To help some of the newbies (including myself), what are the best financial decisions you've made that have allowed you to be where you are today? (i.e. eliminate debt, particular investment strategy, etc.)
1. Got out of debt and never carry a monthly balance on credit cards.
2. Set up an emergency fund
3. Moved retirement accounts to Vanguard and switched everything to low cost funds.
4. Moved an annuity with a 2% fee at another broker to a 0.45% one at Vanguard
5. Decided to live below my means and invest the rest.
6. Found a partner who is frugal
7. Carry my weekly spending budget around in cash
bigred77 wrote:Deciding from day 1 to set aside a healthy percentage of my income FIRST, and then live on the remainder.
+1. Started maxing out all the retirement accounts at a young age (~24) and then figured out how much money I had available to live.
It is MUCH harder when you do it the other way around.
ddunca1944 wrote:My best financial move was to. marry a debt adverse saver. Obviously that was not the main reason I married him, but it turned out tobe a great financial decision.
+1. We married while still in school, grew into "real" adulthood together, and have planned jointly throughout our careers/child-raising. When both partners are into maxing tax deferred accounts, avoiding bad debt, and have the stomach for 100% equity holdings, you feed off of each other. (DW's high income also came in handy.)
It's gratifying to see and hear our 20-somethings and their mates talking spreadsheets and financials....
Maximize savings in 401K
Save 20-50% of income
.....more pay, more savings is the most important thing by far...
using low cost funds and staying invested in mostly equities has been very good but not as important as saving a lot.
The best financial move I've made was getting my need to feel special out of my system and setting up a plan to dump everything else into the Total World Stock Index for the long haul.
In terms of portfolio management I've reduced the number of accounts by consolidating them. Before I focused on Vanguard offerings I had a bunch of mutual fund account holdings which I consolidated at a single brokerage. For my first few years of investing I switched funds a lot until I realized that just making market average returns was probably good enough so I switched everything to the Vanguard 500 index fund (this was back in the 1980's before ETFs and Total Stock Market Index funds).
While I look at my accounts on-line at least every week or two I still believe in paper financial/brokerage statements solely for making it clear to my survivors where the assets are (I tell them but I doubt they really pay attention). I've recently started to make a game of reducing the number of statements (where I can) I receive so they only come quarterly, primarily with Schwab. Schwab send sends statements quarterly if there is no significant activity. To reduce my activity I try to focus transactions only in the last month of the quarter. I find this discipline makes me think longer term and tempers my actions if I get what I think, at the moment, is a "brilliant" financial idea.
I think it's important to keep track of what is happening in the business and investment communities. I've subscribed to the Wall Street Journal for many years (though I don't renew until I find a good discount or deal, who want to pay $500 or more a year?). I enjoy watching cable TV business channels (CNBC, Fox Business, and lately Bloomberg TV is often my favorite) in moderation. Since I primarily follow the 3 fund model I save so much on investment expenses that the cost of WSJ and cable are inconsequential.
I've kept my distance from anyone or anything that offers financial "help".
I'm financially conservative and don't gamble. We've been to Las Vegas numerous times to visit relatives and while we've enjoyed the buffets and surroundings we just have no interest in gambling.
I found a spouse who, though not interested in finances, is not an extravagant spender. We enjoy ideas and experiences, we don't exist to collect "things".
Finding Bogleheads a few years ago has made me more confident and relaxed in my investment and financial choices.
There's a lot to be said for living your life as simply as you can and enjoying all things in moderation.
2. Choosing degree programs that are applicable in the marketplace.
3. Finding BH's (max tax advantaged, index NOT individual)
4. Choosing a spouse who's on the same page.
1. I live below my means.
2. Along with my family, I invested time and money in my education to allow me an interesting and well-paid job.
3. I found a great spouse who also follows points 1 and 2, even if I wouldn't describe her as frugal.
4. I held a lot of my employer's stock in a share save scheme and in company stock awards, and allowed it grow for years, becoming something like half our net worth. I sold half of the stock at 15% below the peak and half at 0.5% below the peak. The share price is currently 50% below the peak, and will take years to recover. I was incredibly lucky, and I don't recommend it to anyone, but it is still one of the best financial moves I ever made.
123 wrote:Finding Bogleheads a few years ago has made me more confident and relaxed in my investment and financial choices.
This was the key for me also. I was fortunate to be a saver, and BH provided the foundation on which I stand. I am now relatively relaxed in the face of stock market noise and future uncertainty.
If the last 10 years are any indication, I've definitely made the right choices and will have snapped victory from the jaws of defeat when I can finally step away from my desk for good.
A great 2017 to everyone.
Dottie57 wrote:#1 Saving as much as I can and putting it into 401k. Without the 401k I am not sure I would have figured out how to fund retirement.
#2. Buying a small home and staying put. Small home= small expenses.
"Staying put" is also very helpful. Buying, selling & moving are expensive.
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When I came to the realization that I didn't either know or didn't want to take the time to learn how to (financially) successfully invest using individual stocks. And thus began the long march to investing via index funds. (I was a slow learner.)
2. Start saving for college as soon as child is born and contribute yearly. Turn out children that can take care of themselves and who are fiscally responsible.
3. Live below means.
4. Be your own investment/financial manager and keep expenses low. Educate yourself as necessary. Keep things simple.
2) Marrying a person without expensive tastes and high earning potential (though the financial was hardly my primary consideration )
3) Purchasing my house
4) Investing steadily in low-cost index funds without trading or timing the market
1) Having a spouse with similar financial mentality (we were together before we really understood our financial selves so some of this was certainly learned together).
2) Not purchasing a house in the middle of a housing bubble after relocating for a new job.
3) By not buying a house, having the freedom to take a much better job in another part of the country when my industry and job security began to erode.
1) Investing in a college education for myself and DW.
2) Quickly realizing that we were not getting ahead despite significant increase in income post-college. (Student loan, credit card, auto and medical debt.)
3) Resultant from item (1), visually capturing the extent of our debt and developing a plan to deal with it.
4) Once the above debt was addressed, refusing to allow lifestyle creep take our newfound cash flow.
5) Paying ourselves first in priority order as detailed in BH wiki.
6) Clearly setting priorities in our life and aligning spending of any money remaining after paying ourselves to these priorities (including increasing savings both to keep lifestyle creep at bay and to retire early). Then vigilantly tracking expenses and evaluating our behavior on a monthly basis.
7) Buying a small home that we can afford and can't fill with stuff.
8) Now that we have our first child, having a sturdy emergency fund brings immeasurable peace of mind.
At this point, we've been doing this for so long that it is second nature.
Also, I'm sure there is a lot that I am forgetting.
In hindsight, getting our financial education earlier is the best financial move could have made.
2) Paying off my school debts aggressively; followed by
3) Saving and investing the amount I formerly paid my creditors.
That got me off to a decent start. The rest is its consequence.
1. Marrying someone with similar goals, values and earnings.
2. Staying 30 years with one company and benefiting from rising salary, bonuses, company car, 401K matching, expense account, stock options (starting salary 1976= $11,000).
3. Investing carefully with help from Joe Domingues, Charles Givens, Howard Ruff, Mark Skousen, NAIC, Chuck Carlson, Archie Richards, Diehards
and finally, from Bogleheads, who have helped me put it together with peace of mind.
2. Began saving for retirement in our early 20's.
3. Stayed invested in the market in good years and bad.
4. Didn't chase the latest hot thing on investments.
5. Didn't let the tax tail wag the dog.
1- picked a degree that had high earning potential
2- worked my rear end off during college to graduate with very little debt
3 - avoided carrying debt from day 1
4 - intentionally avoided hcol areas to live in
5 - never pulled cash out of my home and always put extra in whenever moving or refinancing
6 - married like minded person and STAYED married to her
7 - lived within means and saved a reasonable amount all the way
8 - never financed a vehicle
I'm 47 and just did my annual financial plan review with my wife and realized I can retire now if I wanted or needed to. The steps aren't sexy but they work.
1)Controlling my investments myself from the beginning, and gaining the requisite knowledge to do so very early on
2)Avoiding a spending-driven lifestyle and saving for the future (while still enjoying life, traveling a lot, and avoiding a miserly mindset)
3)Buying much less house than I could afford
4)Investing in an education and career that suited my needs and abilities
5)Finding a spouse that shares these and other key values (okay, not exactly a financial move, but important, and certainly has a huge financial impact)
6)Careful use of credit
Pay cash for everything.
Old fashioned self-sufficiency == Never lend "anything", never "borrow" anything".
Avoid bad influences.
Live frugally -- find happiness in what can't be bought.
Always lay-up on short par 4's.
1. Going to medical school and picking a good paying field
2. Landing a good job in said field
1. Finding WCI and bogleheads and getting educated
2. Every change made as a result of #1
Dottie57 wrote:#2. Buying a small home and staying put. Small home= small expenses.
Ohhh how I wish I was able to do that. I would be "setting pretty" if I was living in my first house for the past 40 years.
House would have been paid off at age 40.
Job changes, lay offs, relocation's, are darn expensive.
On a more macro scale, when I retired in 2015 I rolled over my 401K into the Bogleheads' three-fund portfolio and love the simplicity and low fees.
bigred77 wrote:Deciding from day 1 to set aside a healthy percentage of my income FIRST, and then live on the remainder.
This is what I did and I highly recommend it to all. After a few months, you don't even miss the percentage you're saving and investing from your daily financial life.
Also buy many, many shares of JPM a few months back and recently sell them. Huge profits for such a short time.
(1) Earn my degrees in philosophy, which provided me with analysis, thinking, and communication skills that have proven extremely valuable in the marketplace; and
(2) Attend elite institutions of higher learning, which allowed me to maximize the benefits of (1) by being inspired to learn and grow by some of the world's best students and professors.
LBYM even in childhood. I had little red packets of money as gifts up to age 9 that I never spent. It must be in my genetic programming.
Bought a modest house in a good location and never moved (23 years ago).
Bought modest cars and kept them a long time.
Do not try to keep up with the Jones'.
Started investing the day I got my first real job.
Kept debt very low.
Never got divorced. (at least not yet!).
Managed to never get fired or laid off. I suppose I could get fired now, but I would just declare retirement and throw a party.
Waited to have expensive vacations until retirement and college funds were in good shape.
Took very good care of my body. Note that also takes some fortune.
It ain't rocket science.
PhilosophyAndrew wrote:My best financial moves were both educational, and each one pushes against what may be Booglehead orthodoxies about higher education (I'm about 30 years past my BA):
I wouldn't call them orthodoxies. The posters against higher ed, or graduate ed, or non-STEM ed, are the loudest, but I see no reason to believe they're the most numerous.
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