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Mr_Asa
Mr_Asa UltimaDork
12/1/22 11:33 a.m.

So my new job pay just hit.  Uhh... wow.

I've never been paid this well and I've been struggling so long that seeing this I'm immediately filled with "I can buy this, and I can buy that, and that and that, this thing, that thing over there..." etc and as of right now I don't trust myself.  

I've got a couple things that I absolutely have to knock out.  I can pay for the rest of the parts for the truck's engine rebuild.  I can pay off my only credit card.  I can get a couple other things taken care of.

But once I do that, how do I save myself from myself?  I'm already set up so I'm contributing above my company's retirement match, so thats good but what else?

hunter47
hunter47 Reader
12/1/22 11:35 a.m.

401k, Roth IRA, ESPP if you have it, general investment account. 

stroker
stroker PowerDork
12/1/22 11:38 a.m.

Whatever the berkeley you do, do NOT open Facebook Marketplace.   That should be 90% of it, right thar. 

 

dclafleur
dclafleur Reader
12/1/22 11:38 a.m.

In reply to Mr_Asa :

Save money first, just set it up to move the money automatically. 

Toyman!
Toyman! MegaDork
12/1/22 11:38 a.m.

In reply to Mr_Asa :

When I was younger, I used a passbook savings account. The only way to access it was to go to the bank with the passbook. Without balance info, you kind of forget how much is in there. 

Now, I'd probably use an IRA short-term and mutual funds long-term. 

 The gist is, get the money out of your day-to-day account. 

 

 

barefootcyborg5000
barefootcyborg5000 PowerDork
12/1/22 11:42 a.m.

Get kids. they'll spend it for you. 

mfennell
mfennell HalfDork
12/1/22 11:42 a.m.

If you can, split your paycheck to two accounts.  Assign one as 'fun' money, one as 'responsible' money.  Don't feel guilty about spending from 'fun' account.  Don't buy fun things with your 'responsible' account.

ddavidv
ddavidv UltimaDork
12/1/22 11:44 a.m.

We do the same thing as mfennell. The play money accounts really are a lifesaver.

I also have automatic deductions taken and max out my retirement account. And I never, ever touch what is in there.

wae
wae PowerDork
12/1/22 11:48 a.m.

This may be a little different since my context is that of a married couple with children, but we set aside a handful of money movements every week.  Some money goes in to the savings account and some smaller amounts go to each of the three kids' savings accounts.  We take out cash that is divided up into grocery money, entertainment money, and "lunch" money.  Groceries are bought with the cash and only the cash.  When we're out, we're out, so it helps to force us to plan.  Same thing for eating out or going to movies or fun stuff like that from the entertainment money.  My wife and I each take some cash that used to be the eating out for lunch money.  The idea was that we could use that to have our lunches every day and anything left over was our individual "slush funds" that we could spend however we saw fit.  Now, since we're not eating out every day for lunch because of WFH, it's pretty much just the slush fund.  When I want to buy toys - a new welder, or parts for the rallycross car, or sometimes just a nice bottle of bourbon - I dig in to that envelope.  We always consult each other before making large purchases with our shared finances, of course, but we're each free to do whatever we want with the cash we have squirreled away.

The general gist of it is that we've created a budget for ourselves and those areas where we're most likely to deviate from it (ooh, how about a $75 standing rib roast for dinner!!) we've constrained ourselves with an envelope full of cash.

Ian F (Forum Supporter)
Ian F (Forum Supporter) MegaDork
12/1/22 11:52 a.m.

One thing that has helped to control my spending a little bit is asking the simple question, "where am I going to put this?"  Due to my significantly cluttered house, this is a very important question.  There are lots of things I want - and some of it I might actually use... But still a lot of things I have no space for.

RevRico
RevRico UltimaDork
12/1/22 11:54 a.m.

Send it to me so I can spend it for you. I don't spend money cause I don't have any. 

jharry3
jharry3 Dork
12/1/22 11:58 a.m.

Max out your 401K.  That's the first step.   

Colin Wood
Colin Wood Associate Editor
12/1/22 12:02 p.m.
barefootcyborg5000 said:

Get kids. they'll spend it for you. 

I only have one kid (that just turned two). I can confirm this is true.

NY Nick
NY Nick Dork
12/1/22 12:04 p.m.

If you have a bad history of financial decisions I recommend reading Dave Ramsey's "Total Money Makeover", there are a lot of things in that but one that is helpful is a budget. A plan for every dollar ...

I have never followed it to a T but I generally have and I feel pretty good about my family's financial situation. I also listen to the YouTube channel on occasion and find it to be good positive reinforcement.

APEowner
APEowner UltraDork
12/1/22 12:09 p.m.

The bottom line is to create a budget and stick to it.  It's acceptable to include fun stuff in your budget.  For example I have a racing budget.  I'm lucky that it's generous but if I were to total one of the cars the budget wouldn't allow me to replace it anytime soon.

You can use the automatic transfer capabilities of today's banking system to both make it easier to manage budgets and harder to cheat.  Again using my racing budget as an example, money automatically gets transferred from the family account to the racing account on a regular basis.  If there's no money in the racing account then I can't easily spend money on racing.  I mean, I can but it's obvious to me and my conscience that I'm doing something that's outside of the agreed upon plan if I do it and that I'll be taking money from something else.

Money also automatically transfers to the various investment accounts.

GameboyRMH
GameboyRMH MegaDork
12/1/22 12:11 p.m.

Remember that a recession could be coming and inflation probably isn't done with us yet? Pay off the credit card right now if you haven't already. Other than that, I've got nothing, I've never had this problem...

mtn
mtn MegaDork
12/1/22 12:11 p.m.

You pay yourself first. 

 I present the world famous mtn savings order (I probably lifted this from Mr Money Mustache or ProDarwin or dCulberson here) (life insurance is not counted in this as I view it as an expense, not savings):

  1. Emergency fund to your satisfaction. Could be $1,000 cash, could be $100,000 cash, depends on your station in life. I personally would want (but do not have, because life has kicked me in the balls too many times) 6 months of my mortgage, taxes, car payment, daycare, insurance (including what health insurance would cost for family on open market), and food.
  2. 401k up to employer match
  3. Pay off any debts with high interest rates (~6% and greater?)
  4. Max HSA – even if you’re a healthy 22 year old (obviously ignore this if you’re still on your parents insurance)
  5. Depending on which has the lower fees
    1. Max ROTH 401k*
    2. Max ROTH IRA*
  6. Max traditional 401k if Roth 401k is not offered
  7. Pay off debts with low interest rates (above ~3%, below my 3rd point)
  8. Invest in taxable account, or your house. These are separate things but the order will change for people depending on what their needs are
  9. Fishing boats, guitars, cars, tools, stereos, hookers and blow...
  10. Pay off extremely low interest rate loans.

*You can go either way with the Roth vs. Traditional, but I believe that taxes will only go up in the future, even the 22% and 24% tax brackets are probably lower than what I think we’ll see in the future (I could be completely wrong). For most people, I think the Roth is the better option, or traditional until your taxable income drops a tax bracket… but as always, do the math for yourself.

 

After that? Well, separate your paycheck into your "monthly needs", emergency funds, and your fun money. The fun money is yours to do with however you like, even if that means taking pointless styrofoam painting classes. 

Teh E36 M3
Teh E36 M3 UltraDork
12/1/22 12:12 p.m.

Congratulations on the job!!  How freeing is it to no worry about the next bill and next dollar. Max out retirement accounts, pay the bills and every time you see that thing you want to buy- ask yourself- is this going to make me happy? 

ProDarwin
ProDarwin MegaDork
12/1/22 12:14 p.m.
hunter47 said:

401k, Roth IRA, ESPP if you have it, general investment account. 

This.  If you find you still have additional discretionary funds, up your investment amounts.  Set and forget.

Kendall Frederick
Kendall Frederick New Reader
12/1/22 12:14 p.m.

Read some of the FIRE (Financial Independence, Retire Early) blogs and set some goals for your future.  Here's a great one to start with:

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Here's a post with links to most of his best content:

https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

I am an engineer and have been making reasonably good money for a long time, but until I got serious about managing my finances, I was spending almost all of what I earned, on pace to never retire.  After getting serious about saving and optimizing my financial life in ~2013, ten years later I'm retiring in 2023 at the age of 56.

 

ProDarwin
ProDarwin MegaDork
12/1/22 12:16 p.m.

MTN, I think you need IRA/Roth IRA (if eligible) between item 4/5 on the list.

Mr_Asa
Mr_Asa UltimaDork
12/1/22 12:22 p.m.
Ian F (Forum Supporter) said:

One thing that has helped to control my spending a little bit is asking the simple question, "where am I going to put this?"  Due to my significantly cluttered house, this is a very important question.  There are lots of things I want - and some of it I might actually use... A also lot of things I have no space for.

Along with others suggested, I think this would help.

I'm good with lists, concrete sets of things.  Listing out what I want to buy/do might help.

Datsun310Guy
Datsun310Guy MegaDork
12/1/22 12:28 p.m.

Pay off credit cards. Stop using unless you pay balance off every month.   

Stock pile cash - we have $20k in an account should I get sick and/or lose my job.  I can go 3-6 months unemployed using that money.

Budget fun money - 

Datsun310Guy
Datsun310Guy MegaDork
12/1/22 12:30 p.m.
Teh E36 M3 said:

ask yourself- is this going to make me happy? 


Yes, it will. 
 

Duke
Duke MegaDork
12/1/22 12:35 p.m.

How do we not spend money?  We just... don't.

We don't live like paupers in any way.  We buy what we want to buy.  But we've trained ourselves to really consider if any given thing is worth the cost.  Usually it's not.  Or maybe a thing is worth buying, but not the best / fanciest / trendiest / most expensive version of it.

Pay for quality and durability, not flash and brand name.  Particularly for clothes and tools.

We don't get new phones every year.  We use a 10-year-old computer that still does what it needs to do (that will probably get replaced next year).  Our TV is 15?  18? years old and still works fine if you ignore the red line down the left side of the screen.  We don't have the latest greatest audio or video game systems.

We get books and movies and puzzles out of the library instead of buying them.  We don't have a dozen different streaming services.

We don't go on big, faraway vacations every year - maybe once every 5-7 years.  We stick to long weekends within driving distance a couple of times a year.

We go out to dinner 2-3 times a week, but we almost always pack lunch.

We don't drink much alcohol and don't smoke at all.

We both drive nice cars - our dailies are both Volvos, bought new and well equipped - but we'll keep them at least 10 years and probably 15.  We have 4 cars for 2 drivers, but the Concert Coach and the Manic Miata were bought used and inexpensively since they serve backup roles.

Sure, the Miata could use a new top, a big splitter and spoiler, fender flares, 15x10s with Hoosiers, etc.  I have a wish list about $3500 deep for it, all in.  I could afford it.  But would spending that money make it $3500 more fun?  Probably not.  So I don't.

 

But DW is going to retire at the end of this year, at age 59.  I'll probably retire at the end of next year at 58.  We raised 2 kids and put them through college, so it's not like we skipped that expense.

 

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