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A place for Get Rich Slowly readers to ask questions
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It is currently Mon Sep 01, 2014 9:37 pm




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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Thu Sep 01, 2011 7:32 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Good progress Alan.

I always have to pay myself first and then work with what I have. No matter how much I have in my free spending account, the more I have to spend, the more easily I spend it, so put as much as is feasible away first, and work with the rest. You won't miss it. So, perhaps gradually increase your $20 to $25, and see how it goes. The $1000 base is a good plan for now.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 7:55 am 

Joined: Tue Jun 28, 2011 10:21 am
Posts: 26
I feel kind of whiney or narcissistic with these posts. Maybe that's part of the initial process. Getting over myself and posting the ugly details.

The accountability factor is huge, but accountability is only worth what I put into it. I almost didn't post that I had charged something on the card. I was embaressed. I actually didn't post as early as I wanted to due to it. But the admission was good. It got something off my chest.

I love getting differing points of view on finances as well. I tend to get stuck in a rut, but having the third party opinion really opens up the possibilities. So thanks...

I got the info for my wife's 401k, but I have no idea what all to post. Are they any key information points you guys would need? This is an area that I am clueless on. I need to revisit my own actually...

H's office was informed that raises are coming. Won't even begin to guess or play with the budget to accomodate. I imagine it will wash with the addition of of our 401k contribution. Hoping for some excess, but again... No plans for it.

Our 1 year anniversary is Sept 18. I am stoked. Heading to Dallas for an evening and then a day at Six Flags. We've socked some money away for park tickets and a hotel. May have the opportunity to stay with family for an extra evening. Working on those details.

We are about to hit Holiday season. We've agreed to no presents for family except for nieces and nephews (4 kids ranging from 2yrs-6yrs). Our families are respecting that decision. Can't say they are completely understanding, but we've esablished that now so that there are no surprises.

It looks like we have one trip to TN or AR from Oct to Dec. Our fuel budget is almsot always budgeted high in case of trips. So I don't feel that we will be struggling in that respect. We will have to adjust and make certain a lot of our discretionary spending is reserved for those trips though. We tend to eat out more when we are with family

Ok... The nitty gritty for the month.

E-Fund: $770.00

Checking: $397.00
Adjusted for payments outstanding. (Rent, Gym ACH)
We have taken a portion of cash out for Groceries, Dining Out and Laundry. Had a trip to the grocery store last night and going again next Tues. (Tues is grocery night in a perfect world)

Car Repair Fund: $89.00

Savings: $300.00
This is earmarked for new tags for the car.

Discover: $1,700.00

VW: $8199.20
Getting nervous. The car is giving us fits. Preventive maintenance is huge. Trying to afford it. May have to divert some debt repayment to put it in the shop. Seriously don't want to.

Sallie Mae: $14,808.87
This balance seems to only go up.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 8:55 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
The name of the fund and the expense ratio.

What is your risk level?

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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 8:57 am 

Joined: Tue Jun 28, 2011 10:21 am
Posts: 26
Risk level?

Is that someone in the provided information or is that something that we decide as far as where we stand?


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 9:01 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
AlanR wrote:
Risk level?

Is that someone in the provided information or is that something that we decide as far as where we stand?


No, what level of risk are you willing to live with when you pick your asset allocation.

Moderate, low risk or high risk?

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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 9:36 am 

Joined: Tue Jun 28, 2011 10:21 am
Posts: 26
I suppose moderate to high risk. We are young... Wouldnt this be a good time to take that risk?

Another question...

My wife and I are doing a modified Dave Ramsey approach. I know there are a lot of differing opinions on his methods and general advice. I'm not looking for a discussion on that.

Dave says don't contribute to retirement while paying off debt. I am uncertain on that. Especially since we have a match... Sure it's Only 2 and a half years of not paying in if we really focus. Are we losing that much in the match? But why not pay in? I like having that habit established.
Right now H and I are caught between his Baby Step 1 and 2. We almost have our EF, but we are also putting extra towards our CC. He would say our focus is split, but is that a bad thing?


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 11:47 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
In terms of investing, personally I would not follow Dave Ramsey. I suggest you do some research. If you have questions....ask.

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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Fri Sep 02, 2011 12:11 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1849
One could write pages and pages (and some on this forum actually have) about risk assessment and debt reduction vs. saving. I'm going to give you the thumbnail version. Then you can think about it and ask more questions.

The reason that Dave Ramsey recommends debt reduction over retirement savings is because debt reduction is a guaranteed cost savings (you're saving interest costs for every dollar of the principal you pay off) while retirement savings entails risk (the markets go up and down) with an average gain that rarely exceeds the interest rates charged. All well and good in a typical dollar for dollar situation.

However, your situation isn't dollar for dollar. In your situation, for every dollar you put in, your wife's company kicks in 75¢. All other things being equal, the gain you make in the 401(k) far exceeds what you'd save by applying that same amount of money toward paying down your debt. So the right thing to do in most cases would be to put money in the 401(k) up to the match, then aggressive use any other money you have to pay down your debt.

But wait! It gets more complicated! When you put money into your 401(k), it's typically put into funds of your choosing. Those funds carry an expense ratio (a fee that's charged so they can maintain those funds you're putting money into). If you're putting your money into index funds, those fees are typically low. But in some cases (especially with managed funds), those fees can be so high that in a few years, they negate the match that the company gave you! That's why we want to see what funds you have and other details like expense ratios.

Now your risk tolerance determines your asset allocation. Risk and reward are tied together. Rule of thumb is that stocks are risky but have the greatest gain over the long term. Bonds are less risky but don't earn as much. And cash is the least risky but earns a pittance (usually less than the rate of inflation, so you lose spending power over time). The key to asset allocation is finding the right amount of risk for yourself, which in turn will determine what funds you put your money into.

At your age, you should be taking on maximum risk and throwing all your money into stock funds. In fact, because you're so young, risk actually works in your favor because if the market tanks, you'll be automatically buying more shares for the same amount of money. In effect, you'll be buying stocks on sale. And because you're young , you have the luxury of time. Eventually those shares that you bought on the cheap will rise. It might not be for a long time but at your age, you have that time.

Okay, that's the thumbnail. Ask whatever you like.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Tue Sep 06, 2011 1:52 pm 

Joined: Tue Jun 28, 2011 10:21 am
Posts: 26
Alright. I have the 401k information in front of me. All of this reads like greek.

The plan is managed by Argent Financial Group. If that matters to anyone...

It looks as though we have the option of playing a range of All Bonds to All Stock.

There are Large Cap Stocks, Small & Mid Cap Stocks, International Stocks, Alternative/Sector Allocation and Bond Funds

And I guess below each is listed the funds invested in????

Seriously... I have never felt dumber than right now.

Any key pieces I should share?


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Tue Sep 06, 2011 1:59 pm 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
What are the different funds/etf names under each type :Large Cap Stocks, Small & Mid Cap Stocks, International Stocks, Alternative/Sector Allocation and Bond Funds?

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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Tue Sep 06, 2011 3:10 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Just relax Alan. That's why we're going through this exercise.
I don't have a source handy, but google risk tolerance and find a risk calculator or risk estimator. It'll ask you questions about whether you're going to hyperventilate if the stock market drops 10% or 1%. It'll ask you all sorts of questions about your feelings on money. Like VinTek said, because you're young, you should be an aggressive investor, but that's not always true for everyone, so you have to find a balance where you feel comfortable.

It sucks if your company offers you 20 funds under each subcategory (i.e international funds), but hopefully they'll be reasonable, and you won't have that much typing to do.

At the laziest, just put the fund symbol, but if you have time, put the fund name and expense ratio (if they give you that). At my company, you have to do a lot of digging to find that, so fund name or type and symbol should work.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Tue Sep 06, 2011 9:20 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1849
AlanR wrote:
Any key pieces I should share?


Expense ratios and fees. Alan, don't worry about it seeming like Greek to you. We were all new to investing at one time. Take it slow, learn what it's all about, and take your time to put together a good plan you can stick with.

The reason I'm interested in expense ratios and fees is that I want to know what the funds are charging you. As I mentioned in an earlier post, some fees are so high that the in effect cancel out the employer match in a few years. We want to see if this is truly a good deal for you or not. If not, we'll fall back on a Roth IRA instead.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Wed Sep 07, 2011 6:08 am 

Joined: Tue Jun 28, 2011 10:21 am
Posts: 26
Ok.... Here we go.

Large Cap Stocks
TRP Large Cap Growth Inst'l
Harbor Capital Appreciation
Vanguard Growth Index Signal
T. Rowe Price Equity Income
Selected American
Longleaf Partners

Small & Mid Cap Stocks
T. Rowe Price Mid Cap Growth

International Stocks
T. Rowe Price Emerging Markets
Dodge and Cox International
Thornburg International Value

Alternative/Sector Allocation
T.Rowe Price New Era
PIMCO All Asset All Authority

Bond Funds
Vanguard Short-Term Inv Grade
T. Rowe Price Floating Rate
PIMCO Total Return
PIMCO Income Fund
Loomis Sayles Bond Institutional
PIMCO Diversified Income
Dodge & Cox Income

The investement options range from All Fixed which is completely invested in bonds to All Equity which is all Stocks but a mix from large cap all the way through T. Rowe Price New Era in Alt/Sector.

I do not see any expense ratios or fees listed on the sheet I have with me. I will check and see if I left that in the binder. If not I will request that info.

H got a raise yesterday. $1. It is effective next pay period. Which is also the first check that contributions will come of out. It looks like as far as take home income goes the raise with wash due to the contribution. So I weigh the option of focusing more on debt or starting H's retirement. Leaning towards retirement.


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 Post subject: Re: Al's Journey to Fiscal Fitness
PostPosted: Wed Sep 07, 2011 8:07 am 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1849
This is where I trot out a recommendation that I make so often that there are probably forum members who roll their eyes when they see it.

Read http://www.minyanville.com/dailyfeed/2011/09/07/yahoo-staffers-despised-carol-bartz/?camp=syndication&medium=portals&from=yahoo from Transparent Investing. It's a terrific primer on investing that packs a lot of information in 53 easy-to-understand pages. It'll cover expenses, taxes, risk tolerance, asset allocation, index-vs.-managed funds and more. Basically it will give you enough of a foundation about investing so that you'll know if any advice you get will work for you.

Take it slow, ask questions when you're done, and don't be afraid. No one will ever care about your money more than you will, so you need to make decisions armed with knowledge and understanding.


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