My mantra has been "If I can't pay cash, I can't afford it." Houses being the only exception to that rule.

Credit cards are paid off every month. Used a 12 months same as cash offer to do my remodel.

Always drive a 10-15 year old car with a proven track record, car shopping is a 2-4 month process when I need a replacement.

I don't own an I-pod, lap top, or much of anything hi-tech or that rapidly becomes obsolete. Buy the cheapest item that will do the job, or the one that will last forever. Most of my clothes are 3-6 years old and cost less that $10 per item.

it helps to be a cheapa$$

http://www.bogleheads.org/

Really simple, spend less then you make. Leverage good credit when you need it. Invest in yourself before others. Time + good habits = success.

As long as your don't have caviar retirement or savings dreams and hamburger income + no time to save you will do fine.

In reply to mguar:

You can't anticipate/budget for everything, but having a 3-6 month emergency fund (in addition to and separate from any retirement funds), can make most unforeseen things simply a bump in the road rather than a life-changing crisis.

Life does have a way of throwing us major curveballs that simply cannot be planned for, but in any case, good financial planning can act as a good cushion so that rock bottom doesn't hurt as much. I would say that such situations act as a good reminder that money and comfort is not the end-all be all of life.

If you have the ability to buy a hideous house in a great (affluent, great schools, public transportation, lots of high-income professional work nearby) area and renovate it yourself you can do well. It's a long, painful process, and it can be a weight sometimes. It's not for everyone.

But my wife and I did this in 2000 and got a small, solid little brick colonial in the best zip code/school district near NW DC in MD for $250k. This was close to double what we'd been shopping a year earlier, and seemed a huge stretch at the time. Our careers progressed over the ensuing decade and 1-1/2 years ago we made another leap of faith and bought another project house - our "forever" house. We carried both mortgages for 7 months while we renovated the interior (minus kitchen and baths) of #2 and tarted up #1 for sale.

1 sold for 2.4 times what we bought it for, which was a bit more than #2 cost. Recently we used some of these proceeds to pay down #2 when we refinanced to get us below the jumbo threshold.

So, 12 years in we're in an awesome house we love. Big, open mid-century rambler with a huge basement (and a real machine shop and a massive garage) in a great neighborhood. 20 minutes from work for both me + wife.

Also - the way we've done the money from day 1 has worked really well. We have a house account into which we both direct deposit a fixed $ amount of our salaries based on who happens to be earning what. The balance of our salaries go to our personal accounts. Additionally, I have a company account into which side work funds go, and the proceeds of my horsetrading vehicles and machinery. Large discretionary purchases come out of this so I don't pay for racing w/ "our" money.

We don't sweat the little stuff either. You're going to live precisely once, and you'll live just long enough to regret everything you wished you'd done while you were able.

So - saving $100k over time by buying good used cars well and maintaining them yourself: Good. Wasting 15 minutes of irreplaceable life to save $4 on something little? not worth the air you breathe.

mguar wrote: In reply to Ian F: The flaw with spreadsheets is they don't anticipate.. How many children does you spreadsheet budget for? Is their education budgeted for? Weddings for the girls? What about if and when you lose your job/career? The days of working for one company your whole life are over.. Or your wife gets cancer? What if, what if, what if........... It's called life and it happens..

Where does ANY budgeting program anticipate that?

Let's face it, a program like Quicken is little more than a fancy database. And being so, it's only as effective as the data input. Nothing will predict the future. At least not with any great accuracy.

Remember the past; Plan for the future; Live for today.

Trying to balance all three and hoping for the best is about all we can ask for.

alfadriver wrote: Do your math. The info I see about rental properties- the income is not very high, relative to what is owed. It's great that you can get a property, and earn some money, but unless you do a great job in the property, you are not going to make much of a living just owning rental properties. To have 10-12 units to rent means you start with a LOT of money to get into that game. While you will build equity, many states have 2nd property rules for taxes that make them very, very high on your non-home property.

I have a full time job at the moment, but the goal is to get as much passive income from rental properties now and hope it builds to a substantial amount in the future. I don't plan on living off it quite yet but if I could make a couple hundred bucks off my first one each month I would be satisfied. As of now I have enough save up for 2 downpayments on 65k apartments. Anyone have recommendations for rental property forums, specifically ones in Florida?

I consider myself good with money...but it took a long time and a divorce to figure that I was good with money and the ex was not.

Lesson learned: prenuptial agreements should be mandatory. Think about this: How much does it cost to get married and how long does it take (hint, if one wanted, one could be married within 24 hours for VERY little money spent). How long does it take to get not married? Most folks don't know the answer to this until they have experienced it. I have experienced it and let me tell you...it can be financially devastating and take years. Frankly, if you cannot agree to a prenuptial agreement, you've saved yourselves A LOT of agony and money (not to mention the collateral damage on future kids) and figured out you should not get married in the first place.
That was a bit of a sidebar, but I feel it is worth the effort to help folks out.

I like to use several checking accounts. Each has its own budget from the overall budget. I've got accounts for:
"variable expenses" (fuel, oil changes, haircuts, utilities, phone, groceries, etc).
"Fixed expenses" (child support, childrens college funds, savings) things that are ALWAYS the same, every month.
"House" account strickly for the house that I'm renovating (mortgate payment and cash for buying materials).
"Periodic" expenses (travel, camps for the kids, gifts, etc)

I also "pay myself" monthly. I went from a job that paid monthly to one that pays twice a month. Basically, on August first, I pay myself (fund the accounts listed above) with my paychecks from July.

This works very well for me.

My project cash is stored in an envelope near my socks, or some other obscure location.

Good posts guy's.

We have been working on what basically amounts to a more laid back version of the Dave Ramsey plan for a little over a year. We have managed to get everything paid off except for my wife's new car. We haven't had a credit card in over five years. The only hiccup is the possibility of getting stuck with somewhere around $5,000 in hospital bills that I thought where going to be paid by workers comp.

Luckily my wife is the most detailed, organized and stubborn person I've ever met and with us both working together things are budgeted out to the penny.

I would like to get rid of the cable and her smart phone bills to help get the car knocked out as quick as possible. But she is not willing too, at least at this point. She doesn't feel it's that urgent.

We rent cheaply for the house we're in. And soon the boy will be out of day care which is going to seem like getting a huge raise. Things are looking better but like I said before I wish it would have hit me sooner.

Thanks, and keep all of your stories and suggestions coming.

We built a computer and ditched cable, went with NetFlix in May of 2010, but we upped our internet speed since we'd be using it more. It's occasionally a drag looking for something to watch, but considering we've saved $2000 in the last 2+ years even including building the computer, it's been worth it.

We cut $100/month and still have 25mb down Internet.

Both have smartphones, but we switched to Sprint two years ago which saved us nearly $100 over the iPhones we had previously. Although my current employer does an AT&T discount, so will likely go back now that we see how sucky Sprints coverage is in the places we like to take road trips.

I went for years just trying to make more money as a lifestyle. Then I notice that a coworker, who made about a third of my salary, was driving a nicer car, taking better vacations and working fewer hours!

When questioned he told me that he worked on "spending well".

At a meeting we had every afternoon we often had a snack. For me it was a Dr.Pepper and a Snickers bar. Coworker had a DP and a Kit Kat.

He made a point to show me that my snack from the vending machine cost $2.25. His "shopped well" cost him 44 cents!

As he showed me the math, he taunted me by pointing out that the difference was his cable bill per month!!

When we figured ONE of my credit cards I was MAD! $62 a month payment was $50 interest and $12 to principle! I would be 82 years old when I paid this off in 2042 and my 4000 dollar balance would be $24,000 if I stopped using the card and paid the minimum.

He was buying a small house 10 minutes further from work than me and had more room, no fighting upstairs neighbors and could park in a garage rather than pay rent on my little apartment which was 15% more than he paid.

Little tips were discussed. Did you know Christmas shows up every year at the same time!

Started working on getting to where I paid for Christmas this year rather than next year plus interest!

Planning saves money! Tires are going to wear out...be prepared to shop for a good deal rather than a before lunch deal.

Started looking hard at my spending and changed things. Monday night movie, shopping and dinner became rental movie and MY cooking Monday.

Paid off all my credit cards and realized about $400 a month was freed up!

Then my job went away! Hostile takeover where I was met in the parking lot with a box of my things.

Got a job paying about half of previous salary but I was well covered with some savings and NO DEBT!

Since then I bought and paid for my house, paid cash for a new AC unit and water heater last month, going on vacation to my nephews this Saturday! My brother got on board with the no debt and "spending well" when I gave him the money to paint his LOOOONG term (7 years) car project.

He asked how I could afford it! So I told him!

Bruce

Mint.com

Take care of the pennies and the dollars will take care of themselves.

I am 23 and really trying to be good with money. I should have my college loan payed off next month which will be awesome. Then it is just saving towards marriage and the 3-6 month emergency fund. Also I only use credit cards for online purchases and pay them off in full at the end of the month. To me, credit cards are just a little bit more secure debit card. I never spend the money unless I can pay it off tomorrow. But I haven't bought a house or anything like that and I am hoping to start saving towards that after my wedding next July. Also I am putting 6% away towards retirement.

Sometimes I think I am way more of a cheap ass then I need to be. I barely ever buy clothes and I don't generally go out that much.

Great post egnorant. That's what it's all about. Watching those pennies every day leads to dollars every week, hundreds every month, thousands every year, and so on, and the math is always easy.

That said, I've loosened up a lot in the last year. Father in law dying at 59 helped me to stop denying myself and my family some hard-earned creature comforts.

I like my smart phone, I like having a NEW car in the garage for mama and baby, and I'm trying to do a vaca once a year rather than once every 5 years.

Not to derail, but make a will and get good life insurance. I'd rather spend $2k on a killer vacation now, knowing that if I died tomorrow, the family is taken care of, than sock away for "future" vacations that may never happen.

YMMV.

I haven't ever seen any so I wouldn't know

The crash of '07 was the wakeup call for me. It's been a long 5-years, but the cars are paid for, we just moved into the 3500 sq-ft apartment in the 8800 sq-ft building we bought 3-years ago for $2500 and have been remodeling, and fortunately we never became trapped by credit card debt.

We do still have a mortgage on our house, but will be renting it after a bit of work. Fortunately we live in an area where single-family rentals are sought after, so the rent will cover the mortgage and a bit more.

Thanks to our planning, we were able to survive 2-months of me being unemployed this year, which also gave me the ability to find a better job/career than the previous one.

I disagree with Alfadriver's playing the bouncing credit card/interest rate game. That's a novel concept...until something bad happens, like your job disappears. There's simply NO reason to carry a balance on a credit card. Emergency funds are to take care of that stuff, when stuff happens.

People who run credit balances to build an impressive FICO score make me shake my head. We only have 2 credit cards (thus proving I'm not a Dave Ramsey blind follower), a home mortgage and have had two or three car notes since we've been married. That's it. Our FICO score is killer; the Jeep dealer had never seen one so high when we bought our (used) Patriot a couple months ago. What do you want a super high FICO score for anyway? So you can borrow money? Isn't that the thing we're all trying to avoid? Other than a mortgage and an occasional car loan, why would anyone want to borrow? Baffles me.

(Yeah, go ahead and list your exceptions that you've justified in your own mind. I won't be impressed.)

As Dave says, you've got to make your money behave.

In reply to ddavidv:

I tend to agree. I've looked at my credit score maybe once ,years ago. Since then, I've never had a problem getting a loan at a reasonable rate when I've asked for one. I think it's just marketing b.s. pounded into us by the credit report companies.

egnorant brought up a good point about planning which is what I had meant when using my little spreadsheet - it allows me to more easily remember and plan for large bills I know will be coming so I can adjust my spending habits to accomodate them. Same for big spending times like Christmas.

ddavidv wrote: I disagree with Alfadriver's playing the bouncing credit card/interest rate game. That's a novel concept...until something bad happens, like your job disappears. There's simply NO reason to carry a balance on a credit card. Emergency funds are to take care of that stuff, when stuff happens. (Yeah, go ahead and list your exceptions that you've justified in your own mind. I won't be impressed.) As Dave says, you've got to make your money behave.

You mis-interpret what I am suggesting. I'm not suggesting using the credit cards as credit, and having a balance hang over you. I'm suggesting using credit cards as cash, and using the apparent responsibility that shows to get you better credit when you need it- like when you finance a home or buy a car. That's not an exception, btw.

And while taking the balance as emergency funds can be dangerous, one can't ever predict what emergency can come up. I would much rather have my emergency funds in a hard to get investment (say can transfer funds once a month) and use a CC, than have those emergency fun be in a worthless, and money losing, savings account (since no account can give you inflation).

For instance, an emergency fund would not have gotten us plane tickets to my in-laws the same day we were asked to come down, due to a family emergency.

Again, don't USE the credit cards for credit, use them to your advantage. If you don't think you need them, fine. We like to use them as a tool.

The OP does not have a much of a credit history, as far as I can tell. You and I have one- being home owners and car owners. Heck, I can't even rent a car w/o a credit card. They are not evil, unless used wrong.

mguar wrote: In reply to alfadriver: rental property is one of the few ways people of average means can earn more money than working.. It's very much a snow ball.. You start out with one tiny property and a whole lot of your sweat.. 20-30 years later you own dozens of property and are living well off them.. That sounds too slow? Well what about those people who work 40+ years and wind up with a tiny pension or social security? In 40+ years of work I've actually been to one persons retirement (2 others retired but couldn't afford a party) Counting everybody that's probably 30,000 people and 3 retirements..

With the same initial investment, what if you put that somewhere else to make a moderate amount of money? 20-30 years later, a good investment can lead to lots of money as well.

in other words, do your math. If you can get a 10% return on a rental property (rent+capital vs. interest, maintenence, taxes, etc), you are doing well- far better than any investment. If you can only get 5%, you may want to look into different options.

alfadriver wrote: You mis-interpret what I am suggesting. I'm not suggesting using the credit cards as credit, and having a balance hang over you. I'm suggesting using credit cards as cash, and using the apparent responsibility that shows to get you better credit when you need it- like when you finance a home or buy a car. That's not an exception, btw.

Ok. That I agree with as that is how I use my credit cards - like cash and paid off every month.

Two of the accounts I have a long history with. A Discover (since '94) is my primary and gets used for most purchases in stores and online as I like the cash-back bonus although I'll admit it's not as much as it used to be. I have a MC (since '92) as a back-up for few stores don't take Discover and for a couple of auto-payments (monthly charity/member donation and EZ Pass).

Then there's a Visa card used exclusively for gas/diesel as it gives me a 5% cash-back applied to the account automatically at billing. It's only $7-8/mo, but it adds up and it's for something I'm going to buy anyway.

Most recently I got a Lowes card as it applies a 5% discount to purchases at the check-out. Since we're averaging about $400/mo in purchases during the renovation, that 5% adds up too.

^^ Good advice that, never carry a balance.

However, we use our credit cards for paying just about everything-- groceries, lunches out, power bill, gas bill, etc., etc. Although we haven't carried a balance on a credit card in the last 25 years or so.

Our card gives us points towards purchase of other items. We usually can earn enough points to pay for our airfare for our annual ski trip and for at least part of the occasional trip overseas.

Basil Exposition wrote: Our card gives us points towards purchase of other items. We usually can earn enough points to pay for our airfare for our annual ski trip and for at least part of the occasional trip overseas.

When I get into a position to start travelling more I plan to look into the whole points/airfare thing in lieu of cash back, which is barely enough anymore to bother with.

ClemSparks wrote: I consider myself good with money...but it took a long time and a divorce to figure that I was good with money and the ex was not. Lesson learned: prenuptial agreements should be mandatory. Think about this: How much does it cost to get married and how long does it take (hint, if one wanted, one could be married within 24 hours for VERY little money spent). How long does it take to get not married? Most folks don't know the answer to this until they have experienced it. I have experienced it and let me tell you...it can be financially devastating and take years. Frankly, if you cannot agree to a prenuptial agreement, you've saved yourselves A LOT of agony and money (not to mention the collateral damage on future kids) and figured out you should not get married in the first place. That was a bit of a sidebar, but I feel it is worth the effort to help folks out.

tr00f. It does not matter which side of the sexual dividing line you are on, if you are bringing assets to a marriage a prenup is essential. Otherwise you could find yourself saddled with your new soulmate's credit problems. Or if the love of your life has major business issues which only come to light after all the assets have been blown through you could be on the hook. Believe me; I have been dealing with this as the executor of my father's estate and the prenup is what saved him from ruin.

ClemSparks wrote: I like to use several checking accounts. Each has its own budget from the overall budget. I've got accounts for: "variable expenses" (fuel, oil changes, haircuts, utilities, phone, groceries, etc). "Fixed expenses" (child support, childrens college funds, savings) things that are ALWAYS the same, every month. "House" account strickly for the house that I'm renovating (mortgate payment and cash for buying materials). "Periodic" expenses (travel, camps for the kids, gifts, etc) I also "pay myself" monthly. I went from a job that paid monthly to one that pays twice a month. Basically, on August first, I pay myself (fund the accounts listed above) with my paychecks from July. This works very well for me. My project cash is stored in an envelope near my socks, or some other obscure location.

Me, I use one checking account and debit card. But then there's only me and the one kid to deal with. I tried my best to convince the ex to open a joint checking account for household expenses, she refused. In retrospect it was because she was hiding some stuff from me and thought I might be able to somehow access her accounts. That's not possible without a password but she was really paranoid.

alfadriver wrote:

ddavidv wrote: I disagree with Alfadriver's playing the bouncing credit card/interest rate game. That's a novel concept...until something bad happens, like your job disappears. There's simply NO reason to carry a balance on a credit card. Emergency funds are to take care of that stuff, when stuff happens. (Yeah, go ahead and list your exceptions that you've justified in your own mind. I won't be impressed.) As Dave says, you've got to make your money behave.

You mis-interpret what I am suggesting. I'm not suggesting using the credit cards as credit, and having a balance hang over you. I'm suggesting using credit cards as cash, and using the apparent responsibility that shows to get you better credit when you need it- like when you finance a home or buy a car. That's not an exception, btw. And while taking the balance as emergency funds can be dangerous, one can't ever predict what emergency can come up. I would much rather have my emergency funds in a hard to get investment (say can transfer funds once a month) and use a CC, than have those emergency fun be in a worthless, and money losing, savings account (since no account can give you inflation).

Well put in the first paragraph. That is how I use my credit card. And for the second part, I have not really though about it that way. I have my emergency money sitting in a savings account.

There's a lot of really good advice on here (not carrying a balance on CC's, but still using them, staying debt free, separate accounts, prenups, etc). Money is just a tool, use it correctly.

The best advice I can give is to pay yourself first. Take the first 10% of everything you make and stick it in savings. Find a dollar? Put a dime in. Get paid $1000? Put $100 in. You'll be amazed at both how fast your savings will grow, and how easy it will be to adjust your expenses to 10% less income.