matuski
Footballguy
I would be willing to pay good money for someone to show me how to get my wife to stay on a budget. 3 attempts, zero success.
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Personal Finance Advice and Education! (5 Viewers)
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Footballguy
What/where is the problem? Daily/Weekly shopping for stupid ####? Drugs? Cars? Does she work? What kind of money are we talking that you would like to save that she blows?
FUBAR
Footballguy
Dentist
***Official FBG Dentist***
Have you tried an app like mint or ynab?
That worked well for my wife, the first step is acknowledging what you spend.
matuski
Footballguy
Spreadsheets, apps, adviser help.
Making the budget isn't an issue. Says she is in, even takes part in the budgeting...but If there are dollars in the checking account she spends them. Think I started or posted somewhere about the insanity that is her and spending
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FUBAR
Footballguy
How big a percentage of your portfolio is currently in bonds?
I just reviewed our balances and found the current balance:
Foreign 25.05%
Domestic 65.83%
REIT 5.49%
Bond 3.53%
The "ideal" I set a couple years ago would be:
Foreign 25.00%
Domestic 60.00%
REIT 6.00%
Bond 8.00%
So, if I were to rebalance to our previous ideal, I'd sell off 5.83% of my domestic stocks and buy bonds; could just sell my shares of Google currently in our mid-range (5-15 years) account.. FWIW, Google is the only individual stock we own. On one hand, that's probably prudent. OTOH, the bond market sucks.
Understanding that every situation is different, we're in our late 30s, unless something surprising happens I'll get a military pension in 4-14 years (best guess is 5), which provides the safety net that we usually look for in bonds, which is why our ideal bond holdings are so low.
ETA: as for the wife's opinion, she has none. Despite many attempts to get her to even consider our financial goals, the only thing she'll discuss is the end result. Retirement, travel, cabin on the lake, etc. She has no clue (and no interest in learning) how to invest so I've been doing it without her assistance for 16 years now. Which I don't mind too much but it would be nice to have an intelligent conversation about this stuff.
I just reviewed our balances and found the current balance:
Foreign 25.05%
Domestic 65.83%
REIT 5.49%
Bond 3.53%
The "ideal" I set a couple years ago would be:
Foreign 25.00%
Domestic 60.00%
REIT 6.00%
Bond 8.00%
So, if I were to rebalance to our previous ideal, I'd sell off 5.83% of my domestic stocks and buy bonds; could just sell my shares of Google currently in our mid-range (5-15 years) account.. FWIW, Google is the only individual stock we own. On one hand, that's probably prudent. OTOH, the bond market sucks.
Understanding that every situation is different, we're in our late 30s, unless something surprising happens I'll get a military pension in 4-14 years (best guess is 5), which provides the safety net that we usually look for in bonds, which is why our ideal bond holdings are so low.
ETA: as for the wife's opinion, she has none. Despite many attempts to get her to even consider our financial goals, the only thing she'll discuss is the end result. Retirement, travel, cabin on the lake, etc. She has no clue (and no interest in learning) how to invest so I've been doing it without her assistance for 16 years now. Which I don't mind too much but it would be nice to have an intelligent conversation about this stuff.
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Gawain
Footballguy
0%.
I've started to add bullion as my risk-hedge (physical, not paper), so I'm willing to let the wife and I ride in a 100% stock mix (mostly large-cap) in our 401Ks and IRA.
We are early 30s, looking to add two kids in the next couple years, so am trying to sock as much away as possible now before diapers and legos and nursing bras sap our savings.
NewlyRetired
Footballguy
Steve Tasker
Footballguy
I would assume that a heavy bond allocation would be part of most FIREs' portfolios, right? (1/3 being "heavy" in my mind)
any specific ones, bond funds, etc?
I have the opportunity to retire at 52 with a full pension, but would need to bridge about 8 years if I didn't want to take a penalty
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FUBAR
Footballguy
Makes sense. How much would you put in bonds if you had a pension you could live on?
STEADYMOBBIN 22
Footballguy
You and I need to fire up APF2K8 and settle once and for all who the champ is.
FUBAR
Footballguy
That's a generic answer, based on risk acceptance. Not tailored to an individual's needs or plans.
That's pretty much where I'm at with this. Even in the account I plan to use in 5-10 years, I feel like there are better, even safer (once you account for inflation risk) investments. The "experts" all say to have a significant amount in bonds, though the method to determine the ideal amount may differ. It's not that I'm trying to find the next big gainer (as written before, I literally have one individual stock in my portfolio). I just don't like losing money in an investment that isn't going to gain much. If I'm going to lose money I at least want that to be the price for taking a risk.
Dentist
***Official FBG Dentist***
i have a friend who needs a financial education, but we need the absolute bare bare basics.
Like this guy just needs to learn how to set up a brokerage account, what the choices are for accounts to set up, and needs to know what a stock/bond/fund is.
If you use the words "index fund" he doesn't know what either index or fund mean... I think if I said S&P 500 he'd think it was a NASCAR race. He barely understands what the stock market is even about, which is pretty embarrassing for an over 40 y.o. chiropractor who's never invested a dollar in his life.
Where do you start someone who has the financial knowledge of a 12 y.o. I want to help, but it's like i can't even dumb the information down enough to have a decent conversation.
Like this guy just needs to learn how to set up a brokerage account, what the choices are for accounts to set up, and needs to know what a stock/bond/fund is.
If you use the words "index fund" he doesn't know what either index or fund mean... I think if I said S&P 500 he'd think it was a NASCAR race. He barely understands what the stock market is even about, which is pretty embarrassing for an over 40 y.o. chiropractor who's never invested a dollar in his life.
Where do you start someone who has the financial knowledge of a 12 y.o. I want to help, but it's like i can't even dumb the information down enough to have a decent conversation.
NewlyRetired
Footballguy
you really can't go wrong with Personal Finance for Dummies for someone just starting out. It will give him all the basics in an easy to read format.
http://www.amazon.com/Personal-Finance-Dummies-Eric-Tyson/dp/1118117859
slackjawedyokel
Footballguy
We started using Mint about 3-4 years ago. Setting budgets can actually be quite liberating in that it allows for earmarked spending in categories instead of constantly struggling with decisions on whether or not to buy something. Case in point... fun money budget. Buy any shoes or handbags you want, but the monthly budget is $xxx.xx. It can roll over if needed so by that LV Bag in 3 months of savings if it's that important.
Dentist
***Official FBG Dentist***
Oh, I guess i find that the bad part about budgeting and I don't use the software that way.
I use Mint as a method of account aggregation and a way to be financially transparent with my wife (the opposite of hiding money)
But it's also a way she's financially transparent with me.
We don't use the budgeting part of it as we are not on a budget of any type.
But since the app aggregates all transactions of spent money it means we constantly have to defend our purchases to each other. It puts extra pressure on me not to buy anything stupid because I know that if I buy something dumb I'm going to get called out on it, and then probably have to deal with her countering with something dumb... So.. do i really want that $300 tablet? It might really be costing me $600 if she counters with $300 of wasteful spending.
So what it accomplishes for me is shaming of each other's purchases so that ultimately they really don't happen and the money doesn't get spent.
I don't want to budget money to get spent.. I don't want the money to be spent at all.
I use mvelopes.com. It's not free, but it's great....I paid for a lifetime subscription about 5-6 years ago, so I'm not sure if Mint has stepped up its game or not. But at the time mint didn't have "envelope" fuctionality, which I think it key in budgeting/adjusting
to achieve this, I think you need to make transparent what you are spending in what group. FWIW, after a lot of back and forth, my wife and I landed on each of us getting $XXXX/month (we agreed on this #) and we could buy whatever we wanted in this area no questions asked.
For bigger type purchases (cars, furniture, etc), we talk about possibilities of these and timelines on a quarterly basis and plan accordingly.
Dentist
***Official FBG Dentist***
Mint gives us full breakdown of spending by category. We get full transparency on everything but petty cash transactions.
But there is no way I think it's a good idea to budget money to be blown, because then it gets blown.
Best practices for me include not spending frivolously to set the proper example, then shaming any frivolous purchases she makes thus making it known that all stupid purchases must be defensible.
It works for me.
But you have to paint it all in a positive light with discussing long range goals like early retirement and vacations. As long we keep our eyes on the prize it works.
Also paint all purchases not on present value but total value.
You spent 100 on A purse? Well if invested that 100 is worth 200 in 2035 dollars so that's what it really cost. Now I have to work another 30 minutes in 2035 instead of being retired in the usvi. Thanks sweetie.
Steve Tasker
Footballguy
1. I guess I don't view it as "blown" money...but just personal money. If I want to go to the bar, play poker, buy a new pair of jeans, etc...it comes out of my personal money. It's not blown, b/c it's an agreed to reasonable amount
2. With "You spent 100 on A purse? Well if invested that 100 is worth 200 in 2035 dollars so that's what it really cost. Now I have to work another 30 minutes in 2035 instead of being retired in the usvi. Thanks sweetie" - while techinically you're correct...be wary about the "too controlling" fight.......hence just agreeing on a monthly amount (that is reasonable and transparent) and be done with it
FUBAR
Footballguy
1. Completely agreed so long as your debts and bills are paid first.1. I guess I don't view it as "blown" money...but just personal money. If I want to go to the bar, play poker, buy a new pair of jeans, etc...it comes out of my personal money. It's not blown, b/c it's an agreed to reasonable amount
2. With "You spent 100 on A purse? Well if invested that 100 is worth 200 in 2035 dollars so that's what it really cost. Now I have to work another 30 minutes in 2035 instead of being retired in the usvi. Thanks sweetie" - while techinically you're correct...be wary about the "too controlling" fight.......hence just agreeing on a monthly amount (that is reasonable and transparent) and be done with it
2. yep. You could argue that the $5 lunch isn't worth $10 in 2035 either. So you always live on rice and beans (which I actually like on occasion but can't eat exclusively)
This whole thing can be made a lot easier if you simply invest XX% first and keep your spending under control, spending money on what you plan for instead of spur of the moment purchases. Which is the benefit of budgeting.
FUBAR
Footballguy
Your money should work for you, to get what you want most. Not you working to simply have a pile of cash you never use.
mquinnjr
Footballguy
Yep. Gotta save early and often and do it right/tax effectively, but can't take it with you. I mean, say for example's sake you save ~35% of your gross. That's pretty awesome. It won't kill you to take like 5% of that (if in cash) and live a little. Take a trip, buy something.
Dentist
***Official FBG Dentist***
Trips, yes. Vacations and experiences are a great way to spend money and one I advocate.
Stuff, almost never.
Doctor Detroit
Please remove your headgear
I will be able to max out my 401k this year for the first time ever. I figure that I'll have a bunch of money in my 50s once some of my debt/obligations are behind me, so for now I will continue to be thrifty in my goal of building wealth.
Doctor Detroit
Please remove your headgear
I'd put it all in the traditional account because we know the tax rate today, and we don't know it tomorrow.
I take more risk with my Roth IRA but as far as the TSP, a 40/22/22/8/8 between C/I/S/G/F is what I do. The lifecycle funds are very conservative, I'm somewhere in the middle of those and what Proteus suggests. As long as you're not a dummy like most feds and have a 70 percent stake in the G fund, I'm good with whatever. But I think that maximum risk is appropriate for outside accounts, with the 401k or TSP you go aggressive but not "all in." If you get an 8% return on average you are ahead of the game, and the TSP funds usually beat their benchmark. Risk tolerance is crucial, the lifecycle funds are fine if you are uneasy with investing.
NutterButter
Footballguy
Looking a the boglehead wiki page, it talks about stock and bond diversification and even recommends having the percentage of bonds in your portfolio be roughly your age. Does anyone here ascribe to that philosophy? I'm 38 and it seems way too early to me to be that heavily invested in bonds. Right now, I'm almost solely in an S&P index. If I'm shooting for 60 as a retirement age and the market took a dump now, that's 22 year for a turnaround which seems like more than enough time. I'd think in that time frame that I can absorb any risk and I'd rather maximize returns.
JFT Ben
Footballguy
Nutter - I'm 38 too, and I agree that it seems pretty conservative. My wife and I are in about 18% in fixed income (bonds/TIPS), which feels right to me. However, if you read some of the legendary investing books out there, like Benjamin Graham's Intelligent Investor (the best book on investing according to Warren Buffett) , he says 25% as the minimum for the bond allocation (with a stock bond allocation that should range from 75%/25% all the way to 25%/75%, with 50/50 as a baseline only adjusting based on pricing of the investments.
FUBAR
Footballguy
Frankly, any allocation calculator that doesn't account for individual circumstances misses the mark.
I'm also 38 (seems a popular age around here) and have less than 4% in bonds. That's
NutterButter
Footballguy
Fubar, why do you think it's too low where you're at? I have 0% In bonds and at my age, I don't see why that should change. Let's say hypothetically another 2008 collapse happens, and it takes 6 years for the market to recover, I'm still only pushing 45 which is quite a few years before my target retirement age. This is the first time I've really thought about this so I'm probably missing something.
GoBirds
Footballguy
Just downloaded Mint app based off recommendation on here, I get nervous providing bank account info to an app. How safe is this and doesn't it increase your chances of getting hacked etc? Not very knowledgeable of this just curious.
Also is this the best app to get started budgeting and get wife involved?
Also is this the best app to get started budgeting and get wife involved?
wilked
Footballguy
Please describe those safer investments with better returns?
Bonds are down, but that doesn't mean you shouldn't be invested in them. I highly discourage anyone to performance-chase. Bonds are there for when the market take a big dive (and trust me, it will, see here for more info http://i43.tinypic.com/w71n5j.jpg). You could always wait for bonds to recover before you jump back into them but that is like waiting for for it to rain before you buy an umbrella...you might not be getting the best value
I subscribe to "Age in Bonds - 10", for what it's worth
wilked
Footballguy
Why does your pension affect your bonds %? To me, having a pension just reduces your "number" (ie size of retirement before you can safely retire).
Basically, you decide what income you need in order to comfortably retire (this should be done with a detailed budget). Let's say it is $50,000 annual. Let's further say your pension provides $20,000 annual. Assuming 3% safe withdrawal rate, that means you need to save $30000/0.03 = $1MM. Once you have $1MM socked away you are 'done'. I don't see how this affects your bond % though... I would still be bond-heavy (say 40-50%) as I approach that $1MM, as it would kill me to be a year away from retirement and see my portfolio take a 30-40% haircut.
yes, safe.
I use mvelopes instead of mint b/c I'm a big fan of the envelope budgeting system. There's a monthly subscription, but it's money well spent IMO.
FUBAR
Footballguy
It depends what role you view bonds in your portfolio. To me, they're a safety net. If you have that safety net already, they aren't as vital to your portfolio.
It helps that I'll hit my "number" before I'm mentally ready to retire and well before we can withdraw from our accounts. The the risk that a 30% drop would mean not retiring is virtually nonexistent.
To be sure, I'll move more into bonds as we get near retirement but full retirement is probably 20 some years away. first "retirement" is around 5 years away.
GoBirds
Footballguy
The scary thing is its all your financial accounts in one place, seems like it would make the most sense to target as opposed to an individual bank. I wanted to check the app out more but they ask for account # right away before I see what I'm getting.
NutterButter
Footballguy
Do you even need that safety net if you're a ways off from retirement? It just seems like a waste of an opportunity to be in higher earning stocks. When you're close to retirement, that safety net is obviously vital. I just don't see the point of having a third or more of your portfolio tied up in something that's going to earn less just to provide you with a safety net you don't need since you have many years to weather the obvious volatility.
Mint.com is obviously going to be less secure than keeping your password information to yourself. Everything is hackable. However, Intuit is a large company in the business of financial and personal information. I do feel confident they are taking pretty advanced steps to safeguard that information, moreso than their smaller competitors.
FUBAR
Footballguy
Maybe not. Of course the other argument is bonds reduces risk and locks in some gains.
Doctor Detroit
Please remove your headgear
Risk tolerance is huge in investing and I think people generally follow the market waves instead of working in a consistent flow. In 2008 when stock markets were down around 40% across the boards, treasuries returned 3.75% for me while the Barclays aggregate bond index fund returned 5.5%. So even if a portfolio was heavily weighted to stocks, you would still have offset some of the stock market losses by being in the bond market. Then if you dollar cost average you bought stocks at a discount for a year, which now have produced a good amount of gains.
People were leaving the market in 2008 because they were all in stocks, and even today they are spooked by such a market occurring again (which it certainly will). Coming up with a mix of real estate, stocks, bonds, and commodities not only diversifies your holdings, it also reduces risk as Wilked so astutely points out. For me between 15 and 20% in bonds is the right mix, so that is the right answer for me. For others it may be 40% in bonds and age and risk tolerance are contributing variables in you deciding what is best for you.
NutterButter
Footballguy
You have some links that demonstrate this? I'm looking for some real # crunching that demonstrates that having the % of your portofolio that's bonds be your age has the same return as being all in say an s&p 500 index. Like I've been saying, I don't see why I'd care about volatility when I'm so far out from retirement.
fred_1_15301
Footballguy
I'm meeting with a financial advisor tomorrow and planning to discuss investment in ETFs. Are ETFs a good, safe strategy to invest let's say 1/10th of my savings? The advisor would get a 1% cut. That seems a little steep but I have no clue.
FUBAR
Footballguy
I mostly agree but the emotional side is huge. For those of us who were in the market in 08, we can use our actions then to tell us what we will probably do during the next drop. Personally, I stayed the course and remember many conversations with my boss at the time when I advocated for staying the course. those who sold off their stocks are likely to do that next time and are better off having more in bonds.
