Interesting Real Estate Increases

[Winilyme]

Agree that achieving those dollar amounts take time, the ability to stomach steep up and downs and ABSOLUTE DISCIPLINE. This is what I taught my 21 year old daughter who just graduated from college and began her investment journey in high school. We had a pact that any money she earned or was gifted would be divided three ways - 1/3 education, 1/3 retirement and 1/3 whatever she wanted. She's stuck to it for eight years and has about $7,000 saved for retirement. That doesn't seem like much but with only part time work for most of that time, she's learned the value of saving AND investing. I'm hoping that education will last a lifetime.

There's also a wealth of resources out there to learn about investing so, 40 years from now, I really don't see "I didn't know what to do" as being a very good excuse for having meager retirement savings. As I've always told my daughter - start now and you will easily retire in comfort.

[thinkxingu]

Originally Posted by Winilyme

Agree that achieving those dollar amounts take time, the ability to stomach steep up and downs and ABSOLUTE DISCIPLINE. This is what I taught my 21 year old daughter who just graduated from college and began her investment journey in high school. We had a pact that any money she earned or was gifted would be divided three ways - 1/3 education, 1/3 retirement and 1/3 whatever she wanted. She's stuck to it for eight years and has about $7,000 saved for retirement. That doesn't seem like much but with only part time work for most of that time, she's learned the value of saving AND investing. I'm hoping that education will last a lifetime.

There's also a wealth of resources out there to learn about investing so, 40 years from now, I really don't see "I didn't know what to do" as being a very good excuse for having meager retirement savings. As I've always told my daughter - start now and you will easily retire in comfort.

Using these numbers, your daughter has saved $7k for education in eight years. How'd she pay for the rest of college, if you don't mind me asking? $7k is one year of community college these days.

One of the things I teach my seniors is to think carefully about how they will pay for school. We go as deep as talking about the overall interest penalties in unsubsidized vs. subsidized loans.

For many, including myself, starting life in the red because of school loans is a necessary evil...and one that flushes all this talk about having an extra $100k/$300 mth. down the drain.

And this isn't just college anymore—trade schools and certifications have increased in costs, too. And, though unions and businesses will often "pay" for the schooling, the costs are often reflected in lower pay for the initial years.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

[jeffk]

Here’s a scenario.
Assume a person has finished a 4-year college education at age 22 and starts a job at $35,000 a year.
Assume they were reasonably smart and didn’t go to a ridiculously expensive college and max out their student loans. Assume they probably got some state and federal aid. Assume they worked to offset their expenses. I.E. Assume any school loans are manageable.
Assume their salary increases 1% a year.
Assume they set aside 10% of their salary for retirement (beyond SS) in a tax sheltered account. (If their salary increases faster, so does their retirement savings.)
Assume the investment growth rate is 5% throughout their working and retirement lives. Hint: CDs will not work. You must go into the market. However a 5% average return is a reasonable expectation without excessive risk.

At age 68, retirement, they will have a salary of ~$54,000 and retirement savings of ~$650,000.
They could take out ~$42,000 a year (75% of their ending salary) for 30 years, till age 98. (Still 5% growth of their investment account balance.)
Note, they would also get SS.
Yes, inflation would nibble at the value of their retirement payouts but, besides medical expenses, your costs tend to decline as you age. You don’t have a mortgage, you aren’t traveling as much, you aren’t driving as much, etc. They may also get a higher rate of growth. All of this is unknowable.

The simple formula is to save 10% of your working earnings and expect 5% growth of your investments.
Is it easy? Of course not. It requires a discipline that most people lack.
If you are unhappy with your standard of living you have two basic options, work more hours/multiple jobs, OR advance your education and accept higher levels of job responsibility. The latter is best but, frankly, not everyone is capable of that.
In addition, the “I want it NOW” mentality is fatally toxic to disciplined savings. My neighbor just got a new car, put an addition on their house, got their yard landscaped, took the family for a European vacation, and my credit card is BURNING A HOLE IN MY POCKET can obliterate a savings plan. If you can earn well above your retirement planning and budget requirements, pay for it in cash, NOT credit. Otherwise, NOT now.

I know a lot of people can pick holes in these ideas and but, but, but it into pieces. Some people face special challenges that make it impossible to do do these things. However, if most people did this it would work for them. It’s not rocket science. It’s just hard and disciplined work. AND, even if it didn't work out exactly as planned, you would still be better off than if you did nothing.

[Descant]

A couple of simple options to start retirement savings-that $300/month in one of the examples above.
1. Buy used cars and pay cash. My college roommate had an old Buick that burned a lot of oil (400,000 miles) so he got used oil for free every time he filled up. If you don't drive a POS for a year in your younger days you're missing a lot of good stories. You're also buying comprehensive and collision insurance coverage that you don't need. Cars can be unnecessarily expensive. He was also investing in stocks in those days.
2. Join the military. Long list of options here. Trade training, ROTC, GI Bill. After active duty, I stayed in the reserves for. One weekend a month was worth a few hundred dollars, plus pay for summer cruise, and you could buy stuff cheap at the base exchange/commissary. A drill was 4 hours, so it was often possible to go in for an afternoon or evening to do extra planning or evaluation of previous events. Stick it out (with your buddies) for 20 years and get a pension.

[Juiced06GTO]

The beginning of your scenario is exactly where I started out after college. 22 w a 35k a year job, about 18k in college loan debt and a bad car addiction haha! I made some mistakes back then, like buying a new car, building and racing it and spending money I didn't have and put nothing into retirement.

Through some helpful advice from my then boss and a check to my crazy spending from my now wife, I reigned myself in and and actually started planning for the future.

Now 37, at the same company I was at when I was 22, I've managed to clean up that mess through advancement, hard work, and more discipline with spending/saving. I haven't been able to kick the car addiction though...

Originally Posted by jeffk

Here’s a scenario.
Assume a person has finished a 4-year college education at age 22 and starts a job at $35,000 a year.
Assume they were reasonably smart and didn’t go to a ridiculously expensive college and max out their student loans. Assume they probably got some state and federal aid. Assume they worked to offset their expenses. I.E. Assume any school loans are manageable.
Assume their salary increases 1% a year.
Assume they set aside 10% of their salary for retirement (beyond SS) in a tax sheltered account. (If their salary increases faster, so does their retirement savings.)
Assume the investment growth rate is 5% throughout their working and retirement lives. Hint: CDs will not work. You must go into the market. However a 5% average return is a reasonable expectation without excessive risk.

At age 68, retirement, they will have a salary of ~$54,000 and retirement savings of ~$650,000.
They could take out ~$42,000 a year (75% of their ending salary) for 30 years, till age 98. (Still 5% growth of their investment account balance.)
Note, they would also get SS.
Yes, inflation would nibble at the value of their retirement payouts but, besides medical expenses, your costs tend to decline as you age. You don’t have a mortgage, you aren’t traveling as much, you aren’t driving as much, etc. They may also get a higher rate of growth. All of this is unknowable.

The simple formula is to save 10% of your working earnings and expect 5% growth of your investments.
Is it easy? Of course not. It requires a discipline that most people lack.
If you are unhappy with your standard of living you have two basic options, work more hours/multiple jobs, OR advance your education and accept higher levels of job responsibility. The latter is best but, frankly, not everyone is capable of that.
In addition, the “I want it NOW” mentality is fatally toxic to disciplined savings. My neighbor just got a new car, put an addition on their house, got their yard landscaped, took the family for a European vacation, and my credit card is BURNING A HOLE IN MY POCKET can obliterate a savings plan. If you can earn well above your retirement planning and budget requirements, pay for it in cash, NOT credit. Otherwise, NOT now.

I know a lot of people can pick holes in these ideas and but, but, but it into pieces. Some people face special challenges that make it impossible to do do these things. However, if most people did this it would work for them. It’s not rocket science. It’s just hard and disciplined work. AND, even if it didn't work out exactly as planned, you would still be better off than if you did nothing.

[Biggd]

I hope you have a chance to own classic GTO some day. Those are money in the bank.

Originally Posted by Juiced06GTO

The beginning of your scenario is exactly where I started out after college. 22 w a 35k a year job, about 18k in college loan debt and a bad car addiction haha! I made some mistakes back then, like buying a new car, building and racing it and spending money I didn't have and put nothing into retirement.

Through some helpful advice from my then boss and a check to my crazy spending from my now wife, I reigned myself in and and actually started planning for the future.

Now 37, at the same company I was at when I was 22, I've managed to clean up that mess through advancement, hard work, and more discipline with spending/saving. I haven't been able to kick the car addiction though...

Sent from my SM-G950U using Winnipesaukee Forum mobile app

[WinnisquamZ]

Originally Posted by Biggd

I hope you have a chance to own classic GTO some day. Those are money in the bank.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

15k for a SL500 or 50K for a true GTO. Neither is a everyday driver so your maintenance costs are minimal. And if you own either you need to wrench. Will always love the SL500. Low miles and single owners are important


Sent from my iPhone using Winnipesaukee Forum mobile app

[Biggd]

I never had the urge to own a Mercedes at any price. I'm not a fan of German cars.

Originally Posted by WinnisquamZ

15k for a SL500 or 50K for a true GTO. Neither is a everyday driver so your maintenance costs are minimal. And if you own either you need to wrench. Will always love the SL500. Low miles and single owners are important


Sent from my iPhone using Winnipesaukee Forum mobile app

Sent from my SM-G950U using Winnipesaukee Forum mobile app

[TheTimeTraveler]

I stick with the Japanese cars; Honda, Toyota, Subaru, etc. Just drive them and change the oil. Add gas once in a while.

Easy to maintain and inexpensive to operate. We taught them well after WWII.



.

[ApS]

Originally Posted by Biggd

I never had the urge to own a Mercedes at any price. I'm not a fan of German cars.

The Mercedes 600 is elegant, the 190D—back in its day—was a solid buy.

Some of the SE and SL models—and 1950s convertibles have me pining for one.

But the best-handling Mercedes should get everyone's attention!

[Biggd]

Originally Posted by ApS

The Mercedes 600 is elegant, the 190D—back in its day—was a solid buy.

Some of the SE and SL models—and 1950s convertibles have me pining for one.

But the best-handling Mercedes should get everyone's attention!

That nose is frugly!

[ishoot308]

Originally Posted by Biggd

I hope you have a chance to own classic GTO some day. Those are money in the bank.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

1966 GTO is my favorite classic muscle car!! What a beauty!!

Dan

[Biggd]

I agree! Went to look at one a couple years ago for sale, black 66 conv with a late model LS motor and 6sp trans. Awesome car but he wanted 60K. A little too rich for my blood.

Originally Posted by ishoot308

1966 GTO is my favorite classic muscle car!! What a beauty!!

Dan

Sent from my SM-G950U using Winnipesaukee Forum mobile app

[Garcia]

Originally Posted by ishoot308

1966 GTO is my favorite classic muscle car!! What a beauty!!

Dan

Back in high school in the mid 80's a friend had a black 66 GTO - awesome car. He's wishing he kept it

[Descant]

I guess we all had cars we wanted in HS, and if we had access, they would be worth a lot of money today. My fraternity brother had a GTO convertible. He joined the Navy and became a pilot. Last reunion he was a four stripe Captain and a pilot with 600 traps. Join the Navy and pick your thrills. I rode an ejection seat once--hot cars are fun, but there is no place like the US Navy for real thrill rides.

[Biggd]

Originally Posted by Garcia

Back in high school in the mid 80's a friend had a black 66 GTO - awesome car. He's wishing he kept it

I've had sooo many cars in my day but I never owned a GTO. I always wanted a 66 or 67 but prices are too high now.
I had a few Grand Prix's back in the day, a wolf in sheep's clothing.

[Juiced06GTO]

I am in the process of building this at home. One day I'll get a nice 66 to park next to my 06 in there...

[Winilyme]

Originally Posted by thinkxingu

Using these numbers, your daughter has saved $7k for education in eight years. How'd she pay for the rest of college, if you don't mind me asking? $7k is one year of community college these days.

One of the things I teach my seniors is to think carefully about how they will pay for school. We go as deep as talking about the overall interest penalties in unsubsidized vs. subsidized loans.

For many, including myself, starting life in the red because of school loans is a necessary evil...and one that flushes all this talk about having an extra $100k/$300 mth. down the drain.

And this isn't just college anymore—trade schools and certifications have increased in costs, too. And, though unions and businesses will often "pay" for the schooling, the costs are often reflected in lower pay for the initial years.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

We were able to pay her full college education through a Connecticut CHET 529 savings plan which we opened and started contributing to when she was born in 1999. Our early investments in that fund benefited GREATLY from the run-up in stocks after the last recession. Four years ago I moved that funding out of stocks and into a very conservative fund to eliminate any volatility during the four years she'd be in college. Along the way, we benefited from a great annual scholarship that she received and she graduated this December - 1 semester early. All in all, we have $21K left in that fund which I'll reclaim as soon as we've paid a final few college-related expenses. We should be able to reclaim those dollars penalty free since the 529 program recognizes the scholarship meant we didn't need to save as much after all. We'll be taxed however on the earnings portion of the final withdrawal. It really wasn't hard to save in this program. It, again, comes down to starting way ahead and discipline.

Bottom line for her is that she will not need to utilize the education dollars she saved (at least not for her education) - but she did learn the lesson we sought to teach her.

[FlyingScot]

Originally Posted by thinkxingu

One of the things I teach my seniors is to think carefully about how they will pay for school. We go as deep as talking about the overall interest penalties in unsubsidized vs. subsidized loans.

For many, including myself, starting life in the red because of school loans is a necessary evil...and one that flushes all this talk about having an extra $100k/$300 mth. down the drain.

And this isn't just college anymore—trade schools and certifications have increased in costs, too. And, though unions and businesses will often "pay" for the schooling, the costs are often reflected in lower pay for the initial years.

Sent from my SM-G950U using Winnipesaukee Forum mobile app

This is one of the really messed up things about our society. Colleges are supposed to be the onramp to American meritocracy. But too many kids have to weigh the finances too carefully, and then are saddled with debt on the back end. This leaves our most prestigious schools to the rich who can pay full fare, and the poor who often qualify for a full ride. The vast middle? Not nearly as able to pay for the best schools as they were 30 years ago. Thus we are less meritocratic and weaker as a country.

Also, let's not pretend that somehow all colleges are equal in terms of the doors they open for the future. They are not--the more expensive private schools give a huge leg up in networking, and those give a huge leg up in job prospects.

[Descant]

I treasure the episode of Frasier when Dr. Crane, from Harvard is discussing with his plumber various Mercedes models and other aspects of high living. DOCTOR Crane was the loser.

[MAXUM]

Originally Posted by Descant

I treasure the episode of Frasier when Dr. Crane, from Harvard is discussing with his plumber various Mercedes models and other aspects of high living. DOCTOR Crane was the loser.

Speaking of that it's amazing how much those Mercedes plunge in value. I was watching the Mecum car auction the other day and good grief these cars pull maybe mid teens at 8-10 years old where they were originally 6 figure cars.

Hell I'll take a low mileage SL500 for 15K all day long! That is a lot of car for the money.

[WinnisquamZ]

Originally Posted by MAXUM

Speaking of that it's amazing how much those Mercedes plunge in value. I was watching the Mecum car auction the other day and good grief these cars pull maybe mid teens at 8-10 years old where they were originally 6 figure cars.

Hell I'll take a low mileage SL500 for 15K all day long! That is a lot of car for the money.

Can’t agree more. Owned a 92 and 99. Would get another one if the opportunity ever came up.


Sent from my iPhone using Winnipesaukee Forum mobile app

[Descant]

It's like baseball cards.. They can't hit on 8 cylinders anymore, nut the image is valuable.

[ApS]

Originally Posted by MAXUM

Speaking of that it's amazing how much those Mercedes plunge in value. I was watching the Mecum car auction the other day and good grief these cars pull maybe mid teens at 8-10 years old where they were originally 6 figure cars. Hell I'll take a low mileage SL500 for 15K all day long! That is a lot of car for the money.

How many months could you drive one before spending another $15K on it?

[Biggd]

Originally Posted by ApS

How many months could you drive one before spending another $15K on it?

They were a high dollar and high maintenance!

[MAXUM]

Originally Posted by ApS

How many months could you drive one before spending another $15K on it?

If it's a sunday afternoon driver that gets occasionally used probably be OK.

For something that is a daily driver? Nope!