| How much should I be saving? |
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bijan814
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| How much should I be saving? |
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How much should I be saving? I'm 23 years old I make $2300 a month. I live at home. At of that money, how much should I be saving every month?
What is a good percentage to be saving.
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Sun Nov 12, 2006 5:39 pm |
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rockhound
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| Quarters |
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I think one of the rules of thumb used to be to divide your take-home pay into quarters: 1/4 for rent, 1/4 for a car payment, 1/4 for living expenses, and 1/4 for savings. So that would be saving 25% of your take-home income. However, since you live at home, if you don't pay rent then you could be saving 50%. You may as well save as much as possible now when you're young and have the opportunity, because soon you may be thinking of buying a house, or a nicer car, and that is aside from contributions to a retirement fund. When looking at the 25% savings, I consider the cash emergency fund (now suggested to be more than 6 months equivalent of your regular salary) to be separate from the contributions going toward an IRA or 401(k) plan.
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Sun Nov 12, 2006 10:03 pm |
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bustour
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Save as much as you can while you're still young. I'm only 35 now, but I sure wish I had saved more when I was in my 20s. If you're able to save on living expenses for while by staying with the folks, put that money straight into the bank or a CD or something safe. Take rockhound's advice on this one.
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Fri Nov 17, 2006 5:46 pm |
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bijan814
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| Re: Quarters |
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quote:
Originally posted by rockhound
I think one of the rules of thumb used to be to divide your take-home pay into quarters: 1/4 for rent, 1/4 for a car payment, 1/4 for living expenses, and 1/4 for savings. So that would be saving 25% of your take-home income. However, since you live at home, if you don't pay rent then you could be saving 50%. You may as well save as much as possible now when you're young and have the opportunity, because soon you may be thinking of buying a house, or a nicer car, and that is aside from contributions to a retirement fund. When looking at the 25% savings, I consider the cash emergency fund (now suggested to be more than 6 months equivalent of your regular salary) to be separate from the contributions going toward an IRA or 401(k) plan.
but I pay for school, just to let you know, I pay 500a month for school. Should I get a loan for that. OR just pay right away?
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Wed Dec 20, 2006 9:41 pm |
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JCook
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Do not get a loan for the schooling. As long as you are at home save as much as you can now while you are young.
Let's say you save $100 each month until you are 63 at 8% interest you will have $335,737.
If you can save $500 each month until you are 63 at 8% interest you will have $1,678,686.
It is easy to see how starting with as much as you can while you are young can add up with the power of compounding interest.
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Fri Dec 22, 2006 3:29 am |
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more freedom
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Not only you should save money, but also have your saved money working for you
You are probably paying too much taxes.
You can have tax advantages if you own a business.
Are you tax wise?
The typical employee’s income looks like this:
Work --- Pay Taxes --- Spend what is left over.
The typical business owner's income looks like this:
Work --- Spend --- Pay taxes on what is left over.
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Thu Jan 04, 2007 11:12 pm |
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rockhound
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| Re: Quarters |
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quote:
Originally posted by bijan814
but I pay for school, just to let you know, I pay 500a month for school. Should I get a loan for that. OR just pay right away?
I would not get a loan becaue you seem to have enough cash to cover it. The quartering method is applied to your take-home pay, and even if that is less than $2,300 you can still easily pay tuition every month and still save a lot of money. To go further, when you have saved up 6 months' worth of living expenses, anything extra should start going to an IRA, a mutual fund, or at least a CD.
In general, I would not get a loan for anything I could pay for outright. The exception might be if the interest you pay on the loan is less than interest the same money would make in some investment. Even that should only be done by somebody with the self discipline to actually understand how that interest relationship is working, otherwise they run the risk of spending the same money twice.
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Sat Jan 06, 2007 7:24 pm |
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bijan814
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| Re: Quarters |
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quote:
Originally posted by rockhound
quote:
Originally posted by bijan814
but I pay for school, just to let you know, I pay 500a month for school. Should I get a loan for that. OR just pay right away?
I would not get a loan becaue you seem to have enough cash to cover it. The quartering method is applied to your take-home pay, and even if that is less than $2,300 you can still easily pay tuition every month and still save a lot of money. To go further, when you have saved up 6 months' worth of living expenses, anything extra should start going to an IRA, a mutual fund, or at least a CD.
In general, I would not get a loan for anything I could pay for outright. The exception might be if the interest you pay on the loan is less than interest the same money would make in some investment. Even that should only be done by somebody with the self discipline to actually understand how that interest relationship is working, otherwise they run the risk of spending the same money twice.
By I rather pay that monthly, isn't true if I pay it monthly its tax deductible
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Sun Jan 14, 2007 2:43 am |
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bfanalej
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| start saving to invest |
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it's really not how much you're saving???
what are you saving for? figure out where you want to go next, if its out of your parents house, buying a car, etc and start moving towards that.
or if you invest or play with stocks/bonds, do research and plan on what stock and how much stock you're going to buy.
basically, SET GOALS, and move toward them...that will tell you how much you need to save
-brian
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Fri Feb 23, 2007 2:50 pm |
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ap76
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| financial planning |
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These are all great replies for the most part but dont be so quick to rule out taking a student loan. Student loans and mortgage loans are the best form of debt because you can deduct the interest paid (mortgage interest only if you itemize) and you are investing in an appreciating asset (a home or yourself). This is opposed to a car loan which has neither of these positive characteristics. If you can get an after tax return of better than your after tax interest rate on a student loan then by all means take out the student loan.
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Tue Mar 06, 2007 5:35 pm |
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neilgomes
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the best saving technique is to pay yourself first. Take some of your saving and put into a bank as a long term saving. then another to your emergency saving. Emergency saving is used when someone got hurt, need to go to the hospital..etc..etc but not for expenses like food.
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Wed Apr 25, 2007 10:51 am |
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oldguy
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bijan.
What you do with 'savings' is far more important than how much you save - consider 3 examples:
Ex #1 - Save $200/m in a 12% fund for 35 years = $1,160,000.
Ex #2 - Save $200/m in a 5% CD for 35 years = $228,000.
Ex #3 - Save $39/m in a 12% fund for 35 years = $228,000.
And 'when' is also very important -
If you wait 10 years and then start, example #1 looks like this -
Save $200/m in a 12% fund for 25 years = $358,000.
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Thu Apr 26, 2007 4:55 pm |
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wise_owl
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| using financial software for budgeting |
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hi i suggest using a financial software program to budget your finances. you can keep track of all your expenses and track your spending history. i recommend this one here: [edit] as i am using it too and its really affordable
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Mon May 07, 2007 1:03 pm |
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neilgomes
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Location: Malaysia, Sabah
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| Re: using financial software for budgeting |
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quote:
Originally posted by wise_owl
hi i suggest using a financial software program to budget your finances. you can keep track of all your expenses and track your spending history. i recommend this one here: [edit] as i am using it too and its really affordable
hmm...wise_owl..strange name. Are you from 15daily? 
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Mon May 07, 2007 2:40 pm |
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Case-Face
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Joined: 21 May 2007
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Take advantage of living at home! I would definitely save AS MUCH as possible if I was in your situation. If you do pay rent, it's probably not as much as me (or a lot of people), so given the luxury of living at home, I would save almost half of what I earn each month. Just calculate general expenses each month and then place the rest in savings, stocks, bonds, etc. Run w/ the opportunity.
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Wed Jul 11, 2007 5:19 pm |
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