AngryCorvair wrote:chaparral wrote:At that income level, you have to make some good choices about lifestyle, but you get to make your own choices, and you can make up for your own emergencies.
true. it really does come down to making good choices about lifestyle. i believe we're going to adjust our restaurants and entertainment budget down so we can put more into the college fund. we also have six months of living expenses in the bank, which is a very nice security blanket.
it is absolutely critical to have a plan. in "The Millionaire Next Door" there are some interesting data presented re. how much time is spent on planning and budgeting by wealthy people versus non-wealthy people. wealthy people spend something like 20x more time planning. dave ramsey says "every dollar has a name," and that's how we live. we spend about 4 hours per month, and go through several iterations of the monthly budget one week before that month begins. it is an effective tool for communicating the expectations for the month, it minimizes surprises, and it gives us each a tangible assignment of responsibility.
Of course, there are times where it's important to not have a plan, too.
1) If a plan would cheat you out of taking irresponsible risks to do something great. I could've raced at the Rock Island Grand Prix on a factory Margay for a few grand that I didn't have. I could've spent ten grand on motors, batteries, and electronics and had the fastest electric kart in the world a couple years ago. I should've done it and worried about it later.
2) If a plan would tie you to doing something that's going to work against you in the end. My plan involved spending five-to-twenty grand on a car that would be dead-reliable, fast, and relaxing for my 25,000 miles a year of driving - and then I moved and went down to 1500 miles a year of driving and 8000 on the motorcycle.
3) If a plan relies on stuff that just ain't gonna happen. I could plan ahead to save for a down payment on a house when I graduate. I could plan ahead around finding Ms. Right and settling down after a few years. But I'm too much of a wanderer, and want to get into an industry that'll be changing and growing rapidly, to tie myself to living in the same area for the ten-fifteen years it would take to pay off the house. But I'm an engineer and if past history is any indication it's at least 5-1 against my having the same dance partner for two different evenings, let alone for the next sixty years.
