NewYorkBuck
Do not read this title
Some really nice posts here. I think the point is understood by everyone that you have to save early. Each year you delay, you are not truncating the early years, you are really truncating the most valuable late years - where your assets are the highest.
Also, I know many said it is hard to save, especially when young and especially with kids. I agree it is harder, but probably not as hard as you think if you stepped back. For instance, the Chinese earn 5% what we do yet save more by a factor of 80. (Using 0.5% as national savings). I think it is just the human condition in America to raise spending with income from year to year. I see this at all income levels. We all know the lottery winner who dies broke, but I also cant tell you how much designer clothes I used to see in South Harlem by Columbia U. A way to get around this is to make a budget and stick to it. Youd be surprised how much is wasted when there is no plan. Perhaps the saddest part is study after study shows such consumption really adds no long term happiness. Study after study shows financial independence does though.
One thing I do sometimes when Im facing a large purchase is to think of it in future dollars. Ill use the oft cited example here of the Porsche I was thinking of buying last year. It was going to be about 85 grand, which is a tidy sum in its own right, but gross that money up at a 7% real rate, and in 25 years thats almost a half million dollars. Enough for a decent summer house, kids education, or FIVE new Porsches. Add on the extra maintenence and insurance, and the numbers are even worse. So to me - what is better - a Porsche now that would be worth about 10k in 25 years, or that same investment worth a cool half mil? You can do the same calc with almost anything - the bigger the cost - the more pronounced the effect is.
Happy budgeting!
Also, I know many said it is hard to save, especially when young and especially with kids. I agree it is harder, but probably not as hard as you think if you stepped back. For instance, the Chinese earn 5% what we do yet save more by a factor of 80. (Using 0.5% as national savings). I think it is just the human condition in America to raise spending with income from year to year. I see this at all income levels. We all know the lottery winner who dies broke, but I also cant tell you how much designer clothes I used to see in South Harlem by Columbia U. A way to get around this is to make a budget and stick to it. Youd be surprised how much is wasted when there is no plan. Perhaps the saddest part is study after study shows such consumption really adds no long term happiness. Study after study shows financial independence does though.
One thing I do sometimes when Im facing a large purchase is to think of it in future dollars. Ill use the oft cited example here of the Porsche I was thinking of buying last year. It was going to be about 85 grand, which is a tidy sum in its own right, but gross that money up at a 7% real rate, and in 25 years thats almost a half million dollars. Enough for a decent summer house, kids education, or FIVE new Porsches. Add on the extra maintenence and insurance, and the numbers are even worse. So to me - what is better - a Porsche now that would be worth about 10k in 25 years, or that same investment worth a cool half mil? You can do the same calc with almost anything - the bigger the cost - the more pronounced the effect is.
Happy budgeting!
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I think it sounds like a terrific plan! I still stash all my money in a matress, the government won't find it there... LOL
