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volvoclearinghouse
volvoclearinghouse UberDork
6/27/18 7:27 a.m.

In reply to STM317 :

I'm of the opinion that everyone ought to have multiple sources of income.  I don't much care for the term "side hustle", but that's the popular parlance nowadays.  People talk about not having all their eggs in one basket, usually referring to their retirement/ investments, but what about the money that's actually coming in every month?  You lose your job- bang, no more money coming in.  Having something you do in addition to your primary occupation to bring in some cash every month helps mitigate that disaster- particularly if its something that's scalable now that you have more 'free' time (from not working the 40+ hours/ week).  Plus its something the kids can learn and develop as a skill.  My dad learned leather work from his dad- he never put it to use to earn money, but he had it nonetheless.  What he did do was take his accounting skills from his "regular" job and turn a few bucks every year doing peoples' taxes.  We also used to grow evergreens on some land we had, prune them, and sell Christmas trees every year.  My dad told me a few years back that the Christmas tree money paid for our Christmas presents every year.  And my brother and I used to help tend the stand (front of our house) so in essence we were working for our presents every year (I might have tried to sell a few more trees had I known that then!)

When I got older I worked for a garden center as a teenager, and they happened to sell Christmas trees.  My dad had gotten out of doing it by then, so I used to go down to the garden center at Christmas and sell them there.  I was one of their best salesmen, and they called me back every year to come sell trees.  

Life skill:  I can peddle dead evergreens to middle-class Americans who hallucinate about sugarplums dancing in their heads.  

STM317
STM317 SuperDork
6/27/18 7:28 a.m.

In reply to Robbie :

Definitely. It could be a trust. A savings account. A 529, etc. But the Roth has tremendous upside the younger a person is (gains are never taxed).

NOHOME
NOHOME UltimaDork
6/27/18 9:46 a.m.
frenchyd said:
mazdeuce - Seth said:

I think a better question is "what did you do last time that worked?" and learn from there. 

I've been though two as an adult. The first was the dot com bust. That one was much more industry specific, we had no money in the market because we were just starting out, and we just went to work. It was a significant hit to those in tech, people lost fortunes. People lost their retirement money and a lot of people had to postpone retirement. We learned that putting all of your eggs in one basket is a terrible idea so when my wife received stock options as part of her job we diversified away from those. Tying you savings up with the same company that pays your income is a bad idea. 

The next one was the great recession. We had paid of our mortgage, but we were a single income. We moved about half our retirement funds into bonds because the world looked sketchy as all get out. Market timing is a terrible idea. Did it anyway. Bought back into the SP500 within 50 points of the very bottom. That made me look like a damn genius. Also bought a chunk of Citibank stock because the upside potential once they stabilized was huge. I thought. Less of a genius. I have enough humility to know that there is significant luck in the smartest things I do. 

Coming out we did great. We had enough invested that market growth has made medium sized numbers into big numbers. My wife took a payout from a company being sold and used that cushion to spend 9 months trying to start a company with an investment group. That didn't work out but stepping up in her industry got her in front of people that wanted her in a similar position in their company. Before she went to work with no salary we de-risked our savings by moving a significant chunk into bonds. Our biggest threat was a recession while she wasn't working. As we've gotten income back, we've stayed bond heavy because things look weird. More market timing. Never a good idea. I'm doing it anyway. 

My recommendation to everyone is to always live below your means no matter what the economic conditions are. Be prepared to live without money for a while. Make sure you can move. The economy recovers unevenly and jobs might never come back where you are. Being stressed about money is bad for a marriage. 

Live below your means? On the surface that sounds like solid advice. It’s not what Henry Ford did, or Bill Gates, or anybody who was really successful 

Taking chances is the only way to be really successful.  While hunkering down  seems a safe bet, life happens. That car accident or slip in the bathtub that disables you can’t be planned for nor can serious illness.   

Around 50% of marriages end in divorce some as retirement approaches which is extremely tough on finances.  

Careers end and the need for updating training never seems to stop. Management changes and often the people in important roles with them.

When I went to high school  you could plan on working for a major company all of your life. Following graduation from college I was told to expect 3-4 career changes in my working life.  At my daughter’s college graduation  they said to expect as many as 20 career changes over their working life. 

If you personally live below your means, you can get away with taking risk with your business. Both Ford and (Kinda) Gates are good examples. Add Bufffet to the list of those who live below their means so that they can take risk with the business. 

SVreX
SVreX MegaDork
6/27/18 10:45 a.m.

In reply to NOHOME :

It’s kinda weird talking about some of the richest men in the world “living below their means”. 

They have rather generous “means”.  I don’t think I’d have any problem at all living below Warren Buffet’s means. 

bobzilla
bobzilla MegaDork
6/27/18 12:08 p.m.
SVreX said:

In reply to NOHOME :

It’s kinda weird talking about some of the richest men in the world “living below their means”. 

They have rather generous “means”.  I don’t think I’d have any problem at all living below Warren Buffet’s means. 

I'm reminded of a coworker years ago that made the comment "they didn't get rich blowing all their money on hookers and blow." Kinda fitting.

mazdeuce - Seth
mazdeuce - Seth Mod Squad
6/27/18 2:12 p.m.

In reply to bobzilla :

Which reminds me of something I recently read: "Everyone says they want to be a millionaire, but what they usually mean is that they want to spend a million dollars. Becoming a millionaire is the act of NOT spending a million dollars."

bobzilla
bobzilla MegaDork
6/27/18 3:04 p.m.

Technically, the wife and I have eclipsed that million mark in income. Sadly, we've spent 90% of it. 10 years of $100k total income makes you a millionaire. At least we have the memories. 

mazdeuce - Seth
mazdeuce - Seth Mod Squad
6/27/18 3:16 p.m.

Living is expensive. 

AngryCorvair
AngryCorvair GRM+ Memberand MegaDork
6/27/18 3:24 p.m.

In reply to mazdeuce - Seth :

no E36 M3.   just like stuff expands to fill additional space, i have found that expenses expand to consume additional income.

example:  most recent job change came with a raise of about $1k/mo take home.  somehow, my checking balance at the end of the month is exactly the same as it was at the end of a month without that raise.  :-(

Streetwiseguy
Streetwiseguy UltimaDork
6/27/18 3:47 p.m.

In reply to AngryCorvair :

I think there is probably an equation that sums it up.  Current income plus 20%=happy until things that are now possible with another 20%income. And so on...

 

Hal
Hal UltraDork
6/27/18 6:29 p.m.
bobzilla said:
NOHOME said:

Avoid kids and fancy homes, they are the honey pots that bind you to debt.

Buy a small home, pay it off and stay there.

Live below your means with zero debt and don't give a berkeley. 

Besides being recession proof, your ability to career jump goes way up.  I have gotten to do a lot of neat things because I did not have to worry about walking away from a good paying  job that no longer fed MY needs and interest. 

 

Pete

 

I'll add "marry a sugar momma" to that list. No kids, two incomes, wife that makes more money than I do. Sure fired road to success.

I will add to this with the idea that living below your means equates to living on one of the incomes and saving the other.  We both had pretty good incomes so that meant doing most of the things we wanted to do before retirement and now enjoying a nice retirement for the last 14 years.

volvoclearinghouse
volvoclearinghouse UberDork
6/28/18 6:07 a.m.
AngryCorvair said:

In reply to mazdeuce - Seth :

no E36 M3.   just like stuff expands to fill additional space, i have found that expenses expand to consume additional income.

example:  most recent job change came with a raise of about $1k/mo take home.  somehow, my checking balance at the end of the month is exactly the same as it was at the end of a month without that raise.  :-(

Not to be a dick (though, since I'm an engineer, I am- just ask Mrs. VCH) but there's no "somehow" about it.  Did housing costs change?  Longer commute?  Eating out more?  Extra trips to Bob's Hookers and Blow Emporium?

bobzilla
bobzilla MegaDork
6/28/18 6:12 a.m.

I have a hookers and blow emporium? Huh... that could explain some things. Still doesn’t explain the Korean car thing though. 

volvoclearinghouse
volvoclearinghouse UberDork
6/28/18 6:51 a.m.
bobzilla said:

I have a hookers and blow emporium? Huh... that could explain some things. Still doesn’t explain the Korean car thing though. 

Actually, it absolutely explains the Korean car thing.  

Adrian_Thompson
Adrian_Thompson MegaDork
6/28/18 8:39 a.m.

As far as diversifying for retirement and planning for future generations.  Our 'side hussle' is a couple of rental houses.  Right now they are slightly better than cash flowing themselves.  But come retirement they will be  fully paid for and will provide another source of income over an above investments and Social Security.  The long term plan is that they will be in a trust that can be passed to future generations.  The kids can either turn them over to a management company and take the income (after maintenance and taxes), split them up one each or sell them outright.  I don't plan on dictating to the kids wha they can/can't do with any inheritance, but they are both being brought up to understand the options.

Luckily we seem to have done OK and both kids are making fiscally responsible long term decisions (community college to start even with 3.8GPA) then transfer to a Uni to finish off, doing with out as they don't see the cost benefit ratio of many 'must have' luxuries and most importantly planning for the future.  They learned the lessons by osmosis from us, and I wish I'd learned them from my parents rather than having to figure it out myself as I closed in on 30.  I got a slow start, and had what felt like at the time as a non recoverable loss of around $100K in the early part of this century, but we're on track now.

Honestly a 20%  bump in income right now would not change our spending habits a bit, we're happy with our lifestyle.  What it would do is pay down the houses faster and/or get us into another one sooner.  

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
6/28/18 10:01 a.m.
SVreX said:

In reply to NOHOME :

It’s kinda weird talking about some of the richest men in the world “living below their means”. 

They have rather generous “means”.  I don’t think I’d have any problem at all living below Warren Buffet’s means. 

While that is very true, Warren Buffett didn't start out that way, nor did Henry Ford.

pheller
pheller PowerDork
6/28/18 11:47 a.m.

Well, the good news is, my wife and I already follow many of the suggestions mentioned in this thread.

 

- We followed the money across the country instead of working low paying jobs closer to family and continue to stay at jobs that pay well, despite the challenge of doing so with a child. My wife's job will soon become commute free, which means I'll likely use her Honda Fit as my DD, saving some money. I try to impress on my lovely wife that the benefit to being a Working Mom is that if even a recession hits and she (or I) loses her job, we won't feel stressed about money.

- We save almost the entirety of a single income, which for our family is north of $50k a year. Downside? It's only been this way for about 3 years so far. One year paid off all debt, another year paid for a house, and this year we're paying off the costs of childbirth while saving for a potentially better living situation. I wish we could have been doing this for the last 8 years of our relationship. 

- We try to live without accumulating alot of stuff. We're getting better about picking up free furniture, testing it, and determining that we really don't need it. This has resulted in quite a few of the rooms in our house remaining nearly empty, and the stuff we do buy being used hard, but also bought with an eye towards being easy to transport, fold down, and etc. 

- We dump a lot of money into our 401k, but we really need to start looking at a Roth IRA. We should have been more aggressive when looking at Mortgage rates instead of getting stuck with 4.6% interest when we could've been under 4%. We take advantage of HSA and Dependent Care FSA. 

- We've been thinking of downsizing our house, as we don't like all the stairs, 1500sqft is a bit much for us, and we'd sooner be a nicer, cleaner neighborhood. Trouble is, we also aren't sure how long we'll stay in our current town as we'd like to be closer to family (and they aren't moving closer to us). 

 

All in all I think this thread reassured me that we're on the right track, and the plans and strategy we have for the future should allow us some flexibility even in the event of a economic downturn. 

Dr. Hess
Dr. Hess MegaDork
6/28/18 12:29 p.m.

Just to point out, we have been in a "recession" since aproximately late 2000 or 2001.  Certainly by 9/11, which was probably the final kicker.  Most visible about 2008, 2009, but we never recovered.  Call it what you will, the names change after each one, but "great recession" will probably stick.  The actual numbers have been fudged now by 4 or more administrations running. 


My point is that you have been surviving (we all have) a "recession" for the last decade and a half.  That's how you survive. 

Hal
Hal UltraDork
6/28/18 9:04 p.m.
pheller said:

- We save almost the entirety of a single income, which for our family is north of $50k a year. Downside? It's only been this way for about 3 years so far.  I wish we could have been doing this for the last 8 years of our relationship. 

Don't sweat it.  You have figured out how to do it and have 20-30 years to keep doing it.  There will probably be some times when you need to break the habit (house renovations, etc). Just get back to the saving behavior as soon as possible.

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