OK, here is a question for everyone. How do you deal with your personal finances? How do you decide how much you should save and how much you should spend on yourself?

The reason I ask is that I always have difficulty working this out for myself, though I am fortunate that I end up saving too much rather than spending. I am a grad student and don't get paid a huge amount. Until recently I had debt from college, but I worked and saved my butt off, and now I am debt free. But now that I don't have debt to pay off, I don't know where I should be putting my money! I automatically save 10% of my income every month, and almost always more than that... but I live like a pauper and it is starting to get very old. I do have a retirement account but it is small. Anyway, I know this is an odd thing to ask, but any advice would be appreciated!

Income - Expenses = Surplus

If Surplus > 0, then you're ok.

Where Expenses are anything you want or need.

Try and contribute to your retirement account and other investing with a portion of your net income. I use a broker to manage that side of things, he does the research and comes back to me. I then look into the matter and make decisions.

You need to set up your own retirement system, otherwise, you'll probably end up SOl after the baby boomers hit social security, I predict a disaster, cuz the money ain't there!

Ohh.. one more tip - diversify.

I have 2 words for you...DAVE RAMSEY.

Read this book and get back with us when your done.
http://secure.centercube.com/ProductImages/large/Product_137061.jpg

you gots to diversify your bonds.

just ask the wu

difference between rich and poor is simple:

poor people spend first save later
rich people save first spend later

i have about 20% of my income going directly into retirement, another 30% paying off my mortgage (at least some of it is recouped as equity), 20% in taxes

of that last 30% i really should be dumping as much as possible into my roth and more into my mutual funds. instead im wasting it on beer, and driving schools (though not both at the same time).

my advice is just save, save, save, and once you are out of grad school, leverage that degree to get a high paying job. save up at least 6 months expenses (or more if you desire to purchase property) in case you get laid off etc. once you are at that point, i guess you can up your consumption level.

additonally, everytime you get a promotion, up your savings rate, so that your actual free spending money is the same as you had before. that way you won't miss the extra cash.

i lived cheaply during my undergrad and as a result had plenty of money saved up to purchase a house (helped by an inheritance) when i was 23. the house alone wound up saving me money due to tax advantages. with the current housing prices, im not sure if that approach is such a good idea though for a new buyer.

Put some aside for retirement, and invest some with a broker, or perhaps in real state. Last, but not least, try to indulge yourself in something that pleases you. Nothing extravagant, nor does it have to be a trip to another country or state. But it's good to pamper yourself every once in a while if you are financially solvent. There is no joy in life if you don't give yourself the chance to savor the fruits of your labor, and stop to smell the roses. I know, it sounds gay, but it's true.

Real estate usually isn't a very good investment unless you have multiple properties. It can be a pain the the ass too.

Once you have some good $ saved(10K min), you can start to really invest it and make it work for you. Until then, mutual fund it, bank it, etc, safe investing.

Real estate usually isn't a very good investment unless you have multiple properties. It can be a pain the the ass too.

Once you have some good $ saved(10K min), you can start to really invest it and make it work for you. Until then, mutual fund it, bank it, etc, safe investing.


Depends on what you do with the real estate. from a pure speculation standpoint or relying on the property as a 100% rental, I can understand.

alternatively, purchase a condo/townhouse/single family, and rent it out via roomates in order to subsidize your own mortgage. that is a much lower risk investment since it is something you would have anyways.

:I dunno guys. My opinion is that you don't need to own multiple property to make $$$ in real state. I bought an 1-1 apt last september, and the the value of that property has raised by $40K already. Renting property can be a pain in the ass, and in fact, you may be strapped out of money at first (fixing broken **** whenever tenants complaint), but it's worth it if you look at it long term.

*** EDIT ***
Tarendol, before anything else, open an IRA or 401k if you don't have one already. And if you can, buy some property FOR you before you get married (and make sure it stays yours in the prenups :hmh: ). It doesn't have to be a family house, nor you should expect to live in it forever. Look at property as an investment, not like the pretty house with a white fence you want to bond with :headbang:

Honestly - I grabbed a years subscription to money magazine and it gave me enough info to be able to do my own research. Not that I do or anything - that **** is boring.

Real Estate investment for the win.

2.5 years ago we bought at $121,000 they are selling today for $210,000 but we live in Las Vegas so that isn't going to be great example.

Gonna get out of this place later this year. Pay off the car and credit cards and some of the student loans my wife has. With what is left over we buy another POS house and fix it up. Sell again a few years later.

Wage earning is one of the hardest ways to retire. Pensions are being phased out. You can no longer count on them. Social Security has been shakey for a long time. The only way to know for certain is to invest early.

My ROTH IRA only allows $4k year. My company does not allow for 401k. My wife is a teacher and also does not provide for 401k but she has teacher pension.

So our focus is to buy real estate and fix it up. We have the tools and the skills. So that is where we will make our 'real' money. Because the investments we have are a pitance. My objective is to make enough money to buy a house outright with no mortgage. Without credit card debt and a mortgage you can see some real savings.

That's right. The interest you pay on debts sucks your savings away.

I'd actually recommend against real estate right now unless you live in an undervalued area -- EVERYBODY and their mother is predicting that the real estate bubble is going to burst any day now, and the real estate market is, in fact, slowing in many areas. (See for example: http://money.cnn.com/2006/01/23/real_estate/most_markets_more_overpriced/index.htm) South Florida's still a pretty booming place ATM, though.

Good advice on the IRA thing, you're allowed 4K (IIRC?) a year to put in.

Most of my money is in CD's, but I'm an engineer and hence very risk averse. The higher the risk, the better the yield, and all of that. (Diversifying also reduces your risk, and according to one of my friends who works at a hedge fund, buying one stock is generally not a good idea unless you have special knowledge that the market does not.) It all depends on if you think that we're headed into another recession (the internet bubble bursting took down even some pretty diversified portfolios) or not.

As to how much ... well, I'm a grad student too, and depending on where you live (and if you have a family and stuff), the average stipend is either decent, or really bad. Sometimes,w ell, if you don't get nice things for yourself, who is?

I went to money.com and in one of their areas (i forgot which) it shows a list of 100 places in the U.S. with over/undervalued homes.

For example : Places like Santa Cruz in CA and Las Vegas are overvalued at like +38% !!!! But the best values were found in Texas. 7 of the best 10 were in Texas. They were undervalued like -3% to -23%. I think the -23% value was College Station. I wouldn't want to live there. But Austin TX was undervalued like 7%.

So we are gonna jump off this ship before it sinks and get into an undervalued market.

:I dunno guys. My opinion is that you don't need to own multiple property to make $$$ in real state. I bought an 1-1 apt last september, and the the value of that property has raised by $40K already. Renting property can be a pain in the ass, and in fact, you may be strapped out of money at first (fixing broken **** whenever tenants complaint), but it's worth it if you look at it long term.

You don't need to own multiple properties to make money, however, if you don't diversify and what you do buy is a "dog", then you take a much bigger hit. I prefer to get a group together (a few people) and have multiple properties, you might make less from each, but in the long run it is more stable and you become less "attatched".

I also recommend commercial over residential if at all possible. Commercial property has it's headaches too, but they seem to come at one time rather than someone calling to change a light bulb at 4am.

With commercial you can make your tenant responsible for everything (even taxes, not just taxes over base) if they will agree to it. You don't pay a dime (except maybe the mortgage if you financed, which you should) and are generally responsible for nothing. Unless of course you own a AAA building for office space.