Disposable income... how?

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scorcher31
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Re: Disposable income... how?

Post by scorcher31 » Mon Nov 06, 2017 11:34 pm

Are you going to get a military pension? The salary equates with a physician or lawyer in the military which would explain the late start and lower amount saved up. Without a pension you are still in great shape if you can keep on this track. With a pension you are in even better shape. Saving 33% percent of your income should be fine just try to maintain it even with salary increases.

Even though your debt is 0% it sounds pretty low. I'd personally wipe that out, then there you go 10% more spending income for fun (just don't carry it in debt). The transportation budget is high but I'm assuming that for your new predicted car and not your old car. Again I would just pay that car off quick and it will be less than 20%. Don't carry any debt but your mortgage and you will have a lot more disposable income.

scorcher31
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Re: Disposable income... how?

Post by scorcher31 » Mon Nov 06, 2017 11:43 pm

I'm not a big fan of cash/cd/bonds during the growth phase for what its worth. Fill up your emergency fund in a high yield savings to the point you have "enough", do you TSP and Roth but consider a taxable for a low cost total stock index fund instead of CDS and bonds. We do 90 Stock 10% tax free municipal bonds and we are about your age. I'm leaving it like that for a good 20 years then ill reconsider

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celia
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Re: Disposable income... how?

Post by celia » Mon Nov 06, 2017 11:53 pm

akblizzard wrote:
Mon Nov 06, 2017 1:03 pm
You nailed it with your conclusion. "The Millionaire Next Door" might be a good read as mentioned above.
+2 (or is it 3?) You beat me to it!

Looks can be deceiving....So can talk....
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

msk
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Re: Disposable income... how?

Post by msk » Tue Nov 07, 2017 12:22 am

I saved 30% of my "income"/scholarships all the way back from the days I was getting only pocket money from Ma, through university, and into working life. IMHO 30% saving and investing (NB!investing not languishing in a savings account) is plenty to be able to afford paying cash for the luxury stuff in your 40s. I used to invest from my pocket money by buying sweets by the pound and retailing them one by one to siblings and buddies. Ate the profit :mrgreen: I paid cash for a brand new Mercedes Coupe when I was 37 and continued to live by these timelessly valid rules to quick financial independence AND a non-pauper lifestyle:

Save and INVEST(!) 30% of after tax income (paying off principal in your home mortgage counts)
Never buy a home costing more than 3 years' income
Never acquire cars (buying or leasing) costing more than 6 months income

You will be FI by your mid 50s, own a luxury home, 2 luxury cars, all the iPhones you desire. All fully paid off, nil debt. Worked for me...

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Earl Lemongrab
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Re: Disposable income... how?

Post by Earl Lemongrab » Tue Nov 07, 2017 12:53 am

Why do you care what other people do? Live your own life. Determine priorities and generate balance.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Cunobelinus
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Re: Disposable income... how?

Post by Cunobelinus » Tue Nov 07, 2017 3:00 am

Priorities.

A good (military officer) friend of mine married another military officer. About a year in, he was excitedly telling me how they'd managed to save about $20k in the past year together and were going to use that as their down payment for a house at their next duty station. I was shocked, but he didn't realize why: I had saved twice that amount in that time by myself.. Priorities. He did live in a very nice area and had a boat and motorycycle and car. (I had a motorcycle and a car and lived in a slightly less nice area, but I had a friend with a boat -- far better than actually owning a boat :sharebeer )

A number of military folks I know in their 20s (and older) treat the entire paycheck as a reliable source of income each month, with no desire to save up for anything unless it's a big trip. There's a lot of folks who think that saving money is something you do later in life.. like in your 40s and 50s. Even saving up for a house isn't that important because VA loans don't incur PMI. Priorities. I don't want to have to work a stressful high-paying job after 20+ years of stressful jobs just to support my habits.

Finally, my first year in, I was in a school with a fellow O-1 who actually couldn't afford to come out to brunch with us once a week, because he had spent his $25k starter loan and taken out other loans to buy a souped-up Jeep, a souped-up mustang, a home stereo system, a fancy TV.. he "borrowed" lunch money each week. Priorities.

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simplesimon
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Re: Disposable income... how?

Post by simplesimon » Tue Nov 07, 2017 5:48 am

Brokepilot wrote:
Mon Nov 06, 2017 8:20 pm
Wow, so much good stuff here, I can't comment on everything but I'll answer a few common questions.

Q: Why do I feel 33% is not enough.
A1: I am 32 and only have 1x my income stocked away and it is not all for retirement. My retirement portfolio is only about 75k, so I am behind.
A2: As long as my health keeps up, I should make 150K-200K in my early 40's (and will likely carry that income till at least 59.) and I want my portfolio to be frontloaded for the lifestyle I plan on living later in life.
A3: I am planning on having a baby next year and I want to have a dedicated 10k reserve for the first-year baby expense so our quality of life (financially) is stable. So I am saving for future expenses and not only retirement.

About the numbers I posted. It is a modified version of my 2017 budget for 2018.

Mortgage plus utilities: 26% (This is my mortgages + $100 additional principle + all utilities)

Transporation: 10% (This includes a $450 car payment, plus all projected gas and insurance on two vehicles, we haven't bought a second car yet but need to next year)

Food, Cell and Allowances: 20% ($500-$600 dollars a month for food and dining and ruffly $350 pocket cash for my wife and $250 for me)

Debts: 9% (0% offers) (0% balance transfer on a camera I bought and a few other items that revolve around 0% offers. Rather pay everything off I like to keep the cash in the bank at 1.1% interest and pay it off slowly)

Investing/Saving: 33% (Max TSP 18k, 5.5k In Vanguard Roth and about 12 grand into CD's, stocks and savings)

I will do a portfolio review tomorrow and post a link in here.
It's understandable that you feel this way now that you laid it all out...1) you just started saving recently, 2) you took on significant debt, some okay (house) some not okay (car and credit cards), and 3) your savings rate is very high.

You can't say you don't have disposable income when you bought a camera and other goodies on credit and will have two cars. If my math is right, your current car and credit card payments combined are close to your mortgage. As you pay these off your cash flow will improve significantly.

Lastly, I suggest you post your portfolio review in a new thread so it doesn't get lost in this one and the discussion could be more focused.
Last edited by simplesimon on Tue Nov 07, 2017 8:17 am, edited 1 time in total.

kate1234
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Re: Disposable income... how?

Post by kate1234 » Tue Nov 07, 2017 6:57 am

If you end up with kids you will have a lifetime of explaining why their friend gets a motorized ride-on toy but they don't. While at the same time reminding them and yourselves that you have both a refrigerator and flush toilets, so yes you are rich. It is totally worth it to clarify in your mind when/where you splurge and when/where you save, because doing both is important.

Leemiller
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Re: Disposable income... how?

Post by Leemiller » Tue Nov 07, 2017 7:30 am

Drop your savings rate to 15-20%, pay off your payments, and take your wife out to dinner without making her compromise on an entree that you both want.

Payments make you feel poorer and so does debt. Notice that the forum doesn’t have a lot of people posting about using zero percent credit cards as a wealth building tool.

Sounds like you have some luxuries but not all the luxuries you want. Sounds like life to me. You choose car payments over a cheaper paid for car. That is a lot of dinners right there. There are many people with a million plus net worth on this forum that drove, or still drive, cheap cars.

wabbott
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Re: Disposable income... how?

Post by wabbott » Tue Nov 07, 2017 7:38 am

Leemiller wrote:
Tue Nov 07, 2017 7:30 am
There are many people with a million plus net worth on this forum that drove, or still drive, cheap cars.
I'm heading to coffee this AM in an '02 Dodge Ram with 395K miles on it. Runs some folks crazy that I don't succumb to New Car Fever every so often.

More Please
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Re: Disposable income... how?

Post by More Please » Tue Nov 07, 2017 7:46 am

My husband retired from the military after 27 1/2 yrs. I was a prodigious saver, 50%. I winced at the expenditures of the other military folks who bought new loaded cars, big houses, etc. I've noticed that pilots, in particular, have a penchant for very fancy new cars. I joked about my frugality (cheapness) with everybody and continued saving. My husband retired 4 years ago, we travel a lot and generally enjoy life. His other friends are still working. Some say they like to work, others hate it but due to divorce, etc. have no choice, and others sadly died. You never know how life will turn out. Do what you think is best for you and your family.

Jags4186
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Re: Disposable income... how?

Post by Jags4186 » Tue Nov 07, 2017 7:51 am

Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.

How can people do that? Here is my life in a nutshell..

I am above the national average for income. Our household pulls in 100k a year with no cost medical benefits for my wife and I. We are approaching our mid 30's, have a mortgage, one 15 year old car and all our savings and investments equals 100K (not great for mid thirties, I was late to the game). My wife coupons like crazy to save money, when we go out (rarely) to eat we share meals (keeps the kcals down to) and limit our self's to one drink each. Yet we look at our peers who make similar money and are baffled by the newer cars they drive, the clothes they wear, fun they have and they all seem to talk about investing like they are killing it and have kids. I make 100k and while I wouldn't say I feel poor (as I am obviously not), I don't feel like I can afford a new phones or be comfortable paying for a second car.

(Our budget)
Mortgage plus utilities: 26%
Transpiration: 10%
Food, Cell and Allowances: 20%
Debts: 9% (0% offers)
Investing/Saving: 33%
Two things:

1) Lots of people don’t save 33%/have credit card debt
2) Some people make more money than you’d think

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Psyayeayeduck
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Re: Disposable income... how?

Post by Psyayeayeduck » Tue Nov 07, 2017 8:03 am

My favorite commercial serves as a reminder of comparing oneself to others financially: https://www.youtube.com/watch?v=r0HX4a5P8eE

Inframan4712
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Re: Disposable income... how?

Post by Inframan4712 » Tue Nov 07, 2017 9:05 am

Friend of mine scrimped and saved for 20 years, lived like a true Boglehead. Turns out his wife never got on board, divorced him took half his savings and half his retirement, crippled him with alimony and child support (and she was the one who cheated). She was *really* upset with his frugal ways. It's not like he was a total cheapskate, but he didn't do enough to have a little fun now and then and he ended up paying in the end, big time.

So now he has to work at least 10 more years than he planned, and by that I mean until 70. Life happens.

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teen persuasion
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Re: Disposable income... how?

Post by teen persuasion » Tue Nov 07, 2017 9:13 am

Brokepilot wrote:
Mon Nov 06, 2017 8:20 pm
Wow, so much good stuff here, I can't comment on everything but I'll answer a few common questions.

Q: Why do I feel 33% is not enough.
A1: I am 32 and only have 1x my income stocked away and it is not all for retirement. My retirement portfolio is only about 75k, so I am behind.
A2: As long as my health keeps up, I should make 150K-200K in my early 40's (and will likely carry that income till at least 59.) and I want my portfolio to be frontloaded for the lifestyle I plan on living later in life.
A3: I am planning on having a baby next year and I want to have a dedicated 10k reserve for the first-year baby expense so our quality of life (financially) is stable. So I am saving for future expenses and not only retirement.

About the numbers I posted. It is a modified version of my 2017 budget for 2018.

Mortgage plus utilities: 26% (This is my mortgages + $100 additional principle + all utilities)

Transporation: 10% (This includes a $450 car payment, plus all projected gas and insurance on two vehicles, we haven't bought a second car yet but need to next year)
There's a wide gulf between your 15 yo car and financing a new car at $450/mo. Try to find a more economical second car.

Food, Cell and Allowances: 20% ($500-$600 dollars a month for food and dining and ruffly $350 pocket cash for my wife and $250 for me)
Where's the other $300+ going?

Debts: 9% (0% offers) (0% balance transfer on a camera I bought and a few other items that revolve around 0% offers. Rather pay everything off I like to keep the cash in the bank at 1.1% interest and pay it off slowly)
Nearly $700/mo in minimum payments at 0%? That sounds like a lot of debt.

Investing/Saving: 33% (Max TSP 18k, 5.5k In Vanguard Roth and about 12 grand into CD's, stocks and savings)

As a SAHM for years, I regret pushing all of our early savings to DH's 401k and mortgage repayment, at the expense of retirement savings in both of our names. Fund a spousal Roth IRA, too.

I will do a portfolio review tomorrow and post a link in here.
I did a little extrapolation and guessing on taxes to put some $ figures to your percentages so I could wrap my head around your situation. My comments are set off above.

Unlike many of the other posters, I don't think your savings rate is the problem. I think the debt payments and your planned car payments are making your finances feel tight. That debt is past spending you are still paying for now, and for the foreseeable future, and it is crimping how much you feel you can spend now. Your budget looks generous to me, especially the food and allowances section. We probably didn't much exceed $400/month for food, even when all 5 kids were living at home just a few years ago. We worked our savings rate up above 50%, and have never approached six figures income. Avoiding consumer debt has been the biggest part of that - not having big (or lots of smaller) fixed payments left more for us to save and spend wisely.

Amart
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Re: Disposable income... how?

Post by Amart » Tue Nov 07, 2017 9:30 am

Not only do many not save, they are barely able to keep themselves out of debt with impulsive purchases they cannot afford outright. As for myself, I splurge on the things I enjoy, yearly vacations and gifts for family, the occasional night out with friends, and my hobbies. I max my 401k and Roth every year, and save a healthy chunk of cash every year but I am lucky, partly because of my temperament and also because I am lucky enough to live nearly rent free for my VHCOL area ($500/month to live with family... average 1 family house in my area is nearly 1 million dollars, and 1 BR condo's 500K+). I see peers who I have graduated school with leasing 50k-60k dollar cars, which come with a monthly bill of nearly my entire "disposable" monthly expenditure.

warner25
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Re: Disposable income... how?

Post by warner25 » Tue Nov 07, 2017 10:25 am

Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
I was late to the game
I wouldn't say you are "late" compared to the general population, but it's possible that some of your peers got a much earlier start, and that does make a big difference. Many of us (I'm a military officer with about 10 years like you) paid nothing for college (through service academies or ROTC scholarships) and started earning decent money immediately on active duty. Start saving 30, 40, 50%+ right away and it really adds up. One year, before we had kids, my wife and I saved 75% of our income, and then we've enjoyed a booming stock market for the past decade. So we paid cash for a new car last month, and the cost was less than the long-term gains on our taxable investment account. In a few more years, you'll be in a similar position at your savings rate.

Also, I think many military families save 0 because they expect to have that retirement pension, so they assume everything will be taken care of...
jlcnuke wrote:
Mon Nov 06, 2017 1:39 pm
Well, let's put some context on things here - even after putting away 33% of your income, you're still spending more money than the average family in the country earns in a year....
I love this point.
panchilly wrote:
Mon Nov 06, 2017 4:57 pm
I wouldn't be surprised if some of these folks you are referring to are pulling in 150, 200, even 250k total comp individually.
He's in the military, so finances are pretty transparent. We all know exactly how much our co-workers/neighbors earn. However, spousal income is a real wildcard. Most military spouses are unemployed, underemployed, or SAHMs due to the unique lifestyle of the active duty military, but in rare cases they are able to work professional jobs and earn some real money. I had a friend whose wife was fully employed as a psychiatrist, and he boasted frequently about how she made so much more money than he did as an O-3.
Cunobelinus wrote:
Tue Nov 07, 2017 3:00 am
A good (military officer) friend of mine married another military officer. About a year in, he was excitedly telling me how they'd managed to save about $20k in the past year together and were going to use that as their down payment for a house at their next duty station. I was shocked, but he didn't realize why: I had saved twice that amount in that time by myself...
We were friends with a dual-military couple, both O-3s, and one time the husband laid out their financial situation for me. His wife was planning to exit the service, and he was proud to say that they were saving about $40k that year in preparation. I congratulated him, but my SAHM wife and I were saving about $50k that same year (50% savings rate) and privately we were amazed at how much they were spending, especially when they didn't yet have kids. They earned a combined $150-200k, so they had to be spending significantly more than my entire income.
scorcher31 wrote:
Mon Nov 06, 2017 11:34 pm
The salary equates with a physician or lawyer in the military which would explain the late start and lower amount saved up.
$100k is actually typical cash compensation for a mid-grade officer regardless of branch/specialty.
Last edited by warner25 on Tue Nov 07, 2017 11:10 am, edited 1 time in total.

Teague
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Re: Disposable income... how?

Post by Teague » Tue Nov 07, 2017 10:51 am

Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.

I used to wonder the same thing. It's all about choices. It sounds like your choices will reward you well. Good job.

One 15 year old car and all our savings and investments equals 100K (not great for mid thirties, I was late to the game).

You are $170,000 better off than I was at age 37. I'm retiring in about a month at age 58 with a projected spending of $8,000/ month and the retirement income to support that. I drive a 15 year old car also. But, I also have two other cars, one 3 years old. And another one that's red and goes 175 MPH. :happy

Yet we look at our peers who make similar money and are baffled by the newer cars they drive, the clothes they wear, fun they have and they all seem to talk about investing like they are killing it and have kids.

People often do not tell the truth about their investing success. Frequently not even to themselves...

I live in an area that has many undocumented migrant farm workers. Incredibly hard working folks - they are very underpaid IMO and they do not make much money. Many of them drive nicer cars than the car I usually drive. A great many have newer cell phones than I do. It is all about choices.
Semper Augustus

an_asker
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Re: Disposable income... how?

Post by an_asker » Tue Nov 07, 2017 10:51 am

panchilly wrote:
Mon Nov 06, 2017 5:33 pm
stoptothink wrote:
Mon Nov 06, 2017 5:25 pm
panchilly wrote:
Mon Nov 06, 2017 4:57 pm
Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.

How can people do that? Here is my life in a nutshell..

I am above the national average for income. Our household pulls in 100k a year with no cost medical benefits for my wife and I. We are approaching our mid 30's, have a mortgage, one 15 year old car and all our savings and investments equals 100K (not great for mid thirties, I was late to the game). My wife coupons like crazy to save money, when we go out (rarely) to eat we share meals (keeps the kcals down to) and limit our self's to one drink each. Yet we look at our peers who make similar money and are baffled by the newer cars they drive, the clothes they wear, fun they have and they all seem to talk about investing like they are killing it and have kids. I make 100k and while I wouldn't say I feel poor (as I am obviously not), I don't feel like I can afford a new phones or be comfortable paying for a second car.

(Our budget)
Mortgage plus utilities: 26%
Transpiration: 10%
Food, Cell and Allowances: 20%
Debts: 9% (0% offers)
Investing/Saving: 33%
Most people don't save 33% that is a very high savings rate. Good job.

Additionally, 100k aint what it used to be. 100k HHI for a family of 2 is actually fairly average for any HCOL or MCOL area. It is low for VHCOL areas like the Bay Area. I wouldn't be surprised if some of these folks you are referring to are pulling in 150, 200, even 250k total comp individually.

200k total comp compared to 100k allows you to buy a lot more luxury items while maintaining a high savings rate.

Are you in an HCOL or VHCOL area? I know first hand that fresh out of college software engineers in the Boston area are pulling in 100k BASE SALARY at 22-23 years old with a bachelors degree. With bonus and stock that approaches 120-130k total comp for a 22 year old... Senior guys are around the 200k mark for total comp. Very senior principal level at bigger companies are 200-250k. Add another 10-15% on top of all those numbers for Facebook/Google caliber companies.

It's easy to assume people are making equal to or less than you are, but I find when you find out about how much people are really making around here its usually a lot more than you thought. This is where the money is coming from for brand new cars, new iphones, big brokerage accounts, etc.
This may be your perception, but statistically these statements are not really true. Yes, there are kids right out of college in the Bay Area making $120k+, but they are most definitely not the norm.
You'd be surprised in certain metro regions.

http://www.mercurynews.com/2017/04/22/i ... ow-income/
This might be OT to the original thread, but I don't really want to start a new thread (I recently discussed something like this with some friends who might even be on Bogleheads ... or not, but I wouldn't want the notoriety of having asked here!). Basically, my point is/was that cost of living in the Bay Area is exaggerated!

Anyway, let's take this quote and compare with Orlando:
Roxanne Calimeris, 27, a social worker who lives in Oakland, said she was shocked at the level of competition for getting an apartment in that city. An employee of Alameda County, Calimeris makes about $82,000 per year, putting her well above the “low income” limit of $56,300 for a single person in the East Bay, but even on that salary, living in the region isn’t easy. Rent costs her about $1,200 per month, for an apartment she shares with her sister (“I knew I couldn’t get my own place,” Calimeris said), and an extra $600 in student loans and $250 for a car payment eat into the rest of her paycheck.
I would say that a one-bedroom apartment costs about $600 (conservatively low estimate). Car payments and student loans will translate one to one. So, would I - or would I not - sound absolutely foolish if I were to say that a pay of $70,000 (even assuming $1,000 per month for the housing) it would make living in Orlando not easy?!! Even if you were to say the difference in taxes is, say, 15% of the income (I really doubt it will be anywhere close to that), that would still knock the income to about $58,000, which would be $46,000 after housing, student loans and car payments have been taken care of.

Texanbybirth
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Re: Disposable income... how?

Post by Texanbybirth » Tue Nov 07, 2017 11:00 am

warner25 wrote:
Tue Nov 07, 2017 10:25 am
jlcnuke wrote:
Mon Nov 06, 2017 1:39 pm
Well, let's put some context on things here - even after putting away 33% of your income, you're still spending more money than the average family in the country earns in a year....
I love this point.
Agreed! Any feeling of depravity on the part of the OP is due to paying his future self at the expense of his present self (and spouse).
"Knowledge and innocence are both excellent things, and they are both very funny. But it is right that knowledge should be the servant and innocence the master." - GK Chesterton

H-Town
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Re: Disposable income... how?

Post by H-Town » Tue Nov 07, 2017 11:04 am

Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.

How can people do that? Here is my life in a nutshell..

I am above the national average for income. Our household pulls in 100k a year with no cost medical benefits for my wife and I. We are approaching our mid 30's, have a mortgage, one 15 year old car and all our savings and investments equals 100K (not great for mid thirties, I was late to the game). My wife coupons like crazy to save money, when we go out (rarely) to eat we share meals (keeps the kcals down to) and limit our self's to one drink each. Yet we look at our peers who make similar money and are baffled by the newer cars they drive, the clothes they wear, fun they have and they all seem to talk about investing like they are killing it and have kids. I make 100k and while I wouldn't say I feel poor (as I am obviously not), I don't feel like I can afford a new phones or be comfortable paying for a second car.

(Our budget)
Mortgage plus utilities: 26%
Transpiration: 10%
Food, Cell and Allowances: 20%
Debts: 9% (0% offers)
Investing/Saving: 33%
My guess is that they are three types of people that can afford buying new phones:
1) Type A: people make so much money that can afford small things like a new phone. $1,000 is nothing to them.
2) Type B: people who are good with managing their budget. They can monitor and make decision to move around spending buckets. If they want to buy a new phone, they'd cut down traveling and/or big ticket purchase. Type B group consistently keep up with their saving rate.
2) Type C: the world will be doomed tomorrow as far as they concern. They live for today and don't even start to question this group.

We make good money but we are not into material things. I still use a 4 year old phone and have no interest in buying a new fancy phone. However, we spend more in traveling and experience. Our saving rate fluctuates from 30-45%.

Grt2bOutdoors
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Re: Disposable income... how?

Post by Grt2bOutdoors » Tue Nov 07, 2017 11:15 am

One thing to remember, is folks who make more money, also pay more money in taxes sometimes much more. As their income rises, the marginal rate can increase as well, sometimes so much so that they are thrown into other buckets like AMT which limits or eliminates deductions such as property taxes and state and local income taxes under current tax law or they may be capped in employer retirement plans due to Highly Compensated Employee restrictions, etc.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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HomerJ
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Re: Disposable income... how?

Post by HomerJ » Tue Nov 07, 2017 11:32 am

You're doing great. Stop beating yourself up.

I would suggest dropping back from 33% savings to 30% savings. An extra $3000 a year for fun. Save half your raises from now on, and spend the other half.

In 10-15 years, you're going to realize it was all worth it.

delamer
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Re: Disposable income... how?

Post by delamer » Tue Nov 07, 2017 11:34 am

Texanbybirth wrote:
Tue Nov 07, 2017 11:00 am
warner25 wrote:
Tue Nov 07, 2017 10:25 am
jlcnuke wrote:
Mon Nov 06, 2017 1:39 pm
Well, let's put some context on things here - even after putting away 33% of your income, you're still spending more money than the average family in the country earns in a year....
I love this point.
Agreed! Any feeling of depravity on the part of the OP is due to paying his future self at the expense of his present self (and spouse).
Well, if the OP feels deprived financially then we might be able to help, but if he is feeling depraved that it is a topic for a different type of forum. :shock:

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HomerJ
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Re: Disposable income... how?

Post by HomerJ » Tue Nov 07, 2017 11:37 am

teen persuasion wrote:
Tue Nov 07, 2017 9:13 am
That debt is past spending you are still paying for now, and for the foreseeable future, and it is crimping how much you feel you can spend now.
This is a good point. Even though it's at 0%, you still spent money in the past that you didn't have yet. And that's why you don't have as much money now.

Don't do that anymore. Don't buy stuff with debt (except house).

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gunn_show
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Re: Disposable income... how?

Post by gunn_show » Tue Nov 07, 2017 11:45 am

scorcher31 wrote:
Mon Nov 06, 2017 11:43 pm
I'm not a big fan of cash/cd/bonds during the growth phase for what its worth. Fill up your emergency fund in a high yield savings to the point you have "enough", do you TSP and Roth but consider a taxable for a low cost total stock index fund instead of CDS and bonds. We do 90 Stock 10% tax free municipal bonds and we are about your age. I'm leaving it like that for a good 20 years then ill reconsider
+1 ... at OP's age, get that money out of CD's and into VTSAX with a little VCLAX for the tax free CA bonds... the growth in this type of portfolio the last few years has been tremendous, it is truly fun to watch your money make money. It does not make money in CDs or savings account.
wabbott wrote:
Tue Nov 07, 2017 7:38 am
Leemiller wrote:
Tue Nov 07, 2017 7:30 am
There are many people with a million plus net worth on this forum that drove, or still drive, cheap cars.
I'm heading to coffee this AM in an '02 Dodge Ram with 395K miles on it. Runs some folks crazy that I don't succumb to New Car Fever every so often.
Just when I think I am special for driving my "new" (bought last xmas) 2007 Lexus GX with 180000 miles on it... I get whupped by the above! Well done sir.

I also find this a bit hilarious:
Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.
Then you go on to list a $450 new car payment AND "we haven't bought a second car yet but need to next year" ... meaning within a year you will have two new financed vehicles... PLUS 20% of your spending going towards "Food, Cell and Allowances" meaning you likely have iPhones and buy nice meals.

So, in fact, you are living the exact life you find hard to understand. You get that, right? I make multiples of your income and have never in my life had a $450 car payment, despite obviously being able to afford it.

But, you are saving a very high rate of income... so don't worry about it, as others have pointed out. Plus an assumed very handsome military pension ahead of you. You are clearly new to the game and have many, many years to go. Keep it up and in 10 years you'll laugh and smile at how much money you have. Just stop buying new cars, tell the wife to get a job, double up the income and savings, and keep trucking along.
"The best life hack of all is to just put the work in and never give up." Bas Rutten

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Re: Disposable income... how?

Post by fareastwarriors » Tue Nov 07, 2017 12:38 pm

I have nothing to add that's not already better said. But go ahead and have that craft beer or 2. It is not going to blow your budget. Enjoy a good cold one here and there!

Cheers! :sharebeer

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Re: Disposable income... how?

Post by cherijoh » Tue Nov 07, 2017 1:44 pm

Jack FFR1846 wrote:
Mon Nov 06, 2017 1:04 pm
People can put on the air of being well off for a very, very long time. A big house with a big mortgage leads to leasing rather than buying cars because who can afford a Mercedes for him and BMW for her at these prices? So years go by and a HELOC helps out when the housing market kicks the value of the house up a notch. Now we escalate from the C series Mercedes to an E class and from the 3 series BMW to an X5 SUV. Meanwhile, these people are fooling themselves that they're saving just fine because they're putting 3% into their 401k to get the company 1% match on the first 3. We know a family like this where the wife had become a SAHM years ago and the husband lawyer got into some hot water at work and was fired. All of a sudden, she was a cashier at the local supermarket to make payments on the mortgage and they turned in the BMW at the end of the lease and drove the 18 year old Volvo that the teenage son had acquired with cash. This is a real story of parents of one of my son's friends. There are tons of families like this. Their motto seems to be "Money ain't gonna spend itself". Go your own way. I was always the cheapo with my parent's dining room table in my house and driving the Honda CRX instead of a new BMW. Now, my friends have 3 mortgages to pay off now that their kids have graduated college. They own about $12 of their own house and are still going to downsize to get out of the payments.
+1
I recall a conversation with someone in my neighborhood back during the great recession - she mentioned that the family was considering ways to economize like dropping the premium cable package, since she was a SAHM and her husband was unemployed at the time. I asked how long he'd been looking and she said over 6 months :oops: That would have been one of my early economizing measures - if I had had premium cable in the first place.

I visualize the "spend now/save for later" balancing act as a children's teeter-totter. If you are exclusively living for today then you are probably increasing the burden you will have to support in the future through lifestyle inflation and big ticket purchases like your home and luxury vehicles. (Even leasing is a burden because you never get a break from car payments). But you aren't providing enough seed capital to grow your nest egg (i.e., the other side of the teeter-totter" to even provide a modest retirement, much less the bloated life style to which you have become accustomed.

At the other extreme you could live the life of a starving college student and save more than 50% or more of your salary but get no enjoyment out of your current existence. I think of this as the Mister Money Moustache life style. I know some of the MMM folks get their enjoyment out of seeing just how much they can trim the fat out of their lifestyle but that is way too extreme for me.

I try and stay at a happy medium although I have recently concluded that I probably could have been spending more money and/or retired a few years ago. But I haven't felt deprived of anything I really wanted. And I was definitely glad that I was a PAW when I was faced mid-career with a "relocate to another state or lose your job" decision back in 2004. I was one of the few who didn't either retire (my older colleagues who had hit their years-of -service number if not their $$$ number) or relocate to the boonies (my age cohort or younger). I had options that a UAW would never have had.

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Re: Disposable income... how?

Post by CoAndy » Tue Nov 07, 2017 1:56 pm

wolf359 wrote:
Mon Nov 06, 2017 12:38 pm
Stop keeping up with the Joneses! They're broke!

Some people define "Can I afford this?" differently.

- Can I afford the monthly payments on my credit card?
- Can I pay off the credit card within the month?
- Can I pay it in cash without putting it on my credit card?
- Can I pay for it in cash after saving 30% of my gross income?

They're playing by a different set of internal rules. The end result is that your mindset will eventually make you wealthy. In 20 years, they'll be wondering how you afford things (because your wealth will have built up and start generating income on its own.) Or wondering how you retired early and don't even need a job.
Exactly! OP, consumers have over 1.2 Trillion dollars in student loan debt, 1 Trillion plus in credit card debt, and 1 trillion plus in car debt. That is how many (most?) do it.

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Re: Disposable income... how?

Post by alfaspider » Tue Nov 07, 2017 2:05 pm

clutchied wrote:
Mon Nov 06, 2017 2:22 pm
great advice in this thread.

I remember driving through Santa Clarita, CA with a work colleague and he was flabbergasted by the external displays of wealth.

I just told him that most of these people were broke and in debt up to their eyeballs. He was shocked and I'm sure it wasn't true for all but you know... :)
I wouldn't assume that to be the case in a place like Santa Clara. A lot of those people legitimately make or have quite a bit of money. I don't doubt that some people live beyond their means, however.

If it truly bothers you that you can't save an amount that is comfortable to you while living a lifestyle comfortable to you, it may be time to think about ways you can increase your income. It sounds like you already have the financial discipline/economizing thing down.

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Re: Disposable income... how?

Post by deadlymonkey » Tue Nov 07, 2017 2:19 pm

It is definitely the savings rate. I recruited my wife to the bogleheads side after she mentioned that it seemed other people of the same rank as me spend considerably more on cars, going out, etc... then we do. She had never really been interested in finances before, so I showed her our TSP contribution and our net worth balances and she understood where the money was going. Casually brought up retirement with other friends and they commented on "working till they die", "3% TSP contribution", and other similar statements. She is definitely on board now.

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Re: Disposable income... how?

Post by sambb » Tue Nov 07, 2017 2:48 pm

We have no idea how the others' finances are. Perhaps they have made a lot on investments, or other ways. Dont assume that the neighbors are "overspenders". They may be way ahead of where you are, or way behind. Not everyone with a nice car or a nice vacation is an overspender. I save a lot and have had really nice cars and nice vacations.
Focus on one's own finances and savings.

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Re: Disposable income... how?

Post by Elsebet » Tue Nov 07, 2017 2:58 pm

Slacker wrote:
Mon Nov 06, 2017 9:16 pm
I don't know the OP's story, but no one ever taught us about LBYM, saving and investing when we were growing up; we lived like "average Americans" until 4 years ago when a new friend clued us in and we really looked into the matter completely changing our outlook, like suddenly finding religion. I need to send that friend a thank you note.
Please do thank your friend sooner than later. I was able to thank the co-worker who clued me in just before he retired, now I can't find any trace of him online to send him another note.
"...the man who adapts himself to his slender means and makes himself wealthy on a little sum, is the truly rich man..." ~Seneca

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Re: Disposable income... how?

Post by quantAndHold » Tue Nov 07, 2017 3:12 pm

I assume the 9% you're putting towards debt is to pay off debt you incurred before you "saw the light" as it were, and you're not incurring any new debt. That would mean that you're putting 42% of your net into long term savings and debt reduction, which I can guarantee your friends are not doing. If any of them are hitting 10%, I'd be surprised.

The only thing I would suggest is that if you're uncomfortable with how you're living, you might cut your savings rate down from 33% to 25%. That will give you some "fun money" but not kill your ability to meet your future goals. Once you pay off the debts, then increase the savings rate accordingly.

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Re: Disposable income... how?

Post by stoptothink » Tue Nov 07, 2017 3:29 pm

alfaspider wrote:
Tue Nov 07, 2017 2:05 pm
clutchied wrote:
Mon Nov 06, 2017 2:22 pm
great advice in this thread.

I remember driving through Santa Clarita, CA with a work colleague and he was flabbergasted by the external displays of wealth.

I just told him that most of these people were broke and in debt up to their eyeballs. He was shocked and I'm sure it wasn't true for all but you know... :)
I wouldn't assume that to be the case in a place like Santa Clara. A lot of those people legitimately make or have quite a bit of money. I don't doubt that some people live beyond their means, however.

If it truly bothers you that you can't save an amount that is comfortable to you while living a lifestyle comfortable to you, it may be time to think about ways you can increase your income. It sounds like you already have the financial discipline/economizing thing down.
Santa Clara and Santa ClarITa are two different places. Only reason I noticed is I have a cousin in Santa Clarita who recently had her 5k sqft. home foreclosed, and she (along with her husband and 3 kids) moved in with my aunt...I just saw some amazing pictures on social media of the Scandinavian vacation she is currently on with her husband. Good for her; doesn't effect me, but she is certainly making life decisions I wouldn't.

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Re: Disposable income... how?

Post by alfaspider » Tue Nov 07, 2017 3:42 pm

stoptothink wrote:
Tue Nov 07, 2017 3:29 pm
alfaspider wrote:
Tue Nov 07, 2017 2:05 pm
clutchied wrote:
Mon Nov 06, 2017 2:22 pm
great advice in this thread.

I remember driving through Santa Clarita, CA with a work colleague and he was flabbergasted by the external displays of wealth.

I just told him that most of these people were broke and in debt up to their eyeballs. He was shocked and I'm sure it wasn't true for all but you know... :)
I wouldn't assume that to be the case in a place like Santa Clara. A lot of those people legitimately make or have quite a bit of money. I don't doubt that some people live beyond their means, however.

If it truly bothers you that you can't save an amount that is comfortable to you while living a lifestyle comfortable to you, it may be time to think about ways you can increase your income. It sounds like you already have the financial discipline/economizing thing down.
Santa Clara and Santa ClarITa are two different places. Only reason I noticed is I have a cousin in Santa Clarita who recently had her 5k sqft. home foreclosed, and she (along with her husband and 3 kids) moved in with my aunt...I just saw some amazing pictures on social media of the Scandinavian vacation she is currently on with her husband. Good for her; doesn't effect me, but she is certainly making life decisions I wouldn't.
Oops, that was an oversight on my part :oops:

That being said, I'm sure the general point still stands.

cherijoh
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Re: Disposable income... how?

Post by cherijoh » Tue Nov 07, 2017 4:30 pm

gunn_show wrote:
Tue Nov 07, 2017 11:45 am
I also find this a bit hilarious:
Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.
Then you go on to list a $450 new car payment AND "we haven't bought a second car yet but need to next year" ... meaning within a year you will have two new financed vehicles...
In the original post he mentioned driving a 15 year old car. Since he mentions that the numbers are based on his 2018 budget, I interpreted the $450 car payment to be for the car he plans to buy next year, not one he already has.

But otherwise I tend to agree with you, the budget seems to include quite a few discretionary items which seems to be out of sync with the issue of not having any disposable income.

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Re: Disposable income... how?

Post by BuckyBadger » Tue Nov 07, 2017 4:56 pm

cherijoh wrote:
Tue Nov 07, 2017 4:30 pm
gunn_show wrote:
Tue Nov 07, 2017 11:45 am
I also find this a bit hilarious:

Then you go on to list a $450 new car payment AND "we haven't bought a second car yet but need to next year" ... meaning within a year you will have two new financed vehicles...
In the original post he mentioned driving a 15 year old car. Since he mentions that the numbers are based on his 2018 budget, I interpreted the $450 car payment to be for the car he plans to buy next year, not one he already has.

But otherwise I tend to agree with you, the budget seems to include quite a few discretionary items which seems to be out of sync with the issue of not having any disposable income.
According to the OP, the $450 is the payment on his current car, and he is factoring in another similar payment on a second car for 2018. Not sure how you can have a payment on a15 year old car, though.

There's a lot of room in that budget for two entrees at dinner and a craft beer so I'm not sure that penny wise, pound foolish thinking is super helpful.

I'd probably have suggested he buy less house. A second income would certainly help, too.

We sure do love to judge strangers here. A little less nosing around the finances of other people and a little more worrying about ourselves would probably be more productive...

I dunno. Maybe I'm the only one getting a humblebrag vibe here...

clutchied
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Re: Disposable income... how?

Post by clutchied » Tue Nov 07, 2017 6:08 pm

alfaspider wrote:
Tue Nov 07, 2017 3:42 pm
stoptothink wrote:
Tue Nov 07, 2017 3:29 pm
alfaspider wrote:
Tue Nov 07, 2017 2:05 pm
clutchied wrote:
Mon Nov 06, 2017 2:22 pm
great advice in this thread.

I remember driving through Santa Clarita, CA with a work colleague and he was flabbergasted by the external displays of wealth.

I just told him that most of these people were broke and in debt up to their eyeballs. He was shocked and I'm sure it wasn't true for all but you know... :)
I wouldn't assume that to be the case in a place like Santa Clara. A lot of those people legitimately make or have quite a bit of money. I don't doubt that some people live beyond their means, however.

If it truly bothers you that you can't save an amount that is comfortable to you while living a lifestyle comfortable to you, it may be time to think about ways you can increase your income. It sounds like you already have the financial discipline/economizing thing down.
Santa Clara and Santa ClarITa are two different places. Only reason I noticed is I have a cousin in Santa Clarita who recently had her 5k sqft. home foreclosed, and she (along with her husband and 3 kids) moved in with my aunt...I just saw some amazing pictures on social media of the Scandinavian vacation she is currently on with her husband. Good for her; doesn't effect me, but she is certainly making life decisions I wouldn't.
Oops, that was an oversight on my part :oops:

That being said, I'm sure the general point still stands.
fair point. It was just BK central in the past...

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Toons
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Re: Disposable income... how?

Post by Toons » Tue Nov 07, 2017 6:14 pm

"Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers."

Credit Cards :happy
https://www.creditcards.com/credit-card ... istics.php
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Disposable income... how?

Post by Slacker » Tue Nov 07, 2017 10:25 pm

Leemiller wrote:
Tue Nov 07, 2017 7:30 am
Drop your savings rate to 15-20%, pay off your payments, and take your wife out to dinner without making her compromise on an entree that you both want.

Payments make you feel poorer and so does debt. Notice that the forum doesn’t have a lot of people posting about using zero percent credit cards as a wealth building tool.

Sounds like you have some luxuries but not all the luxuries you want. Sounds like life to me. You choose car payments over a cheaper paid for car. That is a lot of dinners right there. There are many people with a million plus net worth on this forum that drove, or still drive, cheap cars.
I heard a good quote on the radio today:

"Start living the life you can afford, not the life you think you deserve/earned"

randomguy
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Re: Disposable income... how?

Post by randomguy » Tue Nov 07, 2017 11:45 pm

Toons wrote:
Tue Nov 07, 2017 6:14 pm
"Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers."

Credit Cards :happy
https://www.creditcards.com/credit-card ... istics.php
Only like 1/3 of the people with credit cards carry credit card debt. I haven't seen it broken down by income but I bet the percentage of 100k+ earners is lower (and I bet the ones that do have a debt have a lot more than average:)). Now that 1/3s might var (i.e.some one puts their vacation on the card and pays it off over the year. They then go credit card debt free and are replaced by someone else) but you really can't fund much of a lifestyle inflation with credit cards for long. Think about what borrowing 5k/year for 15 years would add up to.

Home Equity refinancing now can give you the big bucks:)

Worry about others is a waste of time. You will rarely ever know enough details to know how they are pulling something off. What you need to figure out is if you are living they way you want. If you are making 100k/year and you can't afford the 15/month for an iPhone, it is because of your priorites in life, not because other people are living it up.

iamlucky13
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Re: Disposable income... how?

Post by iamlucky13 » Tue Nov 07, 2017 11:52 pm

I know where you're coming from. I'm not in a position of saving as much (less than 20% retirement, and a varying amount in taxable depending on my bonus), but I definitely know the sense that everybody around me is able to make their money go further.

However, I've been privy to some conversations about the less happy reality - the challenge of both parents having to work to keep up with the bills, the stress of unexpected expenses, the avoidance of thinking about retirement because of small or non-existent savings, the misgivings of contributing less to charitable causes than intended, etc.

I see you mention your friends are "killing it" with their investing, so I'm glad for their sake they're fitting at least something in there, but who knows what they mean by that. Is it regular meaningful contributions to retirement accounts in steadily growing investments, or is it a handful of individual stock picks in $1k, 2k, or maybe even $5k increments, a couple of which have doubled or tripled that distract from the average returns of the entire portfolio, etc? One of those scenarios feels a lot more exciting, and the other is a lot more significant relative to retirement, and you can guess which is which.

It's weird how even knowing about these distinctions I still often wonder if I'm doing something wrong with my money.

Regardless, you're doing an excellent job of saving in my opinion, and even though you got a later start than I did, I think you'll pass me up in a few years if you keep at it. I've done fairly detailed and relatively conservative calculations for myself and believe I'm on a path with good odds of retiring around age 62, and excellent odds of doing so by age 67, even if social security benefits do have to be reduced as expected.

From my perspective, it appears you're in a position where you can ease up your savings rate a little bit. I'm not talking about going wild, but I would expect that you'd be able to gradually transition your savings rate a few percent lower and still retire sooner than your peers while balancing your quality of life now with your retirement goals. I wish I'd done a little bit better job of that myself.

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Re: Disposable income... how?

Post by iamlucky13 » Wed Nov 08, 2017 12:05 am

Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.
I also have to add: craft beer is cheaper than the less expensive beer, because you have to drink more of the latter to achieve the same level of enjoyment, assuming it is even possible.

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Brokepilot
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Re: Disposable income... how?

Post by Brokepilot » Wed Nov 08, 2017 2:05 am

Sorry for not being clear here...

-I own one car, its 15 years old and paid off. The second car is slowly becoming hard to live without.

-My 9% debt is also my miscellaneous category too. It includes mess dues (work related) and the 100 bucks each month I put into saving for an XMAS fund so the holidays don't hurt so much. Really, I have no big debt, I only have 170 bucks I pay each month (0%) for the next twelve months. It was a camera for my wife's Youtube channel.

-I bought a 190K house. The taxes (3.5%) and insurance are almost as much as my mortgage. Not my choice of location, orders are orders......

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simplesimon
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Re: Disposable income... how?

Post by simplesimon » Wed Nov 08, 2017 6:17 am

Brokepilot wrote:
Wed Nov 08, 2017 2:05 am
Sorry for not being clear here...

-I own one car, its 15 years old and paid off. The second car is slowly becoming hard to live without.

-My 9% debt is also my miscellaneous category too. It includes mess dues (work related) and the 100 bucks each month I put into saving for an XMAS fund so the holidays don't hurt so much. Really, I have no big debt, I only have 170 bucks I pay each month (0%) for the next twelve months. It was a camera for my wife's Youtube channel.

-I bought a 190K house. The taxes (3.5%) and insurance are almost as much as my mortgage. Not my choice of location, orders are orders......
You're doing a great job saving and your purchases are reasonable. Many here just don't like buying using credit cards or loans (except for mortgages). $190k house on $100k salary is good. 33% savings rate is good. Just keep at it...consistency is key.

If you want more disposable income you can wait until you get promoted, try to create side income, look for expenses that you can cut, or dial back a little bit of the savings.

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Brokepilot
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Re: Disposable income... how?

Post by Brokepilot » Wed Nov 08, 2017 12:36 pm

Current Portfolio.

viewtopic.php?f=1&t=231833

alfaspider
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Re: Disposable income... how?

Post by alfaspider » Wed Nov 08, 2017 12:56 pm

iamlucky13 wrote:
Wed Nov 08, 2017 12:05 am
Brokepilot wrote:
Mon Nov 06, 2017 12:12 pm
Seriously I don't understand how people can just buy new phones, new vehicles and still go out every Friday eat a nice dinner and drink craft beers.
I also have to add: craft beer is cheaper than the less expensive beer, because you have to drink more of the latter to achieve the same level of enjoyment, assuming it is even possible.
Or just brew your own and drink craft beer for cheaper than swill :sharebeer

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akblizzard
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Re: Disposable income... how?

Post by akblizzard » Wed Nov 08, 2017 1:04 pm

There are more knowledgeable folks than me that can comment on your portfolio. But I'll toss this at you for your consideration...I was able to take our investing to the next level a few years ago (and retire this yr, thank you very much) after wife and I got on board (together) with a budget. We did this late in our careers, and it made an amazing difference for us. Wish we had done it much sooner. Don't make my mistake of thinking budgeting is only for those "who make less than me". Your mileage may vary, we use YNAB.com.
Stay safe

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Re: Disposable income... how?

Post by jayk238 » Wed Nov 08, 2017 2:29 pm

Grt2bOutdoors wrote:
Mon Nov 06, 2017 12:23 pm
You are a Prodigious Accumulator of Wealth (PAW). The folks you are wondering about are Under Accumulators of Wealth (UAW). - source: The Millionaire Next Door. I'm currently reading the latest edition of Stop Acting Rich by the same author - Stanley. I read the first book, most of the spending is in the form of debt - lease, home equity or failure to save any money. They could also feel that since the value of home and retirement account is rising, they can afford to spend from paycheck. They are living the paycheck to paycheck lifestyle. Do not fall for it, you are doing fine, in about 10 years you will have saved more than what most of your friends save over a lifetime.
Its hard for me to take serious the author of millionaire next door when he died because he was driving his corvette way too fast. Basically he sold us on a bag of goods - made boat loads of money writing that book and then died doing the opposite.

Im not saying never enjoy your money- you certainly can- even if he had a huge bank account when he bought the Corvette- he still lived with a lot of risk. He just transferred financial risk to lifestyle risk showing that if you try to live years and years below your means or have no outlet to enjoy you will increase your chances of risky behavior. Trading one risk for another is still, in a way, dishonest when taking in context his writings.

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