Money Matters

As promised, I want to start this thread to deal with all matters financial. Without disclosing personal information (of course!), let's discuss any elements of personal finance, investing, saving, etc. I am not an expert, but it is one of my interests/hobbies and I follow it pretty closely. So feel free to ask general questions like how the economy works, what does the Federal Reserve do, how does the government affect the economy (less than many people think), what is a mutual fund, how does the stock market work, etc.

It's a good tie-in to the retirement thread. So I will start with that - for those already retired, do you feel you prepared sufficiently for retirement? Should have saved more? How did you save? Do you have a good pension? 401(k)? How much did you sacrifice to save for retirement? What mistakes did you make?

For those still working - are you saving enough? What are you doing to save more? Of course, those unemployed have a much more pressing need and can't really think about saving for retirement.

A few things off the top of my head. Avoiding getting into debt is the number one thing I try to impress upon young people starting out. Obviously saving starts with income and that means getting a good job so education is more critical than ever. It's getting to the point where a masters is practically necessary. It's the equivalent of what an undergraduate degree was years ago.

Other parts of 'building the foundation' include living within your means (biggie!), getting insurance (health, life, disability, long-term care, etc.), putting money away regularly and investing diversely.

We've only just got to the point where I can pay the plumber without getting a lump in my stomach. We save a 1000% more than we used to, which was nothing. Enough? Who knows. What's enough?

Financial advisor at our network group suggests having 18 months- 2 yrs worth of savings for expenses easily accessable.

When we were engaged we had an understanding we'd have 20K in the bank before getting married, we've always paid our credit cards every month and always live within our means. Hubby(I think ) is a little on the stingy side because his dad has money problems when he was a teenager, he doesn't want to end up like that.

Amazing to me when people go into a marriage with all the credit cards maxed and then take a extravagant honeymoon and have to buy a house right away.

Yes, it amazes me too. The housing collapse and the Madoff fiasco revealed just how dumb so many people are. We saved to have the 20% down for the house. We rarely ate out, only took one small vacation per year, etc. We never carry balances on the cc. When I was working, we made sure we cut where needed so we could both out the max into the 401 (k).

Exactly! When I quit working, I planned everything out to make sure we just used hubby's salary for all expenses then got a part time job just to cover my car payment at the time, then I got pregnant so for 1/2 year I had to save a little more since I stopped working. Then buying our new house we wanted to keep around the same payment we were making on the old house. The mortgage broker said "oh we can give you a bigger mortgage, but I don't recommend it" . We wouldn't even think of counting hubby's overtime in the amount since you don't know if that would last.

Yes, they were already playing games in late '95 with weird mortgage products. I said no thanks! Give me a boring fixed rate, 30 yr mortgage with 20% down.

Yeah, us too.
What was up with those interest only loans???

Don't know and never wanted to.

One of things I've noticed during the whole housing thing. Is young couples buying these enormous houses and then not being able to furnish them. We had people that bought the house across from us where we used to live (they were traditional cape cod houses)and just to keep up appearances had changed the siding and roof just on the front and sides of the house. The back looked horrible.

Never understood that keeping up with the Joneses thing.

I have no mortgage, I bought my house outright. I remember when I was making the deal, my lawyer told me he could get me a mortgage for 1%, (that was when banks were lending like crazy), I asked him if you could buy a pair of pants today for $20 or for 20.01 tomorrow which would you pick?? … so much for that.

We have one credit card which we haven’t used in 4yrs, zero balance. We love to travel and have taken a few exotic vacations, but lately the last few years after 911 we’ve cut down, (I’m more worried about the overzealous security people than the terrorists and I hate the way the airlines treat you nowadays… $8 for a pillow, lol)

DW works in investment banking and we have a few investments… she knows more about that stuff than me. (lol)

Nice to have no mortgage! My escrow payment (tax plus insurance, but mostly tax) is now more than my mortgage.

For investments we have mutual funds for the pensions and 401 (k) plans. I have a relatively small individual stock portfolio I 'play' with. And for the past few years, I have gotten into collectible books as a way to further diversify.

We also save as much as we can. Always pay off the card when it comes in - don't carry a balance. We did refinance when we had 3 kids in college at once. Thankfully the other one went to the USCGA in CT. He is paying now with his service. He has 10 years in already this year and is in line to become a Lt. Commander this spring. Would it be wise to pay the mortgage all off? It's still a pretty sizable chunk o' change.

What are the new cc changes that are going to penalize 'good' customers like us. Or did I misread that?

We are pretty diversified, too.

Any ideas about appraisers? I think I should have mom's stuff appraised now. Mostly art work and some antiques.

I would ask around about appraisers. No experience there.

Paying off debt vs. investing is always a tricky proposition. We pay extra each month in order to pay it off faster. If I thought I could definitely not get a better return on money than the mortgage interest rate I am paying, than I would consider paying more of it off.

Credit card:

http://www.marketwatch.com/story/story/print?guid=9C252E80-79E8-4297-B416-0F6C832B0006

I’d stay away from appraisers; they just want a piece of the action. With the advent of E-bay and the internet I’d do my own research… I wouldn’t hesitate paying off the mortgage if I thought I had a sound investment. I’d figure I’ve just converted some of my assets, but I haven’t lost anything. Leaving that much liability exposed to the whim of taxes just is just too unnerving to say the least, especially since taxes never go down! (lol!) They’ve done some studies on how much people end up paying for their homes after the mortgage is satisfied – the amounts were phenomenal!!

–That’s just my opinion though, situations change from individual to individual… ☺

Thank you.

For years I couldn't understand how everyone was going on these great vacations and had new cars and new furniture. Why, I didn't even have matching towels until I had been married for 27 years! Instead, DH and I never carried a balance on our cards, hardly ever bought new clothes, and didn't shop for entertainment. We hardly ever go out for dinner (pizza delivered is a big treat!). How did everyone else manage it????

Then the economy crashed . . . we never felt a thing. For us, it is just life as usual. I am fortunate to be tenured. But the advice given to people - like take a bag lunch to work! Are you kidding????? I have always taken a bagged lunch to work. The idea of carrying a balance on a credit card for a lunch you ate 6 months ago is bizzare!

I do agree that having 2 years of savings is ideal - and we are working on it. But we have managed living on one wage for 33 years (first DH, and now me). And we live by our wits. We hire professionals for jobs we really can't tackle, but the majority of fix and repair work is done by DH.

And we bought housing we could afford.

I am sorry if I sound a bit smug - but after years of wondering what we were doing wrong - it's nice to think we might have been doing things right.

Before anyone gets too excited regarding changes to the credit card regulations, check out this frontline documentary

http://www.pbs.org/wgbh/pages/frontline/creditcards/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

jan appraiser's cost $, do you intend to sell your mom stuff later? or gift it to the family? i am the executor for both of my parents and everything will be sold and proceeds divided. if anything needs to be appraised it will be done when it can charged to the estate.

here we never carry cc balances, over pay the mortgage each month (recently re-fied to a very low 15 yr), max out the 401K's (at least when i was working, may drop the max in roth for last year), and keep them diversified in mutual funds. a also do not keep them in the same firm, they are split between two large firms and 401K with employer, and always rolled out with a job change - will say since we are young we do not have much in bonds as i believe there is time to re-coup any downturn until needed. that will change over the next 5-7 years.

a story from the other side of the street - my brother told me that his sil/bil - who have had financial problems in the past decided to file for bankruptcy - before doing so they initially loaded their cc with 85K in debt and redid the interior of their home - then filed - all cc debt was washed clean - claims they "brag" about it. bi consider is in law enforcement evidently they did not consider this a crime. and set a nice example for their kids.

what scum!

Wha, I'm the executrix of mom's estate also. She has said all her 'things' in our house are mine. However, that is not written down. I know that needs to be done. I don't expect any problems, but would just like to know the value. I know appraisals cost money, but do think it would be beneficial. Mom would pay for it anyway. When mom and dad moved in with us 11 years ago, they brought a lot with them and the 'family' could have what they wanted from the rest. My family didn't take anything, cuz we will have what they brought down here. I do think I'll sell some of the art though and give the proceeds to my kids.

DH would dearly like to retire after next school year. The big thing would be medical ins. We'll be looking into different options. Maybe he'll stay on part-time so he could get some benefits if they would even consider that.

Scum indeed!

I can't believe that people can do that and get away with it...

yes - best to get in writing and if you are that curious than go ahead and have the appraisals done, maybe piggy back both at the same time.

yep - and they are very religious too - falls under the "how do you sleep at night"

i know cc companies are predators, this is one of the reasons why they are.

I'm so glad for this thread! I don't have any money. Ha!

I have questions, but must get up and do some sewing I have planned for today.

I have always detested the bankruptcy laws. It's beyond disgusting.

Appraisers are a necessary evil if you have no expertise.

WC - never heard of taxes going up because of paying off the mortgage!! Please elaborate.

Michaela - everyone else 'managed' it by doing everything on credit - hence the worst economy since the depression.

Market is way off today - large jump in new unemployment claims seems to be the main reason. The market was way ahead of itself. That's why I have moved LOTS of our retirement money to money markets for now. Pay attention to what's happening in Greece. It will spread. Also, yesterday's report on new home sales in January was the worst since they began keeping records in 1963. This is with the $8k tax credit and the Fed Reserve still purchasing mortgage loans. Bad news.

Sorry you were confused Victor, I don't see anywhere I said that... lol

I think we should also share tips for saving money. I, too, always took my lunch to work. That had to save hundreds per year.

Increasing your 401 (k) contribution is always good and because it's pre-tax, your take-home pay is less than a dollar lower for each dollar contributed.

It's much easier to save when you do it automatically from your checking, if you can swing that.

Also, investing regularly - every month or every paycheck from your checking account is better for evening out market fluctuations - 'dollar cost averaging.'

Okay then - what do you mean by this?

"Leaving that much liability exposed to the whim of taxes just is just too unnerving to say the least, especially since taxes never go down! (lol!) They’ve done some studies on how much people end up paying for their homes after the mortgage is satisfied – the amounts were phenomenal!!"

It's true, you don't know what taxes are going to be imposed in the near future the cover the financial problems of this country or where they're going to impose them, they're making up as many new taxes as possible, as fast as they can. So it's better to keep things tangent, close at hand, rather than unfinished, 'unpaid for', that just a loose string you don't need. (assuming you have the 'capital' to remove the debt...)

Okay.

☺!

i brought my lunch to work to - do not go to duncan donuts and do most everything myself to the home - now i do go overboard on gardening:)

You don't say!!

Has anyone cut back on garden purchases? Doesn't seem so!

I always have to compromise on garden expenses! I NEVER get to spend what I really want to spend! You know, like those $150,000 landscaping makeovers they feature on HGTV. ^_^

Those are ridiculous! And what fun is there in having someone else do all the work?!!

I’ve cut back and I’m getting better deals now. Before I used to buy a ‘special plant’ that the catalog sold me for ## dollars, now I shop around locally more and go the extra mile and I’m finding a lot of the plants I used to find in the catalogs for # dollars, besides that they’re larger and suffer less stress when transplanted, so cutting back is working out just great for me! It also seems the local greenhouses have been getting a larger selection than they’ve had in the previous years, more of the once 'hard to find' plants.

That's good. I think the locals felt the pressure from the web sources and had to diversify a bit to compete.

Jan I could help some what with antiques and if not probably tell you where to go. You would be surprised to find out that a salt and pepper shaker could go for 300 bucks and it looks like nothing.

My DH has been retired over 20 years, I've been retired over 10---when we taught, we didn't pay into SS, just CT Teachers' Pension---but DH worked summer & parttime jobs to get SS, it is minimal, but the med. ins. is the important part---but we also both have to supplement SS with health ins. purchased from our retirement pension---- both of us paid into our own retirement funds as long as we worked---we are doing OK---not spendthrifts, our mortgage was paid off many years ago---we remortgaged when we bought the FL home, but that's sold, the mortgage paid. My folks paid for our son's college tuition. I would love to do my kitchen over, but DH gives the extra to the kids---our son's inlaws are wealthy---they have set up a college fund for all 6 of their GKs, plus the blueberry farm also contributes to their college fund, I keep telling DH the kids are better off then we are, but he doesn't listen!