Like others have said, this thread is great. I won't re-hash what everyone has said already, but here's one thing I started doing early on as a habit that turned into a really good thing later on. When I was 18 or so (33 now), I started sticking 10% of everything I made in savings. Not rigidly, back then I waited tables, so every time I worked I'd throw a 5 spot or something into my stash (or a buck or two even on a slow night.) I made myself do it unless I absolutely couldn't get by w/o it. That money back then was for "important stuff" like deposits on rent, or if I needed that "emergency" car money to get back on the road (NOT MOD MONEY... my project was my only car.) It was not to pay normal bills or play with at all. It wasn't that hard to do, it was one or two less beers after work. Just forget it's there. Then, as I got older, I kept doing that, and as I made more money, it started to become significant. I tried to keep rougly the same lifestyle, so I was able to start saving more (and worrying less!) That was the money I used for house downpayments (put down 20% so I didn't have to pay Private Mortgage Insurance and throw away an extra $100-200 a month!! (now you can do an 80-10-10 or 80-5-15, but that 's a whole different thread.)) And now it's building back up to do who knows what... refinance, pay more down on our next house, or add to my daughter's education fund, or heaven forbid, pay for any medical surprises that might come up, etc. (I've got decent insurance, and still, I just spent roughly $1500 out-of-pocked to have the ACL in my knee reconstructed) Also, I split it up, so some goes to the "important stuff fund" some goes to the 401k (enough to get full match from my company), and some goes to a small "car fund." It's all done automatically from my direct deposit, so I never see it, never miss it! It is hard to do sometimes, and I have had to dip into it on occasion to make ends meet. But doing that occasionally is far better than not trying to save at all. Anyway moral(s) of the story: 1) Save money and forget it's there, even if it's painful. 2) Don't pay Private Mortgage Insurance, beg, borrow or steal enough to get the 5% needed to get a 80-5-15 loan. (Otherwise you pay an extra couple hundred bucks a month until you have 20% equity in your house!) This place rocks!
Scotth, That's damn good advice ESPECIALLY the part about having it done automatically (electronically) so you never miss it. I do the same thing for my "dragster fund" - a little each week deposited automatically. I never miss it. MINIMALLY---> Cashing in on your employer's 401k match is a MUST!!! UNLESS you're already so rich you don't need any FREE MONEY. I would bump my 401k contribution with each raise I got - rasises were often so meager that to keep it would be almost un-noticeable so what beter way to forget about it than adding it to your 401k. BELIEVE ME!!!! It does add up - mine's already enough to pay off every bill I have including my house (not that I can or would) but the point is that there's NO WAY I could have saved that much dough up otherwise. Here's another method (of argueable value) --- I would always claim ZERO deductions so I could ensure getting a refund. Yes yes my 'smarter' friends told m ehow stupid THAT was since I was letting the government hold MY money when I could invest it and get the interest - and while they were RIGHT - they didn't understand my lack of disipline - by letting uncle sam hold my dough I couldn't piss it away 5 bucks at a time. Instead I would get a decent return that was enough to go get some really cool tools or whatever. Point here is that while some methods make more financial sense than others - they don't make ANY sense unless you DO IT. Find a way to save that works for you - what ever it is. As you get more disciplined - you'll learn better ways to invest it - save it - spend it - whatever. And here's the best advice I have ever gotten about money....."NEVER SCREW A FRIEND FOR A DOLLAR" Really think about that one - before just nodding and thinking how much sense it makes. Them's HARD words to live by - for some.
The Jalopy Journal
