Your best financial move

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Niko
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Your best financial move

Post by Niko » Sat Apr 27, 2013 9:28 am

I really enjoyed reading through the dumest financial move thread over here: http://www.bogleheads.org/forum/viewtop ... =2&t=94793

It got me thinking we should flip this around and see what people would consider their best financial move?

For me, it was opening a Roth IRA when I was 16. I opened on the urging of one of my high school teachers who told me that if I wanted to be a millionaire (I told him I did, at 40), this was what I should do. I remember he wrote down the phrase "ROTH IRA" on a piece of paper. I walked into my bank and told them I wanted to open one of those. Since then I transferred it to Schwab and then Vanguard, but I've had the account 15 years, nearly half of my life. The value is not so much in the money I put in during those first few years (I couldn't really put in too much while I was in school). But rather in the lessons it taught me about compounding, investing, and budgeting. Having this account through my formative years focused my attention on long-term saving in a way that few teenagers and early 20-somethings never really experience.

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Boglenaut
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Re: Your best financial move

Post by Boglenaut » Sat Apr 27, 2013 9:31 am

Marrying a frugal woman. :)

Best move, financial and otherwise.

YttriumNitrate
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Re: Your best financial move

Post by YttriumNitrate » Sat Apr 27, 2013 9:36 am

deleted.
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mickeyvee
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Re: Your best financial move

Post by mickeyvee » Sat Apr 27, 2013 9:42 am

My best move was finally understanding what an asset allocation was and then implementing it.

Back in 2010, I had my IRA slopped together in American funds and my 401K was a arbitrary disaster. I started doing some research and discovered 3 things:
>Asset Allocation
>Bogleheads.org
>Vanguard

Now I just focus on:
> Save as much as I can
> Monitor & Rebalance
> Save as much as I can
8-)
Life - Can't live with it...can't live without it!

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VictoriaF
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Re: Your best financial move

Post by VictoriaF » Sat Apr 27, 2013 9:43 am

Not buying a house.

Victoria
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Niko
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Re: Your best financial move

Post by Niko » Sat Apr 27, 2013 9:45 am

VictoriaF wrote:Not buying a house.

Victoria
+1

One of my biggest mistakes was owning a house from 2006-2009. Since then I haven't owned, and I think that has contributed more towards my financial success than anything else.

hicabob
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Re: Your best financial move

Post by hicabob » Sat Apr 27, 2013 9:58 am

Starting, growing and then selling a small hi-tech business - all in a 7 year timeframe. It has been the hardest I have ever worked but the financial rewards have been much more than expected.

scrabbler1
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Re: Your best financial move

Post by scrabbler1 » Sat Apr 27, 2013 10:02 am

Although it was not done as a financial move, it has turned out to be my best financial move - not wanting to have children.

On a purely financial basis - (1) paying off my mortgage in 1998, and (2) retiring in late 2008 at age 45 just as the market was crashing because I was able to cash out my company stock while it was still nice and high while being able to buy into a bond fund while its NAV was nearly at its bottom, providing an unexpected boost to my ER budget.

staythecourse
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Re: Your best financial move

Post by staythecourse » Sat Apr 27, 2013 10:02 am

EASILY it is marrying a compatable and financially responsible spouse. No doubt about it. It limits spending, limits arguments, helps one grow faster to the goal of financial independence, AND avoids the BIGGEST financial mistake many face which is divorce.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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momar
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Re: Your best financial move

Post by momar » Sat Apr 27, 2013 10:04 am

VictoriaF wrote:Not buying a house.

Victoria
Buying a house in January 2010.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

otbricki
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Re: Your best financial move

Post by otbricki » Sat Apr 27, 2013 10:09 am

Best financial move ever was refinancing my house in 1994, and going from a 30 year to a 15 year mortgage as part of the deal.

I was lucky in marriage too, but I can't say it was finances I was thinking of when I proposed.

Ed 2
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Re: Your best financial move

Post by Ed 2 » Sat Apr 27, 2013 10:29 am

Niko wrote:
VictoriaF wrote:Not buying a house.

Victoria
+1

One of my biggest mistakes was owning a house from 2006-2009. Since then I haven't owned, and I think that has contributed more towards my financial success than anything else.
I think owning real estate always is a good investment . "How you buy?"...it is a question. I boughtn my house in 2004, had up's and down's , ended up having enough equty to refy... I think if you did't buy than you will not buy now. Market timing always isn't smart strategy in any assets.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel

enderland
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Re: Your best financial move

Post by enderland » Sat Apr 27, 2013 11:06 am

As a current 24 year old -

Realizing the difference between a masters student graduate stipend (about $800 a month, which was about my full living expenses) and a full-time engineering salary (a bit more than $800/month...) meant I would have to approach finances in a different perspective to really manage/steward my money. So I took Financial Peace University while in my last semester and got interested in money and found my way here.

I suspect this will contribute to me making considerably fewer dumb moves and a lot more best moves.

andyh182
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Re: Your best financial move

Post by andyh182 » Sat Apr 27, 2013 11:13 am

Contributing 20% to my 401(k) at my first job right out of college. Even though I got laid off a couple of years later, it set a strong foundation for me.

Paying off my low interest student loans and high interest credit card debt. Being debt free is simply amazing. Almost as amazing as compound interest. :D

Being a lazy investor and riding out the "recession"

Investing in low cost index funds.

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Sphinx
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Re: Your best financial move

Post by Sphinx » Sat Apr 27, 2013 11:29 am

Niko wrote:...what people would consider their best financial move?
For me, it was increasing my retirement savings rate.

I did not have a 401(k) at work for most of my career, and it did not occur to me that it was "okay" to save for retirement outside of retirement accounts. For a long time, I would put the max into my Roth IRA, my SEP-IRA and my spouse's Roth IRA, but I would go no further. Any excess savings idled in my savings account.

I am now buying I-Bonds and investing within a taxable account in addition to maxing out my Roth IRA.

:idea:

Ed 2
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Re: Your best financial move

Post by Ed 2 » Sat Apr 27, 2013 11:35 am

andyh182 wrote:Contributing 20% to my 401(k) at my first job right out of college. Even though I got laid off a couple of years later, it set a strong foundation for me.

Paying off my low interest student loans and high interest credit card debt. Being debt free is simply amazing. Almost as amazing as compound interest. :D

Being a lazy investor and riding out the "recession"

Investing in low cost index funds.
Ditto, almost same in my case. It is just weard to be weard to many of my friends and coworkers.))
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel

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C8H18Engineer
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Re: Your best financial move

Post by C8H18Engineer » Sat Apr 27, 2013 11:39 am

I'm with mickeyvee, and I would explain most of my financial saving history as one of apathy, although I've been a saver since I was 15 and got my first job. My employers' 401K's just offered the usual suspects, and I tried to listen to the general advice of balancing, but they never seemed to grow. I tried money management firms with my after-tax, but also found that didn't grow as the fees just kept eating away any profits.

The light went on the same, except they happened in a different order for me: reading about index funds, finding Vanguard, then this wonderful board. I plan to keep on reading about investing, of course...

...and unlike my father did with me, I plan to put it into my kids' heads early that cost matters, live beneath your means, save early and regularly, index, and balance (in finance and life). Now if Vanguard would offer a starter custodial account with smaller minimum for people under 18, I might like to start one now and help that learning process through review of monthly statements, deposit of a portion of allowance and other earnings, and talking about how the market value can go up and down, but can grow over a long time.

Barefootgirl
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Re: Your best financial move

Post by Barefootgirl » Sat Apr 27, 2013 11:42 am

Learning to live below my means, beginning at a relatively young adult age.

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crowd79
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Re: Your best financial move

Post by crowd79 » Sat Apr 27, 2013 12:26 pm

Stopped trading Forex as a way to grow a retirement account. Huge mistake. Took my remaining balance minus $400 and putting it into a new traditional IRA through Vanguard. Then, finding out about Bogleheads.

Bmac
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Re: Your best financial move

Post by Bmac » Sat Apr 27, 2013 12:28 pm

Managing to continue to "live like a resident" (as the White Coat Investor would say) upon getting my first "real" attending job and lucking into stumbling across this great little book well known to Bogleheads called "The Coffeehouse Investor" just as I started my first foray into investing in my company 401k and other taxable mutual funds. That led to reading "Bogle on Mutual Funds," finding the predecessor to this forum and the rest is history.

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MN-Investor
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Re: Your best financial move

Post by MN-Investor » Sat Apr 27, 2013 12:49 pm

For us, it was investing in our companies' employee stock purchase plans. Not that we made tons of money in them, but more that it got us used to saving. The money for the investment came out of our checks before we missed it. And so we made a habit of saving.

Another smart move, for us, was paying off our house early. We bought our house in 1980 when the interest rates were 14%. Prices of homes at the time were quickly appreciating. We did refinance - I can't remember that rate, it was something like 11%. Anyway, we made our final payment in June '94. Then, what we had been paying in house payments, we just added to our investments.

Finally, my dumbest move which ironically turned out to be one of the best moves. I quit working in '99, at age 46, for a number of good reasons. (We were fine living on my husband's salary.) Anyway, I left my 401(k) with my former company. I had no idea what to do with it. The conventional wisdom is that I should have rolled it over into an IRA, then diversified the funds in low cost index funds. It turns out that the chunk of money I had in company stock really outperformed the market. When I turned 59-1/2 last year, I rolled over the non-company stock into an IRA, and I moved the company stock into a taxable account, using the Net Unrealized Appreciation tax rules. My company stock currently sells about $45/share. My basis is about $4.07/share. :-)
The key to success - Save early, save often, invest well.

scrabbler1
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Re: Your best financial move

Post by scrabbler1 » Sat Apr 27, 2013 1:00 pm

MN-Investor wrote:For us, it was investing in our companies' employee stock purchase plans. Not that we made tons of money in them, but more that it got us used to saving. The money for the investment came out of our checks before we missed it. And so we made a habit of saving.

Another smart move, for us, was paying off our house early. We bought our house in 1980 when the interest rates were 14%. Prices of homes at the time were quickly appreciating. We did refinance - I can't remember that rate, it was something like 11%. Anyway, we made our final payment in June '94. Then, what we had been paying in house payments, we just added to our investments.

Finally, my dumbest move which ironically turned out to be one of the best moves. I quit working in '99, at age 46, for a number of good reasons. (We were fine living on my husband's salary.) Anyway, I left my 401(k) with my former company. I had no idea what to do with it. The conventional wisdom is that I should have rolled it over into an IRA, then diversified the funds in low cost index funds. It turns out that the chunk of money I had in company stock really outperformed the market. When I turned 59-1/2 last year, I rolled over the non-company stock into an IRA, and I moved the company stock into a taxable account, using the Net Unrealized Appreciation tax rules. My company stock currently sells about $45/share. My basis is about $4.07/share. :-)
I used NUA when I cashed out my company stock, too. For me, the cost basis was $29 and the sale price was nearly $900 per share, so I cleaned up and paid a relatively low tax rate (about 25% federal+state+AMT+10% early penalty only on the cost basis, not NUA).

I forgot to mention earlier that refinancing my mortgage in 1992 was a big benefit, cutting nearly 5 points off the interest rate ($200 a month) which helped me a lot to paying it off 6 years later.

ddunca1944
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Re: Your best financial move

Post by ddunca1944 » Sat Apr 27, 2013 1:12 pm

Signing up for my company's 401K and contributing enough to get the match. I did not know much about finances, but did figure out that it was a good deal. I did it when they were fairly new and most of my co-workers had all kinds of reasons not to. (Gradually I increased my contributions until I reached the max allowed)

Marrying my current spouse was also a great financial move, but it was not based on financial reasons.

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zebrafish
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Re: Your best financial move

Post by zebrafish » Sat Apr 27, 2013 1:34 pm

1. Going to medical school
2. Listening to my wife and not falling for whole life insurance pitch made to our entire med school class back when I was young and naive
3. Reading "Investing for Dummies" and John Bogle's "Common Sense" book (and others; "self-education")
4. Living below my means

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tyler_cracker
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Re: Your best financial move

Post by tyler_cracker » Sat Apr 27, 2013 3:13 pm

YttriumNitrate wrote:buying a hair clipper and giving up the barbershop easily had a 500%+ rate of return in the first year.
as someone who has been cutting my own hair since freshman year of college (when mom quit giving me money to go get a haircut :D), this gave me a hearty lol. :sharebeer

lightheir
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Re: Your best financial move

Post by lightheir » Sat Apr 27, 2013 3:38 pm

Holding the course with investments even through the latest recession.


I have more than a few friends who briefly looked like geniuses when they pulled ALL their investments out of the market and avoided losing more than 10% of their stock value - and then promptly looked not so smart when the market rebounded when nobody expected it to and left them in the dust.

Hold the course.

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auntie
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Re: Your best financial move

Post by auntie » Sat Apr 27, 2013 3:45 pm

Divorce from a man who is convinced he's smarter than the market, despite frequent evidence to the contrary.
High risk does not equal high reward. It equals high risk of no reward.

jaj2276
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Re: Your best financial move

Post by jaj2276 » Sat Apr 27, 2013 3:49 pm

I listed my dumb(est) mistakes, so here are my best(est) moves:

-- Deciding to get my master's degree in a completely different field than my undergraduate. Even if I did nothing else, I easily doubled my lifetime earning potential.

-- Moving from Atlanta to NY in 2002 to take a lower paying job (in a much higher cost-of-living area!). This again easily double my already doubled lifetime earning potential.

-- Before even understanding asset allocation, and after getting burned during the internet stock craze (this was the beginning of my accumulation period so I didn't really lose all that much money), sticking all my money in S&P 500 index funds for the 2000s (until I learned about asset allocation).

-- My last best decision was doing nothing with regards to my investments nor my contributions during 2008-2009. I continued to max out my tax-advantaged accounts and even invested after-tax money. I "lost" a lot of money during that time but have made it all back and then some since. I *wished* I would have known about TLH at the time (the idea seems so simple I can't believe it never occurred to me), but that's for the other thread.

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nedsaid
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Re: Your best financial move

Post by nedsaid » Sat Apr 27, 2013 5:32 pm

I actually have made a few good financial moves in my life.

1) Investing through Workplace Savings Plans and IRA's.
2) Living below my means.
3) Not buying new automobiles or expensive gadgets.
4) Investing in stocks. Starting with individual stocks, moving to mutual funds, and then learning about index funds and ETF's.
5) Keeping an eye on investment expenses.
A fool and his money are good for business.

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FrugalInvestor
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Re: Your best financial move

Post by FrugalInvestor » Sat Apr 27, 2013 5:37 pm

Boglenaut wrote:Marrying a frugal woman. :)

Best move, financial and otherwise.
This would be the same for me. My wife and I were on very similar pages financially. It was not the reason I married her, but has worked out well for us.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

scouter
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Re: Your best financial move

Post by scouter » Sat Apr 27, 2013 6:11 pm

-Starting to save and invest (individual stocks) at age 16.
-Marrying the right woman.
-Learning to make good use of our time.
-Reading Andrew Tobias' books in the early '80s.
-Continuing to live debt-free on 2/3 of our income and investing the rest, while raising kids.
-Staying flexible with our career goals and being willing to change paths as we recognized opportunities.
-Doing our own taxes to learn how to take advantage of every possible tax-saving strategy.
-Gradually shifting our investments to a low-cost, tax-efficient, index fund strategy.
-Becoming a Boglehead.

lwfitzge
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Re: Your best financial move

Post by lwfitzge » Sat Apr 27, 2013 6:14 pm

Boglenaut wrote:Marrying a frugal woman. :)

Best move, financial and otherwise.
+1, but mine was all out synergy...

marry a frugal woman and also one that makes a lot of money

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SpecialK22
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Re: Your best financial move

Post by SpecialK22 » Sat Apr 27, 2013 6:38 pm

Realizing the myth of "good" debt at an early age. In other words, debt undertaken for such things as purchasing a house or financing higher education is not somehow purified. It doesn't mean it's inherently foolish to use debt for these types of purchases, but it's still debt.

Joining the military has probably ended up being the best financial move I have made, although I didn't join thinking of it from the financial aspects.
Last edited by SpecialK22 on Sat Apr 27, 2013 6:40 pm, edited 1 time in total.

tacster
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Re: Your best financial move

Post by tacster » Sat Apr 27, 2013 6:39 pm

Getting a college education. By far the best return on any investment of my life.

Staying single, and not losing half my net worth in the likely divorce.
INSERT PITHY QUOTE HERE

simple man
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Re: Your best financial move

Post by simple man » Sat Apr 27, 2013 6:54 pm

Driving cars til they drop.
Moving away from "high society" neighborhoods so my spouse and I would not feel the pressure to keep up with the Joneses.
Tithing (the more we gave away, the more we got back).
Not allowing divorce to ever be a possibility.
Sticking to term life insurance.
Picking up John Bogle's Little Book.
Finding Bogleheads...

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BigFoot48
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Re: Your best financial move

Post by BigFoot48 » Sat Apr 27, 2013 8:09 pm

Switching from managed funds to index funds, and selling all my individual stocks.
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 12-time loser

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bengal22
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Re: Your best financial move

Post by bengal22 » Sat Apr 27, 2013 8:13 pm

Deciding to work for a living at a good company
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Taylor Larimore
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Merrill Lynch to Vanguard !!!

Post by Taylor Larimore » Sat Apr 27, 2013 8:24 pm

Niko:

Our best financial move was moving our investments from Merrill Lynch to Vanguard in 1986.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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LadyGeek
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Re: Your best financial move

Post by LadyGeek » Sat Apr 27, 2013 8:32 pm

Finding this forum and acting on the advice.
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ge1
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Re: Your best financial move

Post by ge1 » Sat Apr 27, 2013 8:36 pm

Buying an apartment in NYC in 2004 and selling it in 2008 for 50% more.

investingdad
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Re: Your best financial move

Post by investingdad » Sun Apr 28, 2013 7:08 am

Getting a degree in chemical engineering despite how hard it was.
Getting an M.B.A. on my employer's dime.
Investing for retirement at 22.
Marrying a similarly educated girl with similar financial goals.
Investing monthly no matter what the market is doing.
Not spending up to our salary.

We never hit any homeruns in our finances and investing, just a lot of singles over and over and over and over again.

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pennstater2005
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Re: Your best financial move

Post by pennstater2005 » Sun Apr 28, 2013 9:00 am

FrugalInvestor wrote:
Boglenaut wrote:Marrying a frugal woman. :)

Best move, financial and otherwise.
This would be the same for me. My wife and I were on very similar pages financially. It was not the reason I married her, but has worked out well for us.
Same here. And also moving into index funds from actively managed funds. And selling off the individual stocks. I miss them, I wonder if they miss me :(
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

rixer
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Re: Your best financial move

Post by rixer » Sun Apr 28, 2013 9:15 am

The best financial move I made was paying off the house early. I made extra payments each month for several years and paid it off just before the economy went south. My income dropped dramatically but we were okay because we don't carry debt. I'm grateful every day for that.

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cheese_breath
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Re: Your best financial move

Post by cheese_breath » Sun Apr 28, 2013 9:19 am

Resisting the urge to jump into tech stocks in the late '90s. Fortunately in this case reason prevailed over emotion.
Last edited by cheese_breath on Sun Apr 28, 2013 9:21 am, edited 1 time in total.
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lws6772
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Re: Your best financial move

Post by lws6772 » Sun Apr 28, 2013 9:20 am

Paying attention to my parents work ethic and frugality! 100% debt free for us! Thanks mom and dad! :D

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Blues
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Re: Your best financial move

Post by Blues » Sun Apr 28, 2013 9:33 am

Deciding in my early to mid 30's that I should become more fiscally responsible and begin looking into and investing in mutual funds.

Taking advantage of my wife's ESPP.

Investing a healthy percentage of our salaries each month without fail into mutual funds, 401K (while available) and the TSP.

Never living beyond our means, borrowing or taking on unnecessary debt. Always paying credit cards in full.

And, the one that I serendipitously walked into back in the middle to late 70's but hadn't given real thought to at the time...accepting a career with the federal government that provided a defined benefit pension plan.

(I remember looking at the "old guys" sitting around at lunch discussing their potential benefits upon eligibility for retirement and thinking to myself: "Retirement?...hell, I'd do this job for free." My how things change over a lifetime of experience. :oops: )
“Tactics without strategy is the noise before defeat.” - Sun Tzu | "Everybody has a plan until they get punched in the mouth." - Mike Tyson

sambb
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Re: Your best financial move

Post by sambb » Sun Apr 28, 2013 9:35 am

1. Marrying a woman who knows the value of money and hard work to make a dollar
2. 15 year mortgage instead of 30 when I bought my home
3. Getting out of techstocks prior to the big crash 10 years ago
4. Investing in a few companies that I liked in the past (panera, apple, etc.)
5. Contributing to my 401k at max
6. Doing consulting outside of my job to make more $, despite the extra time and travel
7. Investing with vanguard, never have used a financial advisor, just learned my ropes
8. Reading about personal finance
9. Buying nice cars when they are 1-2 years old instead of brand new

allsop
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Re: Your best financial move

Post by allsop » Sun Apr 28, 2013 9:43 am

.. . ..
Last edited by allsop on Sun Apr 28, 2013 1:42 pm, edited 1 time in total.

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nvboglehead
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Re: Your best financial move

Post by nvboglehead » Sun Apr 28, 2013 9:46 am

The best moves in my financial life began with the purchase of Jack Bogle's first book, "Bogle on Mutual Funds", which was first published in June 1993.

Despite my lifetime interest in personal finance, investing only made sense to me after reading that book. I am very grateful to Jack and am happy that I have had the opportunity to thank him in person a few times in my life.

Best wishes,



Dale
Learn from the Bogleheads! Do you want to work for your money or have your money work for you?

tim1999
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Re: Your best financial move

Post by tim1999 » Sun Apr 28, 2013 10:21 am

Bought some dumpy rental homes pre-bubble, renovated them, and sold at pretty much the peak of the bubble.

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