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Dappered Financial Talk

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    There's so much being promised for this new update that I'm thinking of asking for some bigger things just to see what we can get. Say, moderators, how about free sandwiches?



      There's some great advice already posted so I will just add that for those with young children, like me, a 529 is great to start saving for college.



        Nothing really meaty, but interesting to see where the country stacks up.



          Great tips here guys. For those interested in investing, read "The Little Book of Common Sense Investing" by John Bogle, the founder of Vanguard. Like Bogle, I'm a huge fan of index mutual funds. Very few actively managed funds beat index funds over the long term and they have higher expenses and higher taxes. My entire 401(k) consists of index funds.



            Check out the book "I Will Teach You to be Rich" that some other posters have mentioned. I read this book as soon as I graduated college and have since set up an automated finance system that allows me to spend very little time per month managing my money.



              @Juan - Yeah I opened a 529 plan for my son right after he was born. Michigan actually offers some very good options for investing in their 529 plan. The price of college for him still scares me though.



                I can't seem to figure out where my money is going. When I sit down and factor in all of my living expenses + leaving a few 100s for the extra stuff, there is a decent amount that I should be saving but at the end of the month I end up with almost nothing left. This bothers me greatly as I haven't been able to save anything for over a year. I analyzed my spending to see where I spent all of the extra money - most of it went to some extra expenses that I didn't expected (car maintenance + doctor's visits + other unexpected but necessary stuff). Those extra expenses keep coming EVERY month and I can't seem to get around them. Each of those "small" things is on the order of $30-50 but when you have 10-20 of them each month, well, do the math - it comes to a pretty large sum. Any advice?



                  @Vovan -- Forgive me if this sounds harsh, but here's my advice:

                  Those "extra expenses", if they actually come around regularly, aren't extra and should be accounted for in your budget, alongside savings instead of digging into your savings. Going back to my earlier comments, automate your finances so that the money goes into a separate account immediately upon receipt of income. This allows you to put savings first, as a "living expense" essentially, and will remove it from your spending money. Rather than seeing what's left, it obligates you to save. It sounds like you may need to set up, fund and maintain a separate "emergency fund" that would be used for truly 'extra'/special expenses (car accidents or breakdowns outside of reg maintenance, unexpected medical bills, etc.), as part of the savings you put aside. It definitely isn't fun cutting back to fund savings, but it's important to have for when those unexpected things do come up.



                    Vovan - Start by putting away $100-$200 when you deposit your paycheck. Transfer it to another bank like ING altogether so it's out of your checking in the first place. Then you'll see your spending scale to what's left.

                    People making $15k/$30k/$60k all gripe about making ends meet, and below the poverty line, they're totally strapped. But as you go up the income scale, you still find folks living paycheck to paycheck, feeling as if they are living as frugally as possible when obviously people are getting by on half. Folks making $120k/$240k still complain, but nobody cares about them.

                    What I'm saying is: like hornsup84 said, get the money out of your hands first, and you'll make do with the balance.



                      Thanks, guys!

                      I realized that I need to change something. I'll start with the automatic deposit into savings first and see where it will take me. I'm pretty sure I can cut on some things that I really don't need.



                        Sorry in advance for hijacking

                        @zero -- haven't seem an email for you, but didn't want that to be because I missed it. I'll check back occasionally.



                          To add to the automated savings strategy, I follow a simply formula:

                          60% bills (housing, food, transportation, utilities, etc.)

                          10% retirement

                          10% emergency fund

                          10% savings (vacation,Christmas / Birthday gifts, etc.)

                          10% fun money

                          If you can't fit all of your expenses into 60%, you might be living beyond your means, in which case you need to either cut back (new vs used car for example) or make more money.

                          I tend to differentiate between emergency and savings as capital expense or not. New roof - emergency, new furniture - savings.

                          Food: Groceries go into bills. Restaurants go into fun.

                          Clothing: Need it - savings. Want it - fun money.

                          I have been following this for a few years (with different ING accounts set up to be automatically funded every paycheck) and have seen a vast difference on my savings. I'm one of those people for who money burns a hole in my pocket, and following a set budget like this one has helped me a lot.



                            There have been some really helpful posts here, thanks guys. What is the general opinion on money-market accounts? Right now, I have a 401k through my employer and I contribute to that (to the extent that the employer matches), but just keep my money (~35k more) in a savings account besides that (one year out of school). Judging from the posts above, is this a good strategy?

                            1) Invest ~10k into index funds

                            2) Open a Roth IRA and contribute max possible

                            3) Put the rest in a safe money-market account with a company like Vanguard, leaving enough with my current bank to cover monthly expenses

                            Sorry if this are terribly stupid ideas/questions, but I'm a complete financial noob.



                              @hornsup: I was to figure out the answer to one of my questions. Just reading about the ROTH backdoor strategy now.



                                @aglass - Your strategy really depends on the time frame that you need your money. If you need money within 10 years for a large purchase, like a down payment on a home, you are better off keeping it out of the stock market. As a side note, if you do buy a house try your best to save enough to put 20% down to avoid paying PMI. For long term, putting money in a Roth IRA is very smart. You'll have to pay taxes up front on your 2012 returns, but you can withdraw it tax-free after you retire. Also, index funds are good for long term investing in a non-retirement account.