PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[mquinnjr]

Fatguy and Random make excellent points.

It boils down to a buy / rent ratio. There is a tipping point where it makes sense. And because buying / selling costs are so high, 5-7 years is the minimum you have to live in a place for it to make sense. There are always other factors... You become much less mobile when you own (and makes it very tough to take that job offer with a 30% raise that just came your way but is 2 hours away).

The standard I have seen is 15 for a price / rent 'breakeven'. For the house I linked earlier (about $350K), you should buy if annual rent is greater than $350,000/15 = $23,333 (or about $2000 a month). FWIW I think rent for that place would be about $2000 a month, so it becomes a coin flip financially

Guy who wishes he had rented here.

I bought a 1 bedroom condo in May of 2008. 5 years later, my LTV is about (15000) off the market price of the condo, including the down-payment. I'm single so it's not hurting anyone else and is really an unrealized loss until I act on it, but it's absolutely holding me back job wise. Would have to rent to have any mobility, and that's not something I ever really intended on doing until I even come close to break even. My HARP re-fi is helping, but not tremendously.

Definitely intend to stay for a bit if you're going to take the plunge at least 5, more towards 10 years like Wilked said. Make sure it's an investment that you can see benefiting your net worth, not just "something everybody does."

 

[wilked]

In my area you could buy decent starter house in a decent hood for $40K-$50K.

I know we've had the "housing prices in different parts of the country are different" discussion a million times but holy crap.

I dont think anyone here chooses to rent. If you have the down payment and credit you buy. Its not even close.3 bed 1 bath 1100 sf 2 car garage decent shape $25K

http://www.realtor.com/realestateandhomes-detail/726-Michigan-St_Sidney_OH_45365_M45855-43879?row=19

4 bed 2 bath 1700 sf 1 car attached garage completely remodeled $55K

http://www.realtor.com/realestateandhomes-detail/624-Maywood-Pl_Sidney_OH_45365_M42311-61030?row=51

This is the cheapest 3 BR single family in the area we are looking at (Arlington MA)http://www.trulia.com/property/3117923626-Single-Family-Home-Arlington-MA-02476

In your case, if you can buy a home for $50K it is a slam dunk.

The best calculator I know of to compare the two is

http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

Arlington is a really nice town Wilked! Hope you can get a house there (do you already live in the town? ). Arlington is a pretty pricey town, if memory serves it was in the top 50ish in the entire state (300+). Having Belmont and Lexington as neighbors does not help in that regard I grew up in Needham but live now down in Millis.

Arlington would be ideal. Might be a stretch financially, but we will see... We are moving in Sept and hope to be in Arlington (still need to find a place). Plan to rent a couple more years, then buy...

Millis is a sweet place. I do some long bike rides out to Sherborn, nice country

 

[NewlyRetired]

Arlington would be ideal. Might be a stretch financially, but we will see... We are moving in Sept and hope to be in Arlington (still need to find a place). Plan to rent a couple more years, then buy...

Millis is a sweet place. I do some long bike rides out to Sherborn, nice country

moooooo. Plenty of cows

I live literally on the corner of Millis, Sherborn and Holliston. I can walk to all 3 towns in 1 minute

 

[moleculo]

People love to talk about 'throwing your money away' via rent. People seldom talk about 'throwing your money away' via interest payments and PMI on that mortgage.

I know you said as long as he has 20%, but the truth is that less than 20% of people have that 20% down payment.

The costs of buying / selling a home are huge, that is why the break even tends to be around 7 years or so. I am a little more conservative and use 10 years as a guide

I think that's probably accurate and justified, but I also think that home ownership should definitely be on the radar for anyone thinking about someday retiring. Part of my strategy is that one day, I won't ever have to worry about making rent/mortgage payments. Right now, about 20% of my take-home is tied up in my mortgage - in theory, once I get this paid off, I would need about 20% less each month to make ends meet.

I get the idea that renting can be cheaper, I'm just not sure how it works out come retirement time. I just can't imagine the uncertainty of renting in perpetuity while living on a fixed income.

 

[The Ref]

People love to talk about 'throwing your money away' via rent. People seldom talk about 'throwing your money away' via interest payments and PMI on that mortgage. I know you said as long as he has 20%, but the truth is that less than 20% of people have that 20% down payment. The costs of buying / selling a home are huge, that is why the break even tends to be around 7 years or so. I am a little more conservative and use 10 years as a guide

I think that's probably accurate and justified, but I also think that home ownership should definitely be on the radar for anyone thinking about someday retiring. Part of my strategy is that one day, I won't ever have to worry about making rent/mortgage payments. Right now, about 20% of my take-home is tied up in my mortgage - in theory, once I get this paid off, I would need about 20% less each month to make ends meet. I get the idea that renting can be cheaper, I'm just not sure how it works out come retirement time. I just can't imagine the uncertainty of renting in perpetuity while living on a fixed income.

I'm the same way except I make extra payments to bring me up to 32% a month. I know I wont' have as much money saved as others by my mid 40's, but I'll have my house paid off and 66% of my kinds College paid in full.

 

[The Ref]

People love to talk about 'throwing your money away' via rent. People seldom talk about 'throwing your money away' via interest payments and PMI on that mortgage. I know you said as long as he has 20%, but the truth is that less than 20% of people have that 20% down payment. The costs of buying / selling a home are huge, that is why the break even tends to be around 7 years or so. I am a little more conservative and use 10 years as a guide

My personal new spin on if it's worth buying a house or not is if you can pay it off in 15 years or less. When I lived up in Boston I was making payments $2500 payments on a house and the principal payment was around 10% month and that was on a 20 year mortgage. When you are making mortgage payments and so little of the payment is being applied to the principal all you are doing is sending a check to a bank vs the landlord.My payment in So Florida > 50% goes to the principal, I fell like I'm actually getting somewhere.

 

[moleculo]

People love to talk about 'throwing your money away' via rent. People seldom talk about 'throwing your money away' via interest payments and PMI on that mortgage. I know you said as long as he has 20%, but the truth is that less than 20% of people have that 20% down payment. The costs of buying / selling a home are huge, that is why the break even tends to be around 7 years or so. I am a little more conservative and use 10 years as a guide

I think that's probably accurate and justified, but I also think that home ownership should definitely be on the radar for anyone thinking about someday retiring. Part of my strategy is that one day, I won't ever have to worry about making rent/mortgage payments. Right now, about 20% of my take-home is tied up in my mortgage - in theory, once I get this paid off, I would need about 20% less each month to make ends meet. I get the idea that renting can be cheaper, I'm just not sure how it works out come retirement time. I just can't imagine the uncertainty of renting in perpetuity while living on a fixed income.

I'm the same way except I make extra payments to bring me up to 32% a month. I know I wont' have as much money saved as others by my mid 40's, but I'll have my house paid off and 66% of my kinds College paid in full.

I used to do that too, but its tough to justify extra payments when the rate is so low. Better off, imo, putting the extra cash in some taxable account and paying off the note down the road.

 

[Binky The Doormat]

Roth is the way to go. Taxes have to increase.

 

[Steve Tasker]

Thanks for all of the comments re: purchasing a house. I seem to be on the right track with my thinking/planning.

 

[dickey moe]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

 

[NewlyRetired]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

 

[Binky The Doormat]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

Health care will dwarf the property tax on my double-wide.

 

[NewlyRetired]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

Health care will dwarf the property tax on my double-wide.

When I eventually downsize in a few years this will be true for me as well.

 

[cstu]

400k for a 1000sq ft? Jesus. I've lived in garage apartments bigger than that.

That's nothing - I recently appraised a $1.1M house that was 1100 sf with a 500 sf guesthouse.

 

[Sand]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

When you live in Taxachussetts - well, yea. Come down here to Alabama. My property taxes are 1/10th of yours.

 

[dickey moe]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

When you live in Taxachussetts - well, yea. Come down here to Alabama. My property taxes are 1/10th of yours.

...but it's Alabama.

 

[wilked]

For those with a financial advisor...

The thought of giving up 40 percent per year in investment return to pay for portfolio management and advice would cause most people to walk away. Yet, this is the price many people pay when they hire an investment adviser to manage a mutual fund portfolio or exchange-traded fund (ETF) portfolio. Cutting this cost by as much as two-thirds is easily done and highly recommended.

http://www.rickferri.com/blog/investments/the-heavy-toll-of-investment-fees/

A nice writeup that puts things in perspective.

 

[Dentist]

For those with a financial advisor...

The thought of giving up 40 percent per year in investment return to pay for portfolio management and advice would cause most people to walk away. Yet, this is the price many people pay when they hire an investment adviser to manage a mutual fund portfolio or exchange-traded fund (ETF) portfolio. Cutting this cost by as much as two-thirds is easily done and highly recommended.

http://www.rickferri.com/blog/investments/the-heavy-toll-of-investment-fees/

A nice writeup that puts things in perspective.

can you imagine a better industry to be in though? You're a salesman, you sell people these funds, get some sweet kickbacks, and then get your "advisement" fee that comes in every year rain or shine..

and the best part is that people don't think they pay you anything since they never write you a check.

and when people get returns they THANK YOU!! for them.

Unreal.

2 good investment books at a cost of a library membership and a couple weekends for you to knock out the books and execute their advice would save people tens of thousands of dollars over the course of their lives.. yet they are too lazy/scared/foolish to do it.

 

[Sand]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

When you live in Taxachussetts - well, yea. Come down here to Alabama. My property taxes are 1/10th of yours.

...but it's Alabama.

Better weather than up north. Great food. World class medical facilities. Tax rates that are just about the lowest in the country. Unemployment has fallen here about the quickest of any state. What's not to like?

In fact, the place I work for has developed about half of the chemotherapy agents in existence - never thought that the worldwide center of cancer drug research was Alabama, did you?

Anyway, over 30 years the impact of paying $6k property tax per year on a 2000 sq. ft house is just huge. I pay roughly $600/yr. Taxes are a huge part of the equation. Something to think about in getting to that nest egg.

 

[Fruitbat]

when looking at historical returns for a fund, does that take into account expense ratios? For example, if I compare historical returns of a low-cost ETF to a high cost managed fund, is it a true comparison that includes all expenses? or are those return figures strictly the growth of the stocks/bonds in the fund?

 

[Sand]

when looking at historical returns for a fund, does that take into account expense ratios? For example, if I compare historical returns of a low-cost ETF to a high cost managed fund, is it a true comparison that includes all expenses? or are those return figures strictly the growth of the stocks/bonds in the fund?

I'd think so. Unless you pay a front loaded fee to get into a mutual fund (these days I have a hard time thinking why) the comparisons should hold. In fact, I'd be sure to use Yahoo to compare as they use dividend adjusted data; that helps a great deal in making things comparable.

 

[BeTheMatch]

when looking at historical returns for a fund, does that take into account expense ratios? For example, if I compare historical returns of a low-cost ETF to a high cost managed fund, is it a true comparison that includes all expenses? or are those return figures strictly the growth of the stocks/bonds in the fund?

I'd think so. Unless you pay a front loaded fee to get into a mutual fund (these days I have a hard time thinking why) the comparisons should hold. In fact, I'd be sure to use Yahoo to compare as they use dividend adjusted data; that helps a great deal in making things comparable.

I would suggest not looking at historical returns as any sort of guide.

 

[Balco]

Venturing into etfs in my taxable (thanks dentist). Anyway, do they have the same tax implications as mutual funds? If so, I want to keep bond etfs out of taxable and will reallocate.

 

[Slapdash]

Roth is the way to go. Taxes have to increase.

Including property taxes. People remain slaves even after paying off their mortgages.

Property tax and health care take up an enormous chunk of our retirement expenses.

When you live in Taxachussetts - well, yea. Come down here to Alabama. My property taxes are 1/10th of yours.

...but it's Alabama.

 

[Dentist]

Venturing into etfs in my taxable (thanks dentist). Anyway, do they have the same tax implications as mutual funds? If so, I want to keep bond etfs out of taxable and will reallocate.

usually etfs are considered more tax efficient than mutual funds.

I have no problem with mutual funds, they are fine. But for me with my taxable account i get free trades to get into etfs... not free mutual funds. it was a pretty easy choice.

http://www.indexuniverse.com/sections/white-papers/15929-the-2013-complete-guide-to-etf-taxation.html

 

[mquinnjr]

Guys, just switched brokers and was setting up some ETF trades in my Roth IRA with cash on hand that I just put in for 2013. I have the gist of ETF's and why I personally want to be invested in them, but I am just starting to notice the impact of the bid/ask spread, similar to what we've discussed in great detail with regards to broker commissions and expense ratios. I feel like this at least warrants brief discussion.

I noticed it as I was setting up trades for market open tomorrow after today's close, and noticed that I had my broker's software set for after hours trading, and the bid/ask was obscene on index ETF's, like $1.00 on a $40 stock. I have gotten my answer on that, which is that in after hours there are less people in the market in terms of liquidity for the buy and sell side, driving the spread further apart than during market hours since there is less of a market to buy and sell a position in a company/ETF. That's pretty clear, I might just be butchering my explanation.

Let me know if I'm right on this analogy - the bid/ask spread would be similar to the "juice" a bookmaker imposes if you were to bet on sports (110 to win 100 = 63.50 ask ("to buy") on a stock with a market price of 63.45). It's how I interpret it at least to try and understand it.

So, for the more experienced folks in here, do certain brokers "mark up the spread" on the bid (sell) and the ask (buy) moreso than others? I'm not getting very far doing research on this in terms of specific broker practices/reputations for this. My pessimist side says "absolutely" without any further info.

TIA for reading/responses, easily becoming one of my favorite threads in the FFA.

ETA: Did a limit order at the prices I want to pay with a 60 day window, is that "doing it right?"

 

[wilked]

Why don't you give some examples of the etfs you are seeking.

 

[Dentist]

after hours will have wide spreads. big etfs with large volume may have a penny or two during the trading day. dont trade after hours. invest with big brand name etfs and you will have no problem nor will the funds trade at a surplus or deficit to net asset value

 

[mquinnjr]

Why don't you give some examples of the etfs you are seeking.

I'm building a portfolio of mostly Schwab ETF's in my Roth IRA account, as they're pretty cost effective and I just moved over there so everything on their preferred lists trades commission free. I currently own SCHA (Small Cap), SCHB (Broad Market - Dow Broad Market Index - Exposure to Large and Medium Cap stocks), SCHF (Int'l. Equity), and SCHP (TIPS ETF).

Getting into SCHD (Dividend 100 Index), SCHX (Dow Large Cap Index), and TLO (SPDR Long Term Treasuries - 10+ years), and adding a small bit more to SCHF. These are the funds where I saw huge swings after hours yesterday. Will check again during the market today, but looking at the premium/discount history, these ETF's looked fairly stable.

In doing some reading, it looks like the "market makers" do charge a premium during the NYSE open hours if what is being traded (e.g., international ETF) is after hours related to ETF's. Didn't know that, but makes total sense. I'll at least keep that in mind when buying these funds.

 

[Dentist]

Why don't you give some examples of the etfs you are seeking.

I'm building a portfolio of mostly Schwab ETF's in my Roth IRA account, as they're pretty cost effective and I just moved over there so everything on their preferred lists trades commission free. I currently own SCHA (Small Cap), SCHB (Broad Market - Dow Broad Market Index - Exposure to Large and Medium Cap stocks), SCHF (Int'l. Equity), and SCHP (TIPS ETF).

Getting into SCHD (Dividend 100 Index), SCHX (Dow Large Cap Index), and TLO (SPDR Long Term Treasuries - 10+ years), and adding a small bit more to SCHF. These are the funds where I saw huge swings after hours yesterday. Will check again during the market today, but looking at the premium/discount history, these ETF's looked fairly stable.

In doing some reading, it looks like the "market makers" do charge a premium during the NYSE open hours if what is being traded (e.g., international ETF) is after hours related to ETF's. Didn't know that, but makes total sense. I'll at least keep that in mind when buying these funds.

my etf book told me the best time to buy and/or sell your etfs was between 1.5 hours after the market opened and 1.5 hours before the market closed.

wild swings occur in the first hour and last hour, but not nearly as often in between

 

[wilked]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

 

[Dentist]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

you must have a brokerage account to buy your funds even in the context of a roth. don't you use vanguard as your broker?

did you mean you aren't interested in having a cash management account?

 

[Tiger Fan]

People love to talk about 'throwing your money away' via rent. People seldom talk about 'throwing your money away' via interest payments and PMI on that mortgage.

I know you said as long as he has 20%, but the truth is that less than 20% of people have that 20% down payment.

The costs of buying / selling a home are huge, that is why the break even tends to be around 7 years or so. I am a little more conservative and use 10 years as a guide

And over the last 30 years, on the average it was smarter financially to rent v own.

I also throw in the "how stable is your job/relationship status" to be considered

 

[Tiger Fan]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

 

[eoMMan]

Thanks for all of the comments re: purchasing a house. I seem to be on the right track with my thinking/planning.

I'd go the other way here....Assuming your jobs are stable and have no plans on moving in a few years, I'd buy the house. As you noted, rates are relatively low and housing, while still cheap, is definitely moving upward.How much is your rent compared to what your housing costs would be (mortgage, re taxes, etc.)?At least in my area, it's definitely cheaper to own and you live in such a larger place (with a backyard!)

 

[moleculo]

<p>

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.



[*]Total Cost of Ownership of your purchases

[*]Live waaaaay below your means

[*]Credit Scores

[*]Marriage, Kids and how they effect personal finance

[*]Know Thy Spend

[*]Unit Costs

[*]Buying everyday items

[*]Opportunity Cost (inc. time vs. money)

[*]Quick wins to control your spending

I'd be interested in all of this. My wife and I have been struggling with keeping to the budget. Its not a desperate situation, its a matter of we have to rely on my yearly bonus to keep from having a negative cash flow. We just went to a cash system for all misc expenses -i.e. restaurants, clothes, home depot, etc. We pull out a cash allowance twice a month, and once that cash is gone, its gone. No more hitting the CC, no more hitting the debit card which is tied to a savings account.

Its been a lot tougher than anticipated, but will be worth it in the long run.

 

[mquinnjr]

Why don't you give some examples of the etfs you are seeking.

I'm building a portfolio of mostly Schwab ETF's in my Roth IRA account, as they're pretty cost effective and I just moved over there so everything on their preferred lists trades commission free. I currently own SCHA (Small Cap), SCHB (Broad Market - Dow Broad Market Index - Exposure to Large and Medium Cap stocks), SCHF (Int'l. Equity), and SCHP (TIPS ETF).

Getting into SCHD (Dividend 100 Index), SCHX (Dow Large Cap Index), and TLO (SPDR Long Term Treasuries - 10+ years), and adding a small bit more to SCHF. These are the funds where I saw huge swings after hours yesterday. Will check again during the market today, but looking at the premium/discount history, these ETF's looked fairly stable.

In doing some reading, it looks like the "market makers" do charge a premium during the NYSE open hours if what is being traded (e.g., international ETF) is after hours related to ETF's. Didn't know that, but makes total sense. I'll at least keep that in mind when buying these funds.

my etf book told me the best time to buy and/or sell your etfs was between 1.5 hours after the market opened and 1.5 hours before the market closed.

wild swings occur in the first hour and last hour, but not nearly as often in between

OK thanks Dentist, was also reading to stay away from the east coast lunch time as more people have time to purchase in that window. So stick to really before and after the lunch hour, that works with the frequency that I'll be trading, which is a small few times a month.

Should hopefully hedge against run ups by a broker in bid/ask spread on ETF's.

 

[BeTheMatch]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

I have read a couple books lately that covered a few of these subjects. One from the Brad's Deals guy. Another one with frugal in the title. I can't remember. There were really only a couple things of substance that I pulled out of either one. Brad gives tips on taking advantage of multiple credit card deals. Some of it seems like a lot of work, though. And some of them border on "scams" that you can't do now anyway. He was buying silver eagle coins or something online from the US Mint with a credit card earning points. He bought millions of dollars worth of coins. Then just deposited them all in his bank. It took him months and months, and now he's a lifetime platinum member of like every airline or something.

Most of the other stuff in both books was really basic commonsense stuff. At least for me and my wife. It boiled down to going to Costco and buying stuff in bulk when on sale. Nothing earth-shattering.

 

[Dentist]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

I think those are all important things, have you found that from reading things by Suze Orman, Dave Ramsey, Jane Bryant Quinn... that these are topics that haven't been covered well in basic personal finance books?

I've spent so much more time on the latter part of your topics because the "getting control of your spending" part just has never been a problem for me due to my upbringing, general discipline, and affinity for math and good decision making skills.

Part of what this entire thread is about is that i think that people who care about their money enough to watch a program like this may really be focused on things like budgeting, coupon clipping, etc.. ways to save money and extend their dollars...

but meanwhile they have 10's or 100's or thousands of dollars in their investment vehicles that are very poorly invested... penny wise, pound foolish.

People will spend a half hour changing their oil to save $50, a half hour clipping coupons to save $25.. and they'll be so excited and really feel like they are doing the right thing for their family finances.

I'm taking that same hour, researching a great investment to buy, rebalancing my portfolio, shifting my money into better funds with lower expense ratios... and i'm guessing in that same hour I've generated $300-500

But people don't want to do that

 

[wilked]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

you must have a brokerage account to buy your funds even in the context of a roth. don't you use vanguard as your broker?

did you mean you aren't interested in having a cash management account?

Dentist> I have a Vanguard mutual fund account and buy mutual funds within my Roth. I do not pay the annual brokerage fee that is part of having a brokerage acct / buying ETFs.

 

[Dentist]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

you must have a brokerage account to buy your funds even in the context of a roth. don't you use vanguard as your broker?

did you mean you aren't interested in having a cash management account?

Dentist> I have a Vanguard mutual fund account and buy mutual funds within my Roth. I do not pay the annual brokerage fee that is part of having a brokerage acct / buying ETFs.

ok, interesting.. i didn't realize there was a distinction.

with vanguard there's no transaction fees to buy their ETFs.. i didn't realize they have an annual brokerage fee.

Edit: ok, i see there's a fee for a brokerage account if you have under 10k.. $20 a year? not bad

 

[Slapdash]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

Here are a couple of sites I like to read that cover some of these:

http://www.mrmoneymustache.com/

http://www.thesimpledollar.com/

 

[wilked]

Ya, it is realistically a coin toss between mutual funds and etfs, assuming you are going all Vanguard. I prefer MFs, but some of that is that I never took the time to 100% understand etfs

 

[Dentist]

Ya, it is realistically a coin toss between mutual funds and etfs, assuming you are going all Vanguard. I prefer MFs, but some of that is that I never took the time to 100% understand etfs

I prefer ETFs simply because i hate the restrictions on mutual funds.. can only buy/sell at the end of the day, transaction fees in and out, minimum investment amounts, higher expense ratios in most cases, lack of transparency in some cases.

Make no mistake about it.. there are bad ETFs just like there are bad mutual funds.

it's just that i think the best etfs are just a pubic hair better than the best mutual funds (index ones that is).

But I also wouldn't criticize anyone for doing either one.. I'm pretty sure you'll never notice the difference over 50 years between a 0.09 and a 0.11 expense ratio

 

[Tiger Fan]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

I think those are all important things, have you found that from reading things by Suze Orman, Dave Ramsey, Jane Bryant Quinn... that these are topics that haven't been covered well in basic personal finance books?

I've spent so much more time on the latter part of your topics because the "getting control of your spending" part just has never been a problem for me due to my upbringing, general discipline, and affinity for math and good decision making skills.

Part of what this entire thread is about is that i think that people who care about their money enough to watch a program like this may really be focused on things like budgeting, coupon clipping, etc.. ways to save money and extend their dollars...

but meanwhile they have 10's or 100's or thousands of dollars in their investment vehicles that are very poorly invested... penny wise, pound foolish.

People will spend a half hour changing their oil to save $50, a half hour clipping coupons to save $25.. and they'll be so excited and really feel like they are doing the right thing for their family finances.

I'm taking that same hour, researching a great investment to buy, rebalancing my portfolio, shifting my money into better funds with lower expense ratios... and i'm guessing in that same hour I've generated $300-500

But people don't want to do that

Agree completely...which is why i didn't want to intrude on this thread if it was out of place. I think they all have been covered before in random books, but I've never seen them all put together before...plus I hate that Orman, Ramsey, etc are generally selling a system.

 

[Dentist]

Love to see this thread have steam! I've been slammed lately, but will look to participate some more in this. If I can hijack slightly for a sec.....

I've got a lot of passion around personal finance...however it's around the "getting control of your spending and setting yourself up for success" vs. "investing and retirement planning vehicles". Now obviously, one feeds into the other...but I've spent alot of time around the first one. Where I'm going with this is that I've outlined a book that someday I'd like to write (pipe dream, I know) around this subject and wanted to test the waters (both on content and writing) in the FFA. Here are some of the topics I want to examine...should I start a new thread for each one or take a look at in here? I'd imagine that the people in this thread would be the most interested...so let me know.

• Total Cost of Ownership of your purchases
• Live waaaaay below your means
• Credit Scores
• Marriage, Kids and how they effect personal finance
• Know Thy Spend
• Unit Costs
• Buying everyday items
• Opportunity Cost (inc. time vs. money)
• Quick wins to control your spending

I think those are all important things, have you found that from reading things by Suze Orman, Dave Ramsey, Jane Bryant Quinn... that these are topics that haven't been covered well in basic personal finance books?

I've spent so much more time on the latter part of your topics because the "getting control of your spending" part just has never been a problem for me due to my upbringing, general discipline, and affinity for math and good decision making skills.

Part of what this entire thread is about is that i think that people who care about their money enough to watch a program like this may really be focused on things like budgeting, coupon clipping, etc.. ways to save money and extend their dollars...

but meanwhile they have 10's or 100's or thousands of dollars in their investment vehicles that are very poorly invested... penny wise, pound foolish.

People will spend a half hour changing their oil to save $50, a half hour clipping coupons to save $25.. and they'll be so excited and really feel like they are doing the right thing for their family finances.

I'm taking that same hour, researching a great investment to buy, rebalancing my portfolio, shifting my money into better funds with lower expense ratios... and i'm guessing in that same hour I've generated $300-500

But people don't want to do that

Agree completely...which is why i didn't want to intrude on this thread if it was out of place. I think they all have been covered before in random books, but I've never seen them all put together before...plus I hate that Orman, Ramsey, etc are generally selling a system.

i think there might be some good personal finance threads in general to bump.

i realize that orman/ramsey are also salesman and they sell a "system"

but I also think that people who are undisciplined in a certain area of their life NEED a system.

People who are undisciplined with food/diet - need like a Jenny Craig/Weight Watchers.. they need their life micromanaged because they've failed on their own.

People undisciplined with money need a Ramsey Plan/Orman plan...

Also I think in life we underestimate how uneducated/stupid a lot of people are... and a lot of people with money problems are also really bad at math, really bad at seeing the big picture, and are possibly undisciplined with many parts of their life.

So why i get that some people are offended they "sell" a system.. i think people probably need that system.

I think it also helps when one spouse is on board and the other isn't.. then the spouse who wants to get things in line isn't the one preaching.. it's the "system" that they were both supposed to buy into.

I had a really financially savvy buddy take the dave ramsey system just so he could shove his wife onboard

 

[Politician Spock]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

Regarding the Untouchables episode... it's pretty good and worth watching to get the details.

The jist of it is that "Too Big To Fail" also means "Too Big To Jail". The presmise being that if any of the executives of these too big to fail banks were jailed for the crimes they committed, customers of their bank would stop doing business with the bank, which would cause the "too big to fail" bank to fail.

If the premise is true, then the executives of these banks are in fact above the law.

 

[Slapdash]

I have always been a mutual fund man myself, not interested in a brokerage account to this point. Interesting to read other's experiences though.

Not sure if this was brought up, but have others seen this PBS

http://www.pbs.org/wgbh/pages/frontline/untouchables/

Looks interesting...

Regarding the Untouchables episode... it's pretty good and worth watching to get the details.

The jist of it is that "Too Big To Fail" also means "Too Big To Jail". The presmise being that if any of the executives of these too big to fail banks were jailed for the crimes they committed, customers of their bank would stop doing business with the bank, which would cause the "too big to fail" bank to fail.

If the premise is true, then the executives of these banks are in fact above the law.

Premise has obviously been proven over the last 7 years IMO.

 

[Slapdash]

Stuff like Dave Ramsey is good stuff for people starting on the path of financial independence, but there isn't a lot of depth there. He tends to be overly simplistic when it comes to what happens after you have gotten out of debt.



Incidentally, I attended a Dave Ramsey course when I was in middle school at a local church. That was a good idea.

 

[Dentist]

Stuff like Dave Ramsey is good stuff for people starting on the path of financial independence, but there isn't a lot of depth there. He tends to be overly simplistic when it comes to what happens after you have gotten out of debt.



Incidentally, I attended a Dave Ramsey course when I was in middle school at a local church. That was a good idea.

i agree. But I mean let's face it.. saving for retirement, actually retiring.. possibly retiring in style?

These are all top 30%er people types of concerns/problems/challenges.

the vast majority of people just never make enough money to get beyond the dave ramsey baby steps of an emergency fund, getting near being debt free (especially bad debt), etc.

There's no depth because most people don't even achieve this.

Which is why for most people if they even retire at all it's because they're forced out of the workplace or health problems bring them down.. so their retirement looks like this:

Bad days - hospital

Good days - $2.99 breakfast special with the gang at the local diner, driving trip to local state park... they may not have to work, but there's not money for leisure.

Only the elite have the money to worry about expense ratios or other complex financial ideas... because they have that burning desire for their retirement to look like:

Bad Day - $2.99 breakfast special, driving trip to local state park

Good Day - Dinner at 5 Star restaurant in Barbados where I'm snowbirding between Dec and Feb in a sweet condo near the ocean