spikeymikey
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| To save or spend??? |
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I recently read "Idiot's guide to personal finance in you 20's and 30's." In the book the really hammer on starting for retirement early. They show a chart where person "A" starts putting away 2 grand a year into a 401k when he's 21 and keeps doing it till he's 29 and stops. Based on 10% growth per year he ends with $839,396.00!!! Person “B” starts 2 grand a year contributions at 35 and never stops till he is 65 and only ends with $658,015.00!
I'm 23 and my 401k account balance is a little over $5,000.00 I recently increased my contribution rate to 25% which breaks out to about $6,750 per year. (I'm still in school.) But my girlfriend just bought a car and I'm a little jealous. With my contributions maxed I’ll have to keep the car I have now (94' ford explorer) I told her I was jealous and she told me to go buy a car, so I laid the figures from above on her and told her I will be in great shape the earlier I start. She was like "but you don't know if your going to make it to 59" "You need to enjoy yourself now!"
Should I cut it to 10% and throw some money around well I am young or keep plugging away?????
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Sun Apr 30, 2006 12:00 am |
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spikeymikey
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Ok but even if I live to be 90.....You're only young once? Do I really need to put away 25% just because I can? I mean people could drive BMWs and work at McDonalds if they lived with mom and dad forever but they don't.
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Sun Apr 30, 2006 1:12 am |
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spikeymikey
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I suppose you are right but does that mean I need to save 25%? Whats wrong with 10%?
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Sun Apr 30, 2006 1:32 am |
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Kiaser
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| Re: To save or spend??? |
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quote:
Originally posted by spikeymikey
I recently read "Idiot's guide to personal finance in you 20's and 30's." In the book the really hammer on starting for retirement early. They show a chart where person "A" starts putting away 2 grand a year into a 401k when he's 21 and keeps doing it till he's 29 and stops. Based on 10% growth per year he ends with $839,396.00!!! Person “B” starts 2 grand a year contributions at 35 and never stops till he is 65 and only ends with $658,015.00!
I'm 23 and my 401k account balance is a little over $5,000.00 I recently increased my contribution rate to 25% which breaks out to about $6,750 per year. (I'm still in school.) But my girlfriend just bought a car and I'm a little jealous. With my contributions maxed I’ll have to keep the car I have now (94' ford explorer) I told her I was jealous and she told me to go buy a car, so I laid the figures from above on her and told her I will be in great shape the earlier I start. She was like "but you don't know if your going to make it to 59" "You need to enjoy yourself now!"
Should I cut it to 10% and throw some money around well I am young or keep plugging away?????
Dude, you're getting advice from a woman who apparently is frivolous and has a few advantages over you in the money department. She can spend her dough and waste it on whatever, it doesn't matter because she really sounds like the type to be a paid for wife eventually and her hubby will take care of all her debts. Somehow I doubt if you get into financial trouble later in life a wife is gonna make all that better for you by paying it all off.
You're only young once but you'll still be young well into your late 30's or even later. Would you like to spend your 30's well off and can live comfortably with security or spend it pulling your hair out wondering if you can get that "big break" that'll take care of your financial trench you'll build for yourself by listening to her.
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Sun Apr 30, 2006 1:54 am |
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Kiaser
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quote:
Originally posted by spikeymikey
I suppose you are right but does that mean I need to save 25%? Whats wrong with 10%?
What's wrong is you never need to back off of retirement contributing. There's plenty of things that can change in a budget but that should be the last case scenario. Get that girl to cook for you at home sometime, stop having that latte ALL the time, cut back on junk you might buy, cuddle up with some TV instead of having nights out on the town all the time. You'd be surprised with cutting back on a few things here or there doesn't really affect the pleasures of your lifestyle but it can amount to a lot of money (car payment, etc).
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Sun Apr 30, 2006 1:59 am |
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spikeymikey
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Ok, here is the deal with the girl.....
She graduzted high school last year, she dosen't want to go to college she works at a car dealership (customer service) making $9.00 an hour. (I make 15 and am still in school) The difference is I pay for car insurrance, Internet, cell phone. Even though she is 20 and done high school her parents still pay her cell phone bill and don't charge her rent. So she can afford a 20k car on $9.00 an hour. She's not spoiled....well she is but she dosen't act like it....she does save a good deal of money. I try to explain to her that she needs to go to school cuz unless she marry's a rich man when she moves out $9.00 an hour isn't gonna cut it with all life's expences. But she's not worried about any of that right now cuz she's 20.
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Sun Apr 30, 2006 2:11 am |
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Kiaser
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quote:
Originally posted by spikeymikey
Ok, here is the deal with the girl.....
She graduzted high school last year, she dosen't want to go to college she works at a car dealership (customer service) making $9.00 an hour. (I make 15 and am still in school) The difference is I pay for car insurrance, Internet, cell phone. Even though she is 20 and done high school her parents still pay her cell phone bill and don't charge her rent. So she can afford a 20k car on $9.00 an hour. She's not spoiled....well she is but she dosen't act like it....she does save a good deal of money. I try to explain to her that she needs to go to school cuz unless she marry's a rich man when she moves out $9.00 an hour isn't gonna cut it with all life's expences. But she's not worried about any of that right now cuz she's 20.
I'd vote there is another reason she's not worried about besides being young. You put it best, "she marry's a rich man when she moves out".
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Sun Apr 30, 2006 2:14 am |
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spikeymikey
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I know her pretty well we've been together for a while. I really think it won't matter how much I make even though I plan on making a good deal of money, but I really think she just has no idea how expensive it is to totally support yourself. I think part of it is her parents still helping her out, but what can I do about that....I can't make her parents charge her rent and make her pay for the cell phone...I wish I could. I think thats what I'm really jealous of, not the car, and not the parents, but her ability to not worry about the future....I wish i could do that some times. I know I'll be better off in the end but still.
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Sun Apr 30, 2006 2:27 am |
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Safora
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quote:
Originally posted by spikeymikey
I really think she just has no idea how expensive it is to totally support yourself.
I agree with you. She has no idea, but why would she. No one has ever made her. I think her parents have done her a huge disservice in that.
quote:
Originally posted by spikeymikey
I think thats what I'm really jealous of, not the car, and not the parents, but her ability to not worry about the future....I wish i could do that some times. I know I'll be better off in the end but still.
It is very easy to fall into the trap of jealousy. But I'm sure you realize that feeling jealous is not something to base your financial decisions on. You sound like you have a good head on your shoulders. Don't let this girl talk you into something you will regret for the rest of your life.
It is easy for her now, still living with mom and dad. And maybe she will marry rich. But life has a way of messing up the best laid plans. She may not have to worry about the future now, but what about when she gets older? She won't be able to take care of herself if someone has always supported her. And if you have spent those years investing, then it sounds like you will be the one that doesn't have to worry about the future.
Trust me on this one...Don't give up your financial security for anyone. It is not worth it. Besides I think this girl will respect you more if you stand up for what you believe in.
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Sun Apr 30, 2006 3:02 am |
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Stock Mama
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True, you're only young once.
But you're only old once, too. Why be old and poor and miserable when you can be old and rich and comfortable?
Besides, don't you know that guys get all the luck of getting more distinguished as they get older, and there's nothing sexier than a distinguished, rich, older gentleman?
So let your girlfriend have her toys if she wants them while you do the necessary work to build the future you really want. If you get sidetracked now, it'll be all the harder to get back on track later. Discipline is the key, and discipline is the only thing that makes a difference between a future of play or of hardship.
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Sun Apr 30, 2006 5:56 am |
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Mike K
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quote:
Originally posted by coaster
http://moneycentral.msn.com/investor/calcs/n_expect/main.asp
Now, doesn't that make you want to save even more? 
According to that i will die before i retire  Time to close out my investment accounts and have fun with my money 
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I am glad i read the whole thread before replying.... so i have to agree with just about everyone. At your age it sounds like you have what most of your peers dont, foresight. Most of my friends always thought about right now, hell most couldnt get out of the past let alone in the present.... stick with what you are doing it will pay off in the long run.
BUT..... BUT.... why work like a slave and save every penny for the first 50 years just to have financial freedome for the last 20? I am NOT saying go blow all your money or get that car you want, just be sure to have a little fun every now and then 
-Mike
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Sun Apr 30, 2006 1:22 pm |
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Mike K
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quote:
Originally posted by coaster
Well, c'mon Mike -- you gotta stop eating so many McBurgers!! 
mmmmmm..... buuurrrgerssss 
Actually, i rarely drink, never smoked, never have done drugs... must be my addiction to speed (see my new thread in the blue room) that knocked my life expectancy down 
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Sun Apr 30, 2006 3:37 pm |
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spikeymikey
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quote:
Originally posted by coaster
Well, c'mon Mike -- you gotta stop eating so many McBurgers!!
Mike makes a good point of moderation -- a good principal for finances as well as life: take care of your present needs; work toward your future; enjoy yourself with what's left after those are taken care of.
Ok but let's define "taken care of" because....like i said...I could put 10% in and then have enough to buy a new car. Are you saying taken care of = 25%?
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Sun Apr 30, 2006 7:26 pm |
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Kiaser
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quote:
Originally posted by Mike K
BUT..... BUT.... why work like a slave and save every penny for the first 50 years just to have financial freedome for the last 20? I am NOT saying go blow all your money or get that car you want, just be sure to have a little fun every now and then
-Mike
You're looking at the extremes here. You don't have to slave away without fun to live comfortably later in life. It's a balance you gotta look at. But with so many other options for saving a little for some "fun" cash, you shouldn't back off on investing for the future.
You seem like to have a strong head on your shoulders, but you're getting a little swayed by someone else's idea of lifestyle (who has nowhere near the experience you do with financial obligations and security). Sounds like she has absolutely no clue about supporting herself, or what it means to handle money for current and future security. Why on earth would you be swayed or jealous by someone in that position?
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Sun Apr 30, 2006 7:26 pm |
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