The Finances and Debt Thread

[Randolphkeys]

As for my wife. Shes been teaching for ten years and get loans are private not federal. Her district also didnt honor her out of state teaching experience so she’s paid like a first year teacher since we just moved to Cbus a year ago.

Oh those loans are pure poison. Well you are in the lean years, but it doesn't last forever. I am not the model of financial success, but I do agree that investing whatever you can spare in a stock package will pay off five years from now, and cut the private loan payoff date down.

Best of luck, and I really do think you are in good shape caring about finances at age 34. I started caring at about 40 or so.

 

[Chris]

Oh those loans are pure poison. Well you are in the lean years, but it doesn't last forever. I am not the model of financial success, but I do agree that investing whatever you can spare in a stock package will pay off five years from now, and cut the private loan payoff date down.

Best of luck, and I really do think you are in good shape caring about finances at age 34. I started caring at about 40 or so.

Thanks. We make enough money to be able to handle the debt while also having the luxuries of new cars, a house, etc so I don’t mean to whine and make it sound like we’re struggling to pay bills because we aren’t. Feel bad because not everybody is so fortunate.

If I knew anything about stocks I’d take that advice. Might be worth looking into though I think at this rate we have about five years left on her loans as is, even if we don’t up the payments.

Will survive!

 

[FiveThous]

The good news is they will probably raise the retirement age before we actually get to retire (36 here) so assuming an average of 7% yearly returns your money should still double 4-5 times! Take full advantage of whatever employer match you can and go from there, in my random internet person opinion.

 

[Chris]

The good news is they will probably raise the retirement age before we actually get to retire (36 here) so assuming an average of 7% yearly returns your money should still double 4-5 times! Take full advantage of whatever employer match you can and go from there, in my random internet person opinion.

Agreed - at this point I’ll just be happy to live to retirement. Don’t need to be rich.

 

[RonG]

It's not about being rich. 1.2 million doesn't make you rich. It's about quality of life and being able to support yourselves comfortably with out having to sacrifice. When do you want to retire, how much money will it take to live with out selling everything and staying home.

You should play around with some retirement calculators and get a good idea of what you are in for.

 

[Chris]

It's not about being rich. 1.2 million doesn't make you rich. It's about quality of life and being able to support yourselves comfortably with out having to sacrifice. When do you want to retire, how much money will it take to live with out selling everything and staying home.

You should play around with some retirement calculators and get a good idea of what you are in for.

Trust me, I know 1.2 mill doesn’t make you rich.

 

[RonG]

I'm 48, I'm just now starting again. I'm investing 5k a month into my fidelity account. I have 10 more years until I plan on soft retiring. Playing with the math I need around 3 million in investments to retire. I can do it, and not have to sacrifice much. However I'm done raising my kids. My point to my daughter was 500 over 25 years is a lot easier than 5k a month for 10.

As for tools I bought the motley fools sub to help me learn and give me additional investment ideas. I don't have time to day trade, so I'll buy and hold spend a few hours a week studying and watching my investments.

 

[FiveThous]

The other thing I’ll mention with regards to 401ks and I can’t remember where I read this but check your elections in your 401k and make sure the total expense ratio is less than 1%.

Again, I’m just some random internet person to you but from what I’ve gathered that should help minimize fees.

Target date funds, S&P index funds and things like that have much lower expense ratios than actively managed funds.

 

[AllforOne]

This is the kind of thread I need honestly. I’m extremely anxious about money, debt, and retirement, and my partner comes from a background of very little financial accumen, to put it kindly. Her parents are in their mid 60s struggling to retire and they let my wife take out $100k in private loans to pay for school to … be a teacher. So that debt is now my debt, obviously, and I’m not complaining as I always knew about it. But it adds to my anxiety about finances overall.

I turn 34 soon and feel shitty because while I’ve put effort into managing a 401k (and recently opened a Roth), I’ve only gotten into an actual well paying career as of last year, and haven’t managed to save a ton compared to my peers due to this.

1. You’re young. By way of comparison, I was in my early 40s with basically zero net worth before I changed what I was doing. I’m now in my early 50s and am much better off. I used to have that anxiety about money you describe - that is gone. You have plenty of time. Maybe not if your goal is to retire at 40, but otherwise, you’re probably ahead of the curve.

2a. I doubt your peers have saved as much as you think they have.
2b. Who cares what other people are doing anyway.

But we ain’t that young anymore so it’s always in the back of my mind. I can’t imagine where I/we’d be if I’d gotten into data analytics out of college instead of fucking around for a decade. Or if my in laws didn’t get their 18 year old 100k in loans to go to a private school to become a school teacher. Smh.

Can’t change the past though so I’ve accepted it and am just trying to keep the trajectory moving upwards. It took a herculean effort to get a Masters and make a career pivot at 32, so I’ve gained a lot of confidence all will be okay.

It will be okay (potentially/probably way more than okay) if you want it to be (sounds like you do) and take the steps to get there (sounds like you are).

And keep learning. To that end - here’s a great recent book on personal finance - (EDIT: this site doesn't seem to like Amazon links) https://www.goodreads.com/book/show/41881472-the-psychology-of-money

 

[Kouki]

Thanks. We make enough money to be able to handle the debt while also having the luxuries of new cars, a house, etc so I don’t mean to whine and make it sound like we’re struggling to pay bills because we aren’t. Feel bad because not everybody is so fortunate.

If I knew anything about stocks I’d take that advice. Might be worth looking into though I think at this rate we have about five years left on her loans as is, even if we don’t up the payments.

Will survive!

It isn't optimized return on investment but I really like my Acorns account. Their shtick is that you link credit card(s) and every transaction gets rounded up and it invests the "spare change." You can also do recurring investments, or change the round up amount.

$3 a month, my rate of return is around 30%

 

[gushoto]

Just wanted to jump in and say that really interesting approach you've got there. Your strategy has merit, but it's crucial to consider the following factors. Explore options for balance transfer credit cards with a 0% introductory APR. This could buy you time to pay down the principal without accruing more interest. Investigate personal loans for debt consolidation. Also, I'd recommend consulting with a professional to get personalized advice based on your specific situation. Personally, I lean towards getting advice from professionals like Equity Release Durham. It helps me steer clear of potential pitfalls like high-interest rates and unforeseen financial consequences.

 

[Mazer]

I thought I'd post a website I've been using for the past few months that uses "AI" to help pick ETFs and stocks that are likely to be the market average over the upcoming 3 months. I'm not affiliated with this site in any way - but I've put a portion of my retirement funds into the ETFs it has recommended, and it has been beating the S&P 500.

The site is https://danelfin.com/. It's been around for several years and has historical data that tracks its recommendations vs the S&P:



That being said, you just can't go wrong simply putting money back every month and investing in an index fund that tracks market performance like SPY. It's a no-brainer that doesn't require time for any research. And it will make you rich if you either start early or can do what RonG does by socking away 5k a month (wow!) later in life.

 

[AllforOne]

Just wanted to jump in and say that really interesting approach you've got there. Your strategy has merit, but it's crucial to consider the following factors. Explore options for balance transfer credit cards with a 0% introductory APR. This could buy you time to pay down the principal without accruing more interest. Investigate personal loans for debt consolidation.

As a general observation: this is a good mathematical answer and a not-so-good, potentially disastrous personal finance answer.

The whole point here is behavioral change. If somebody is in debt and they want to get out, they have to change the behavior. They can't keep doing the same things that they did before and get a different result. You have to become a different version of yourself. Same as if you were going to stop smoking, or drinking, or losing 30 pounds, or whatever.

The balance transfer and consolidation loans don't change the behavior. If anything, they reinforce it. They allow you to feel less pain for the debt.

Of course, if you consolidate a bunch of credit cards or cover them with a personal loan (or God forbid pay them with a second mortgage or a HELOC), then you're not only not changing the behavior; you're making it more likely for the behavior to continue. If anything, the person who consolidates $25K of credit card debt into a personal loan will, in one year, have a $25K personal loan ... and $25K in new credit card debt, thanks to having those cards available again.

The best way to think of personal finance is that it isn't math class. It's psychology class.

 

[AllforOne]

I thought I'd post a website I've been using for the past few months that uses "AI" to help pick ETFs and stocks that are likely to be the market average over the upcoming 3 months. I'm not affiliated with this site in any way - but I've put a portion of my retirement funds into the ETFs it has recommended, and it has been beating the S&P 500.

The site is https://danelfin.com/. It's been around for several years and has historical data that tracks its recommendations vs the S&P:

That being said, you just can't go wrong simply putting money back every month and investing in an index fund that tracks market performance like SPY. It's a no-brainer that doesn't require time for any research. And it will make you rich if you either start early or can do what RonG does by socking away 5k a month (wow!) later in life.

Interesting stuff and glad it is working out for you.

Following on your last paragraph, I am all about index funds. Set it and forget it.

And if anybody reading this is in their 20s or 30s ... start investing as soon as you can. Future You will thank you some day, big time.

 

[KI4MVP]

As a general observation: this is a good mathematical answer and a not-so-good, potentially disastrous personal finance answer.

The whole point here is behavioral change. If somebody is in debt and they want to get out, they have to change the behavior. They can't keep doing the same things that they did before and get a different result. You have to become a different version of yourself. Same as if you were going to stop smoking, or drinking, or losing 30 pounds, or whatever.

The balance transfer and consolidation loans don't change the behavior. If anything, they reinforce it. They allow you to feel less pain for the debt.

Of course, if you consolidate a bunch of credit cards or cover them with a personal loan (or God forbid pay them with a second mortgage or a HELOC), then you're not only not changing the behavior; you're making it more likely for the behavior to continue. If anything, the person who consolidates $25K of credit card debt into a personal loan will, in one year, have a $25K personal loan ... and $25K in new credit card debt, thanks to having those cards available again.

The best way to think of personal finance is that it isn't math class. It's psychology class.

Yes, but if you can do both, you solve the problem sooner.

I never, ever pay credit card interest, but I run as much spending I'm going to do anyway through credit cards to get the rewards. Usually 2% cash back. It takes discipline, though, to not spend more than you can pay. If you don't pay attention, it's easy to lose track. Even if you check your balance, it doesn't include pending charges.

But if you do it right, the credit card companies float you an ongoing interest free loan and pay you money to do it. Do it wrong and they bleed you.