Saving and finances

Hey everyone,

I am unemployed at the moment.

I have come to a realization that when you had a high paying job and you spend alot of your money without a care on materalistic and high end things as well as drinking and parting etc, and when you lose your job its hard to stop your spending habits as well as cut back on your lifestyle.

Does anyone have any experience with this ?

Also how much of your pay cheq do you save and what are your general expenses?

Going from eating out 3 times a day in fancy places to eating at home is hard !

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sillymcnasty

Trader joes + Mint.Com

DatabaseHead

Yep, went through that years ago.

Had ~220,000 in debt, down to 160,000 now. (Almost all Mortgage).

I agree we were eating out daily, going out for drinks 2 days a week dropping 200 a night. It was wild, we cut that crap back a while ago though so if we do get laid off, no big deal.

Hope you get a job soon!

dave330i

Wife and I max out our 401k, we have 529 setup for our kids, our debt are mortgages (rental properties) and we live off my earnings and save hers. So we save 40-50% of our household income.

jamesleecoleman

I used to be able to save money. I saved up 20 thousand dollars, got another car that day. But I reached my goal of saving. Over the past year, I've been broke two or three times. Mostly because of hidden bills (bills that wasn't told to me). Now I'm in the process of saving and trying to build back up. I might need to get a second job.

My advice, which I've heard from somewhere else...
If it is cool, you don't need it.

NetworkNewb

dave330i wrote: »

Wife and I max out our 401k, we have 529 setup for our kids, our debt are mortgages (rental properties) and we live off my earnings and save hers. So we save 40-50% of our household income.

I've always considered the whole "rental properties" thing, the idea of a bad market and losing everything I own scares me away. No risk, no reward though right...

GSXR750K2

That sucks to hear. It's never good leaving a position under someone else's time frame. It's only happened to me once in 2007. I was collateral damage from a huge falling out between execs, so it was a fairly bogus deal. So bogus that I got three months severance...not something that typically happens when they have a good reason to let someone go.

Anyway, after that I adopted the "save now, play later" mentality. Like Dave, max out the 401k (helps on taxes too), and I max out a Roth IRA. The Roth doesn't help on taxes, but it is nice because if your back is really against the wall, you can withdraw your contributions without penalty...not advisable, but it's a last resort option. I don't carry much cash because it's harder to track "where it all goes", and seeing the numbers can really shed some light on habits that can be cut back or cut out. I've cut out a lot of toys over the years that were fun, but also completely frivolous.

When you're working, and if you have the self-control, you could use a rewards card for the stuff you're going to buy anyway. I put just about everything on my Discover Escape card and the miles have paid for several vacations for me and my girlfriend as well as many Amazon purchases for computer parts that I sell to clients. I almost feel bad for it sometimes.

Kevin Hart had a good bit in one of his comedy routines...he no longer hangs out with his athlete friends because he can't afford to do what they do. It may suck, but saying "no thanks" to friends who act like ballers 24/7 may be required, if you have those influences in your life that try to pull you to the club. I saw a YouTube video a long time ago that stuck with me, the guy said, "A poor man plans for the weekend, but a rich man plans for the next 10 years." Good words to live by.

Best of luck.

-EDIT-

I left out regular savings. I set a minimum balance for my savings account and I treat it as my zero floor. I keep contributing to it so if I ever need to dip into it, there's a well-cushioned reserve for if/when the hard times come.

DatabaseHead

dave330i wrote: »

Wife and I max out our 401k, we have 529 setup for our kids, our debt are mortgages (rental properties) and we live off my earnings and save hers. So we save 40-50% of our household income.

How are the 529's performing? Grandparent (my parents) have a lot of wealth and always **** into the 529's for our 3 kids. Last I read there was some criticism. Just curious if it is unfounded or has some legs....

TechGromit

kalimuscle wrote: »

I have come to a realization that when you had a high paying job and you spend alot of your money without a care on materalistic and high end things as well as drinking and parting etc, and when you lose your job its hard to stop your spending habits as well as cut back on your lifestyle.

This isn't a cause and effect of having a high paying job, making you careless with money. It's a personal financial decision choice. You can't blame you problems on having a high paying job and now you don't. You need to plan for the future, max out your 401k saving plan, have a portion of your pay check direct deposit allocated to go into a separate savings account, to save for that rainy day. You shouldn't be looking for ways to cut costs and save money when your unemployed, it should be a lifestyle choice. There's nothing wrong with spending money on materialistic things, drinking and partying, so long as you do those things AFTER you take care of your emergency savings/nest egg/retirement savings first.

NOC-Ninja

Whats the point of savings? Retirement?

IMO whatever money you save is not enough to retire after you add up inflation. On top of that social security will probably be cut by then.

Although, my money is more than enough to retire at another country, in front of the beach.

Queue

What is the opinion on something like state retirement? I have to work here for a long time, but in theory getting a check for life at 57 is equivalent saving millions of dollars. There is no reason for me to use an employer 401 because it is not matched as they put in for your state retirement. Should I start an IRA? I need to probably talk to an accountant that can help me meet the sweet point between lowering taxes and saving.

My savings goal was to save up a 5 figure emergency savings account. At 10,000 it really is only enough for about 7 months of my current lifestyle to sustain in the event of loss of income.

Then I keep at least 2,000 in checking and use excess money to pay large chunks of student loans. I have 17,000 to go. I also have another bank account that money is auto transferred to $500 for a large purchase. I am doing the pay a car payment without one thing.

At the rate I'm going in a couple years I'll have a 30K+ paid off car (if I choose) and no debt except mortgage.

I never really changed my spending habits from when my income was low. However, I do eat at nice restaurants and don't look at prices as much as I could.

I'm 27

dave330i

DatabaseHead wrote: »

How are the 529's performing? Grandparent (my parents) have a lot of wealth and always **** into the 529's for our 3 kids. Last I read there was some criticism. Just curious if it is unfounded or has some legs....

The 529 are doing ok. Ours is good for any accredited college, so it gives us some flexibility. It also helps with our taxes and every little bit helps.

GSXR750K2

REDACTED

My personal opinion on things like state retirement/pensions/etc.? Don't count on them. The anticipated returns on the vast majority of those plans are a pipe dream and are why many of them have either failed or are failing. Take a recent example from the city of Dallas, TX...when the firefighter/police pension was set up (back in the 1980's if I recall), it was calculated with around an 8% return for life in mind, which is asinine, and now it is severely underfunded because the ideal scenario it was built around didn't play out. Other parts of the world are more realistic in the expectations of return performance, which is why they are able to provide the types of pensions/retirement they do.

For young people like you and I (I'm 34, so young-ish), a Roth IRA is a great way to save tax-free, especially if you expect to retire in a high/higher tax bracket. The contribution limits are less than a 401k ($5,500 if under 55, $6,500 if over) and it's after-tax, so no help on your 1040 filing, but the total balance isn't taxed at retirement. There are income limits and contributions get phased out at an AGI of $117,500 if filing single, if I recall, but that may not be a concern to you yet. In the end, it comes down to being taxed now instead of later compared to a 401k, and since yours is in the hands of the state, ehhhhh.... I'm not a tax guy, so consult a pro.

Call me cynical, but no one is going to look out for your future more than yourself. Hopefully I'm wrong and you get a nice state retirement that will only add to the nice nest egg you will have built for yourself over time.

-EDIT-

He deleted his post, so I deleted the quote.

Verities

kalimuscle wrote: »

Hey everyone,

I am unemployed at the moment.

I have come to a realization that when you had a high paying job and you spend alot of your money without a care on materalistic and high end things as well as drinking and parting etc, and when you lose your job its hard to stop your spending habits as well as cut back on your lifestyle.

Does anyone have any experience with this ?

Also how much of your pay cheq do you save and what are your general expenses?

Going from eating out 3 times a day in fancy places to eating at home is hard !

1. Define short term and long term goals.
2. Determine your Net Pay.
3. Create an estimated budget; how much do I NEED to survive (i.e. rent=$xx, food=$xx, gas=$xx,etc) and ask how much should I save to reach what I listed in step 1?
4. Stick to your budget. At first it will be hard, but in time you will see the benefits of it and it you will not worry as much about finances.

Dakinggamer87

I max out my 401k and IRA then adjust my spending to what I truly need. I would rather have that money to travel the world then a ton of expensive toys that will come and go. I still make room for games in my budget. At the end of the day personal finance is just what it is. You have to decide what truly is important to you. Anything extra I throw into a brokerage account or my emergency fund to balance inflation/long-term goals. I contribute 30-35% to my retirement/goals.

My advice pay off your debts to funnel your savings!!

Verities

Forgot to add in thoughts on investments....

1. Start adding a small sum into a savings account, could be $50 a month.
2. Start with a small sum, could be $50 a month investing into a Roth IRA. If you have a long time to go before you retire, tell them to be 80% aggressive, 20% conservative (you will see higher returns in the long run).
3. Adjust your budget (this could be monthly or every couple of months depending on your debt, spending habits, or if you get a higher paying job).
4. As stated above, take into account the inflation that will occur over time and consider investing more into your retirement account.

p@r0tuXus

NOC-Ninja wrote: »

Whats the point of savings? Retirement?

IMO whatever money you save is not enough to retire after you add up inflation. On top of that social security will probably be cut by then.

Although, my money is more than enough to retire at another country, in front of the beach.

I'm in agreement with you to a point. Saving in $US and accounts that deal with them might be a gamble if recent history and current market situations are any relevant concern. Everybody preaches diversification between stocks, commodities, currencies and assets. I consider the words of advisors and analysts with a big grain of salt. Even in the great depression there was a confiscation of some assets by the gov't and others by the banks and holding companies that liquidated the ones that closed. I find it interesting all the biases that come into play (ie. normalcy, recency... etc.) and alternatively the hyper-paranoid fear-dealers you hear on the regular. I honestly don't know what'll happen, but mathematically the US is far in debt ($20 Tril) with a reserver currency and over leveraged with record high market levels and seemingly manipulated commodity markets. It's not just here, the whole world is connected now. With Quadrillions of dollars leveraged in dirivitive markets the next blow could be biblical, right? So what's one to do?

Blucodex

Are you single? Go overseas for a year. Get your clearance and come back with cash in hand.

gespenstern

I'm 40, married with kids, wife stays home, have 0 on 401K. Never lived a lavish lifestyle. Don't spend much on myself, have 2006 car, no hobby purchases at all, run a home PC that was last upgraded in 2011. Luckily, my work gives me a phone.

If I was single saving would be a piece of cake.

hurricane1091

The old saying goes that you never really have more money. Better job = better car, better house, better clothes, etc. Those things can still come into your life though while saving, if you don't go over board and buy double the car because you make double the money now.

Personally, I drop 10% into my 401k, and I'd like to go higher. I'm not so concerned with other investments, because I am going to be getting a house within a year and I'll probably focus on paying that off aggressively while still adding to my savings account. Real savings won't happen until after that dust settles in 15 years or whatever, but at least I'll be putting 10k+ a year into my 401k in the mean time. I'm rather young though, and everyone is at a different point in their life. I don't sit here and say "I have X amount of dollars a month, I can afford X payment" until I spend 100% of monthly net income. I think people are guilty of that honestly. Just because you make enough to afford a $650/month car payment doesn't mean you should do it if it's at the expensive of saving.

Priston

When I started living on my own I made a rule, always have more money in your bank account at the beginning of each month than the previous month (Don't spend more than you make!) Now I've got 1 year of expenses saved up, I'm thinking about changing my rule from monthly to quarterly. I'll also make an exception when I buy a new car and when I buy a house.

Remedymp

Saving is relevant to where you retire.

tedjames

Back during my Motorola days in the '90s through 2001, I made a good salary and lived paycheck to paycheck, eating out for lunch every day, stopping for soda and breakfast tacos every morning, just blowing through each paycheck while of course keeping up with my bills. It took a long bout of unemployment (high tech layoffs of 2001) and going back to work making $11k less than what I made at Motorola and coming back with a ton of debt for me to realize that I needed to change my ways. That's when I created a spreadsheet with all of my monthly obligations and created goals for saving and getting out of debt. I started bringing my breakfast and lunch to work. No more needless spending. Why do I need stuff? It just takes up space in the house. Now I have little debt other than a car note (zero interest) and mortgage. I also have a nice savings account. No more impulse buying. I'd rather spend my money on experiences, like the UK trip we took last year. Saved for a long time to pay for that.

JoJoCal19

dave330i wrote: »

Wife and I max out our 401k, we have 529 setup for our kids, our debt are mortgages (rental properties) and we live off my earnings and save hers. So we save 40-50% of our household income.

Good on you! I'm working towards the same setup. My wife is finally working again (subbing part-time, but will be teaching full-time in the Fall) for the first time in 7 years, basically since we started and expanded our family, and we are working on paying off all debt other than mortgage and Federal student loans. We will be banking all of her income and a good part of mine. I need to look into the 529 more as we want our kids to go to school debt free and not be like us.

NetworkNewb wrote: »

I've always considered the whole "rental properties" thing, the idea of a bad market and losing everything I own scares me away. No risk, no reward though right...

Real estate investing when done properly is safer and brings better returns than stocks, 401k, IRAs. The key is 'done properly'. Folks who lost their asses in the market crash were ones who weren't properly cash flowing, didn't have reserves, and leveraged their properties to the hilt. The fact is that after the crash the rental market boomed. People who had proper reserves, didn't fully leverage their properties and use them as ATM machines, and had the proper cash flow ratios didn't lose their properties, but actually were able to expand their portfolios and add more.

JoJoCal19

Also, YouNeedABudget is the best thing ever. HIGHLY recommend it!

BerkshireHerd

JoJoCal19 wrote: »

Also, YouNeedABudget is the best thing ever. HIGHLY recommend it!

Amen to that!

TechGromit

NOC-Ninja wrote: »

Whats the point of savings? Retirement?

IMO whatever money you save is not enough to retire after you add up inflation. On top of that social security will probably be cut by then.

So your suggesting don't save because it probably will not be enough to retire on anyway? I disagree with your strategy. My biggest regret with my 401k is not started saving at 21, instead of waiting till I was 28, even with a modest income of 50k a year, 6% 401k withholding, at 3% interest return on investment over 46 years is 1 million dollars. While 1 million dollars may not be enough to retire on, it certainly better than nothing. And it has minimal impact on your lifestyle.

jamesleecoleman wrote: »

I used to be able to save money. I saved up 20 thousand dollars, got another car that day. But I reached my goal of saving. Over the past year, I've been broke two or three times. Mostly because of hidden bills (bills that wasn't told to me). Now I'm in the process of saving and trying to build back up. I might need to get a second job.

I feel you, I saved 150k in my 401k before I got married, in the last 10 years since being married, I was only able to save 30k and my 401k before is only worth 175k. I'm in the process of getting unmarried, so in a year I expect to be saving the Max allowable per year, I should just hit the 1 million mark as I turn 67.

Ismaeljrp

If you begin saving early enough compounding interest can offset inflation, and if you invest enough and reinvest the earnings it can grow at a faster rate. Thing is to have a good 401k, not all 401ks are equal as too many have high fees that cut in to your potential earnings. You can also try an IRA of your liking, and probably even better invest in an index fund using passive management. You can read some of John Bogle's books. Also, Tony Robbins published a book recently that is really handy.

kalimuscle

With any retirement saving schemas such as 401k you have to wait till you are 50 to be able to get the saved funds back. What is the point? Honestly I am not trying to be funny here but I do not believe I will live to be 50

NetworkNewb

kalimuscle wrote: »

With any retirement saving schemas such as 401k you have to wait till you are 50 to be able to get the saved funds back. What is the point? Honestly I am not trying to be funny here but I do not believe I will live to be 50

A quick Google seach will explain how they are profitable. But a quick summary is you get to put money in pre-taxed and that money grows. So your money grows faster instead of getting money after it getting taxed and that money growing. Not to mention there are many companies out there that actually do 401 matching and matches the money you put in to your 401, aka a bunch of free money (up to a percentage usually). But if your not gonna live very long you probably don't have to worry about saving anyways.

dhay13

I don't see the logic in not participating in a 401k unless you truly need that money to live off of but at that point you may be further ahead getting a 2nd job so that you can contribute up to the company match. Most companies, at a minimum, will initially match 50% up to your 6%, so you get a free 3%. That is a 50% ROI. Kinda hard to get that anywhere else!