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Thread: So I managed to save 10k last year

  1. #11
    Platinum Member mustlovedogs's Avatar
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    Do you use any apps like Mint?

  2. #12
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    Didn't know what it was until now, how are you finding it?

  3. #13
    Platinum Member mustlovedogs's Avatar
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    Originally Posted by Honeycomb8
    Didn't know what it was until now, how are you finding it?
    I love it. Auto tracks spending, categorizes it, and shows you trends. It makes it really easy to budget and save.

  4. #14
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    Originally Posted by Honeycomb8
    These are amazing tips, thanks so much! I will definitely start keeping a diary of my expenses and will look into buying stocks later on this year. I think one of the best tips I've gotten was the delayed purchase. If I wanted something, I was told to wait it out for a month- if after the month is up and I am still wanting it badly, I can then consider buying it.

    I've cut down on my lunch costs and will stick to a monthly entertainment budget. Ideally, if I can save 400-450 a week, I know it'll be worth it in the long run.
    I would not buy stocks unless you're really good at that kind of thing. I'd do the mutual fund LhGirl suggested and I believe those companies provide free financial planning advice. Very impressive and good for you! I spent 10 years saving after I paid off grad school loans. And it really paid off a lot. Good luck! (I ended up hiring a financial planner about 4 years in and still have one 17 years later -I know it's not my thing to pick stocks, etc).

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  6. #15
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    Originally Posted by Batya33
    I would not buy stocks unless you're really good at that kind of thing.
    Great point, and I want to clarify: By opening a brokerage account, you can open a mutual fund, which is a far better plan than picking stocks.

    Go to Fidelity, Schwab, Vanguard, or find another house, and meet with an advisor. You can do this over the phone. You can put all, or part, of your money in an S&P 500 mirror fund (designed to mirror S&P 500 performance), money market, etc. Spend some time with the advisor and detail your financial goals. Look at fees and compare them, as that's how they make money, and do what's best for you.

    Once you start accumulating funds, it's not a bad idea to open another brokerage account with a different company and compare the performances of each. Fund managers are highly paid financial employees, who buy and sell all the stocks in your funds for you. You can leverage your gains/losses across different funds. Do not be disappointed in market trends such as 2018, as historically, the market gains, long term, and you are in it for long term.

    Love the app idea from mustlovedogs. Add it to your phone, and commit to it for one full month, to track every penny, and you will get a clearer picture of where you need to cut.

  7. #16
    Gold Member thisisrichey's Avatar
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    Originally Posted by Honeycomb8
    These are amazing tips, thanks so much! I will definitely start keeping a diary of my expenses and will look into buying stocks later on this year. I think one of the best tips I've gotten was the delayed purchase. If I wanted something, I was told to wait it out for a month- if after the month is up and I am still wanting it badly, I can then consider buying it.

    I've cut down on my lunch costs and will stick to a monthly entertainment budget. Ideally, if I can save 400-450 a week, I know it'll be worth it in the long run.
    The better system is:
    if you want something, wait until you've accumulated enough money to buy it outright.
    Once you are able to buy it outright, if you still want it bad enough - go get it!

    I would use this over the "wait 1 month" rule as if you havn't accumulated enough saved money to purchase it outright, you're encurring debt all over again. And encurring debt is a no-no in best financial practices.

    As far as investing and mutual funds, bla bla bla. here are some general tip, industry "knowns", and personal experience:
    1. For the beginner who doesn't want to, or feel confident, about researching specific stocks to buy/sell, a mutual fund is a terrific way to diversify and limit risk. But realize it's FAR more expensive to do mutual funds over specific stock purchases. CHECK OUT the "fund management fee" typically in the 1-3%/yr range. (TIP: Vanguard is notorious for having the lowest management fees for mutual funds...)

    2. If you want to go the mutual fund route, studies have shown that a great fund to go with is the S&P500 index fund (each investment brand may have their own version of an S&P indexed fund). Although there are plenty of funds that out-perform the S&P each year (approx 10-15% funds beat the S&P in any single year), most of those don't CONSISTENTLY beat it. So by sticking to a S&P500 index fund, you are going to be in the 85% or higher of performance annually.

    3. An even better mutual fund is a Russell Index based fund- basically an S&P500 for mid-cap stocks (aka smaller companies.. not the biggest major companies). General concensus is the smaller the company the more volatile the company, thus more risk, but more reward. however studies have shown that even with more risk the Russell Index's rewards during good times, far outweigh the risks of bad times - and that the perfomance during bad times aren't nearly taht much lower/riskier than the S&P500 in most years. So IN REALITY, the Russell Index gives you better performance in both types of cycles. (I myself now make my bread-n-butter a Russell Index based fund instead of the S&P i used for a long time).

    4. The best strategy for mutual funds is somethign called "dollar cost averaging." And that is.. you maximize your "diversification" by buying in regularly a regular alottments to counteract cycle ups/downs. (Ex. Buy $100/worth of the mutual fund every 3 months. and just keep doing that). The philosophy here is that.. if the cycle is up and the price is expensive, you are purchasing fewer shares with that same $100 for that cycle. During cycle down times where the price is low, you are accumulating MORE shares for that $100. The end result is the the avg cost per share is overall lowered so that your overall return is even higher).

    ex.
    Q1. S&P=$25/share. $100 purchases 4 shares.
    Q3. S&P=$50/share. $100 purchases 2 shares. You now have 6 shares for $200 = $33.33/share avg
    Q4. S&P=$10/share. $100 purchases 10 shares. You now have 16 shares for $300 = $18.75/share avg
    Q4. S&P=$50/share. $100 purchases 2 shares. You now have 18 shares for $400 = $22.22/share avg

    So to compare buying it all at once vs "dollar cost averaging".
    If you spent all $400 on Q1 @ $25/share. You've have 16 shares worth (at $50/share) = $800
    By dollar cost averaging, you have 18 shares @ $22.22/share now worth (at $50/share) = $900

    This can apply to any investment purchase but since you expect index funds to be more stable (and stocks to be more up/down) - this works like a charm with mutual funds.

    Good luck!

  8. #17
    Platinum Member reinventmyself's Avatar
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    Originally Posted by mustlovedogs
    I love it. Auto tracks spending, categorizes it, and shows you trends. It makes it really easy to budget and save.
    I bank with Wells Fargo and after some initial personal settings there is a feature that tracks all my spending for me by categories.
    I can long onto my account and see real time and colored graph that shows my activity and goals.
    It makes a difference to see in writing, rather than just imagining it my head. It's a great tool and good reinforcement.

  9. #18
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    You guys are too awesome. I have documented all my spending for the last 10 days, and have kept away from all stores. I will aim to keep my entertainment costs to around 65 dollars a week which is lower than before but manageable. Aiming to save a minimum of 400 dollars but will try hard for $450 a week. I have started to make lunch and will start meal prepping from tomorrow onwards.

    Will update in 3 months =D. I hope to be live modestly and keep my mind on the main goal.

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