg

investing in blue chips. anything for any decent income would take a great deal of cash to see even a small return. That's what deters myself from going blue chip. I'd need to invest 700K before I make what I make now (If I remember correctly). I'd need to save, without having anything to my name for 39 years...

Looking at CME Group @ 287.93 with Div Yield of 3.1... Good example, they're now worth 50.90. Jinkies.

EV42TMAN

When i bought my house i had to do an exercise for my loan called "identifying spending leaks" basically you go through what you spend money every day/week/month and see where your money goes. its interesting if you've never done it. otherwise i suggest using mint.com to track you're money it automatically sorts where you're money goes and you can easily identify spending issues and create goals.

Iristheangel

Roguetadhg - I had Metro PCS for the first two years in IT since it was $50/month. They're pretty great too if you're looking to save money. Also, your signature made me giggle.

EV42TMAN- +1 to Mint.com. I tried it out and it's not bad. I couldn't really keep disciplined so I switched to my little non-fancy Excel spreadsheet but I know a lot of people who really got some great use out of it

Tackle

WOW! I wish I could save 30-40% of my income. Almost 50% goes to rent (18%) and student loans (min payment is 29% of my monthly income). Not complaining, just jealous. Should have been more money conscious before starting college. I'm looking at getting a newer (03-06) vehicle as my '98 is starting to cost more to fix than it's worth. There will be only a few bucks after all bills and minimal entertainment for savings.

I think I need to get paid more

Edit: I do keep an Excel spread sheet to track my spending/income. It helps, and is nice to check back to prvious years.