How much income is enough?
- Thread starter Swagdaddy
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BrutulTM
Good, bad, I'm the guy with the gun.
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For the record, I'm not saying you can't go on vacation or ever go out to eat or whatever, you should just prioritize it behind your savings, because compound interest is so fucking effective on money you save in your 20s and 30s and so much less effective on money you save in your 50s and from what I've seen most people do little to nothing for retirement in their 20s.
Cars are a great example of this. You can get a reliable used car that will get you to work every day and need little to no repairs for $10-15k yet people I know who are definitely not rich are buying cars that cost $50k and paying interest on them. When you look at the amount of "happiness" that a 50k car brings you vs. having 5-10 times that amount in your retirement account down the road it's really questionable. Some friends of mine spent $60K putting a small pool in their backyard in the middle of the 2008 stock market crash. If they had invested that money then it would have more than doubled...probably tripled by now and I really wonder how much they use that pool vs. the amount of time they spend maintaining it.
Personally, I think happiness comes from things you accomplish, things you build, and your family, not from how fast your car does 0-60 or going to a museum in a foreign country. A fancy car makes you happy for a week or two after you buy it, but eventually it's just the thing that gets you to work every day. I'm not saying you need to be Warren Buffett with $60B in the bank and still living in a small, old house and using coupons when you go out to dinner but you have to look at vacations and such as an extravagance, not as a priority and don't compromise stuff that's important for stuff that's not.
Cars are a great example of this. You can get a reliable used car that will get you to work every day and need little to no repairs for $10-15k yet people I know who are definitely not rich are buying cars that cost $50k and paying interest on them. When you look at the amount of "happiness" that a 50k car brings you vs. having 5-10 times that amount in your retirement account down the road it's really questionable. Some friends of mine spent $60K putting a small pool in their backyard in the middle of the 2008 stock market crash. If they had invested that money then it would have more than doubled...probably tripled by now and I really wonder how much they use that pool vs. the amount of time they spend maintaining it.
Personally, I think happiness comes from things you accomplish, things you build, and your family, not from how fast your car does 0-60 or going to a museum in a foreign country. A fancy car makes you happy for a week or two after you buy it, but eventually it's just the thing that gets you to work every day. I'm not saying you need to be Warren Buffett with $60B in the bank and still living in a small, old house and using coupons when you go out to dinner but you have to look at vacations and such as an extravagance, not as a priority and don't compromise stuff that's important for stuff that's not.
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My biggest concern is whether there will be enough fresh water to counteract all of the salt created when they:
a) tax your retirement accounts to plug holes in Social Security
or b) make SS more progressive so that you don't get any distributions, since you saved enough on your own
I am not saying you shouldn't bother saving - SS will certainly not support your desired standard of living, but you shouldn't be putting off all luxuries now with plans on enjoying them later in life.
a) tax your retirement accounts to plug holes in Social Security
or b) make SS more progressive so that you don't get any distributions, since you saved enough on your own
I am not saying you shouldn't bother saving - SS will certainly not support your desired standard of living, but you shouldn't be putting off all luxuries now with plans on enjoying them later in life.
I find my biggest challenge right now at 30 is balancing the savings/retirement vs spending for fun/enjoyment.
I try to look at saving now as a big payoff for years later down the road but obviously there are some things that I will forfeit in the now. But then I think "is it worth the sacrifice?" Living like a pauper so that you can retire 20-40 years later has its drawbacks. But I don't want to be one of those people living paycheck to paycheck because "you could die tomorrow brah enjoy life!".
What is the sweet spot? Does it change based on age?
I try to look at saving now as a big payoff for years later down the road but obviously there are some things that I will forfeit in the now. But then I think "is it worth the sacrifice?" Living like a pauper so that you can retire 20-40 years later has its drawbacks. But I don't want to be one of those people living paycheck to paycheck because "you could die tomorrow brah enjoy life!".
What is the sweet spot? Does it change based on age?
You seem to focus on the two extremes. The debate is in the middle. Putting 10% in a 401k vs 25%. It's easy up say save it all and be backed up by numbers, but to what end?
alavaz
Trakanon Raider
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Soygen
The Dirty Dozen For the Price of One
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The "sweet spot" is different for anyone. Picasso plans on dying at 59, so about 2% into savings is his sweet spot. I will live to 113 and don't need to see all of Europe before Muslims destroy it, so I can comfortably put about 20% away.
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Noodleface
A Mod Real Quick
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There is a difference between a "working capital cushion" to absorb large, unexpected expenses and an "emergency fund" which is meant to cover a period of unemployment. Some of those credit sources will shut off as soon as the bank learns of your loss of income. But even if they didn't, would you really want to rack up a balance at 8% (or 20%+) interest over several months?
Although 6-months salary is the rule of thumb, it depends obviously on your cost of living. In NC, with a working spouse and no standing consumer debt, $20k is fine as long as your mortgage payment is less than $3k/mo. Home equity does not count toward emergency savings - it needs to be in something liquid like a savings or brokerage account.
Soygen
The Dirty Dozen For the Price of One
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BrutulTM
Good, bad, I'm the guy with the gun.
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About 20% is where I'm at too, although I was lucky enough to inherit 50% of a piece of land that is worth $5+ million and could be leased out for at least $120k a year I choose to bust my ass and live on $30k a year because this cowboy shit is just so much fun.
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BrutulTM
Good, bad, I'm the guy with the gun.
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And when you wreck it and are trapped in a comatose tomb you'll at least be glad you didn't hold onto that money you can't use.
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Fight
Ahn'Qiraj Raider
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I am about 12 years removed from college days. My friends and I all started at about the same place, but I am a lot further ahead than most of them now because what I decided to do with my money.
For me, it started in high school. Freshman year, I mowed lawns over the summer, bought a few video games here and there, but mostly saved my money and put it in the stock market. With that, I paid for my own college debt free. I still always worked part-time during the semesters and full time in the Summers and had about $15k when I graduated.
Me and 3 college buddies were renting a shit-hole at the time, so when we graduated, I offered to buy a place if they would pay me rent. So, that $15k was the 10% down I needed on a $150k 4-room house. They paid the mortgage, we split the water, electric, gas, and internet four ways. So, even though I was barely making $30k at my job, I was able to continue to put money away. Bought rental house 5 years later, another one 2 years after than, and a 4th a year after that. My renters pay the mortgages and I still clear between 37% - 90% profit off the top each month. It is a snowball rolling downhill effect that is still picking up speed.
If I told you my yearly salaries at my day job during that time, you might call bullshit because I have never made anything to brag about. It is not how much you make, but having discipline and a financial plan with what you are going to do with it. I am a believer in goals. Set them, tell your friends and family about them (accountability), and then be patient enough to stick to the plan.
Most of my friends are still living in shitty 600 sqft apartments and can't even afford to put any money away each month into their 401k's because they buy a new car ever 3 years, rolling their previous loans on top of the new ones.
Your average person does not have much control over the income or salary they are able to make, you just kind of take what you can get. BUT you do have control over what you do with your money. Make your money work for you, turn every $1.00 you make into a $1.50.
For me, it started in high school. Freshman year, I mowed lawns over the summer, bought a few video games here and there, but mostly saved my money and put it in the stock market. With that, I paid for my own college debt free. I still always worked part-time during the semesters and full time in the Summers and had about $15k when I graduated.
Me and 3 college buddies were renting a shit-hole at the time, so when we graduated, I offered to buy a place if they would pay me rent. So, that $15k was the 10% down I needed on a $150k 4-room house. They paid the mortgage, we split the water, electric, gas, and internet four ways. So, even though I was barely making $30k at my job, I was able to continue to put money away. Bought rental house 5 years later, another one 2 years after than, and a 4th a year after that. My renters pay the mortgages and I still clear between 37% - 90% profit off the top each month. It is a snowball rolling downhill effect that is still picking up speed.
If I told you my yearly salaries at my day job during that time, you might call bullshit because I have never made anything to brag about. It is not how much you make, but having discipline and a financial plan with what you are going to do with it. I am a believer in goals. Set them, tell your friends and family about them (accountability), and then be patient enough to stick to the plan.
Most of my friends are still living in shitty 600 sqft apartments and can't even afford to put any money away each month into their 401k's because they buy a new car ever 3 years, rolling their previous loans on top of the new ones.
Your average person does not have much control over the income or salary they are able to make, you just kind of take what you can get. BUT you do have control over what you do with your money. Make your money work for you, turn every $1.00 you make into a $1.50.
Alex
Still a Music Elitist
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I'm 30 years old and I'm not saving the yearly max. Not even close really. But I already have a pretty decent amount locked up in my 401k and I'm contributing almost 10% of my income. Pretty sure I'll be fine. Sounds like some of you guys treat saving money like a hobby. And that sounds sad and boring. I think Brutul honestly kind of hates living. I don't want to be hiking the Alps or Machu Picchu or trying to bang young Irish lasses when I'm in my 60s. Who knows, maybe I'll still be seeing destination concerts at Red Rocks and doing shrooms and molly when I'm that age. But those are pretty fun things to do right now that I doubt I'll regret. Fucking squares, the lot of ya.
Crone
Bronze Baronet of the Realm
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I'll forever regret my choices over the last 2 years since losing my job. Between unemployment, and not adjusting to the new job wages, I burned through all of my retirement account to keep things going. $80k gone that had built up over 8 years at my previous job. Now I'm 33 and starting over. I know I still have time, it's better than having nothing and being 50, but I'll regret it forever.
Luckily, at least I hope, hitting rock bottom and realizing there isn't an IRA ACH withdrawal ready and waiting to bail me out has given me a wake up call and I can adjust and keep things in check as I move forward into another new, hopefully longterm job.
Luckily, at least I hope, hitting rock bottom and realizing there isn't an IRA ACH withdrawal ready and waiting to bail me out has given me a wake up call and I can adjust and keep things in check as I move forward into another new, hopefully longterm job.
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