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A place for Get Rich Slowly readers to ask questions
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It is currently Wed Oct 22, 2014 8:53 pm




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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Sun May 13, 2012 7:25 pm 

Joined: Wed May 02, 2012 10:04 am
Posts: 7
Quote:
I don't understand exactly how fees work on funds. When do the fees get charged - when you buy shares of the fund? For example, say I buy $100 of shares in XYZ fund every paycheck. It has a 1% expense ratio. Does that mean I'm charged $1 each time I buy and actually only invest $99? Do you pay fees on gains if the fund value goes up?


If the fund has a front-end load (think Class A, B, C, etc... shares), then that amount is taken out when the shares are bought. I know my 401k doesn't have any funds like that, but they do exist, at least as options for Roth IRAs (Waddell & Reed is an example of a company which has funds with front-end loads). Run, don't walk, away from those!!!

The expense ratio (ER) is taken out of gains before they appear in your account, you never actually see the money coming out. For example, if the ER is 1%, and the fund gained 10%, the gain you would see is 9%. In general, the lower the better. Vanguard usually has very low ERs. Unfortunately, the ERs of 0.46% to 1.17% are pretty normal, I'd try to keep them as low as possible. What is the fund with the 0.04% expense ratio? I'd definitely try to invest in that one, as long as it's within your desired asset allocation.

Quote:
The target fund allocation for the 403(b) splits my money between all 12 funds. Would it be wiser to research all of them and choose a couple in each category?


Yes. I think you said you're 35, right? A general rule of thumb is your age in bonds, (100-age) in stocks. So, you'd want about 35% bonds, 65% stocks. Another school of thought is, for goals that are 10 years or more away, 80% stocks, 20% bonds. It really depends on your personal risk tolerance.

For the percentage of your portfolio devoted to stocks (stock mutual funds), you want to diversify between large cap, small cap, and international. Are you contributing to an IRA (Roth or Traditional) at all? If so, those also count towards your desired asset allocation. If you google "Lazy Portfolio" you can dig up some example asset allocations and go from there. Good luck and congrats on paying off the car so quickly!!


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Tue May 15, 2012 6:26 pm 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Thanks for the info, CrazyCat.

For now, I left the allocation percents the same for my 403(b), but dropped some of the worse funds based on some research on Morningstar. The .04 expense was on a Vanguard index fund, so I kept that one. I'll do more tweaking as I get a better grasp on all this.

I do have an IRA and a Roth IRA with...Edward Jones. Talk about fees and expenses! :( I'm hoping by the end of the summer, I'll have enough grasp on things to roll those accounts over, maybe to Vanguard? I have a lot to learn before I'm comfortable with that, plus I'll have to convince my husband that I can manage the portfolio myself!

Ordered some books with amazon gift cards, so the questions will probably continue as I start reading. To be continued...


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu May 24, 2012 5:37 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Emergency fund progress-
Balance: $1,936/$20,000
Percent Complete: 9.7%

Making very little progress. Between vacation plans, purchases for the house, and some expenses that I put off while paying off the car, there's just not much left of my paycheck. I'm cutting myself some slack, but am determined to regain my momentum soon.

In the meantime, I'm busy reading about investing. My goal is to have a decent grasp on things by the time I finish the emergency fund and increase what we're investing each month.


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Jun 07, 2012 4:07 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Emergency fund progress-
Balance: $2,687/$20,000
Percent Complete: 13%

I think summer will be back and forth between spending and saving, but I'm much happier with this week's progress. Hoping to pass $3k with my other June paycheck.


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Jun 21, 2012 4:32 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Emergency fund progress-
Balance: $3,000/$20,000
Percent Complete: 15%

Nothing exciting happening. Hit my $3k goal and hopefully will get to $4k in July.


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 Post subject: Mid-year snapshot
PostPosted: Mon Jun 25, 2012 6:24 pm 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
I was looking over our finances and progress so far this year and thought I'd do a mid-year summary here. It's nice to look back and see where we were at different points in this financial journey.

Assets:
Cash (checking accounts and sinking funds): $7,722
Emergency Fund: $3,128
Daughter Savings: $4,221
Daugher Stock: $1,460
Husband 401k: $81,091
Me 403b: $8,310
Me IRA's: $30,803
Daughter 529: $11,670
Home (zillow estimate seems high, this seems more realistic): $455,000
Car 1: $15,000
Car 2: $9,000

Total Assets: $627,405

Debts:
Credit Cards: $304
Mortgage: $304,857

Total Debts: $305,161

NET WORTH: $322,244

Current Goal: Emergency fund to $20,000

Stretch Goal: $500,000 net worth by age 40 (March 2017) Why not shoot for the stars, right? :)
To reach goal, net worth must increase this much each month (on average): $3,119


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Tue Jun 26, 2012 4:22 pm 

Joined: Sat Jun 16, 2012 2:11 am
Posts: 192
Nice reading. You are doing great!


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Jun 28, 2012 10:08 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 1114
Caught up on this thread. So very interesting and encouraging! First great job on paying off the debt! Looks like you are doing great on the balance sheet as well. ;)

What has been your experience with 529 for your daughter? We recently had our first and we're considering opening one up for him.

You mentioned a financial epiphany one summer. Can you speak to that please? Also, how did you go about getting your spouse on board with the finances?

Out of curiosity what does your monthly budget look like? What in your budget is a fixed expense? What is a variable expense? Is 20k 3-12 months worth of expneses? Consider this thread when thinking of saving money.

_________________
~ Eagle


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Tue Jul 03, 2012 6:06 pm 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Thanks for reading, Eagle! :)

About the 529, our state (NC) offers a tax deduction on the first $2,000 contributed each year, so until last year, we've been putting in around $2,000 per year. The funds are all Vanguard with low expenses, but the returns haven't been great. I think that's just a reflection of the markets lately. Even without impressive returns, it's pretty amazing how quickly steady contributions become a sizeable chunk of money. I dropped the monthly amount to $25 until we have our emergency fund and then I'll go back to ~$2k per year. Our daughter is 6 and I'm really glad that I took the time to set up the 529 early on.

My financial epiphany was last summer, about exactly a year ago. We had an accident and had to replace a very large amount of carpet. (probably could have filed a homeowner's claim, but that's another story...) We had dipped into our emergency fund several times last spring, and when I went into the flooring store to write the check, I realized that we'd only have $1,800 left in the e-fund and it made me feel sick. My family set a great financial example for me and I couldn't believe we were essentially living paycheck to paycheck. So I decided it had to end and we had to get back to living below our means. It took some time and effort, but things are so much better now.

Getting my husband on board has been an ongoing process. He comes from a family of huge spenders. We've watched most of the Financial Peace dvd's and that has helped show him that his family is not smart about money. Also, some of their bad decisions are starting to come back to haunt them and I think he realizes that he doesn't want to end up the same way. So it's a work in progress, but he's come a long way since last summer.

I'm too lazy to look at our budget numbers in mint at the moment :), but the big categories are:

--mortgage + escrow - $2,000 (normally $1800, but bank made mistake on escrow and we'll pay higher for 6 more months)
--groceries and eating out - $600
--afterschool care during school year - $300
--utilities, TV, internet, cell phone - $350
--gas - $300

A $20k emergency fund should cover about 6 months of basic expenses, although depending on the emergency, we would make pretty drastic changes to cut our budget to the bone.

Whew, that was long!


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Wed Jul 04, 2012 4:12 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Unexpectedly got paid a day early because of the holiday. :)

Emergency fund progress-
Balance: $3,892/$20,000
Percent Complete: 19%

Hardly any spending the past two weeks, but the next two weeks will include a week of vacation.


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Aug 02, 2012 4:38 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
It's been a year since I started my journal. Last summer, I was worrying about money for hours every night. Things are so much better now! If we keep making progress at our current rate, I can't wait to see how things look in another year.

Emergency fund progress-
Balance: $5,477/$20,000
Percent Complete: 27%

August is a three paycheck month, so I'd love to hit the 1/3 point on the emergency fund before September. Worth a try, although I do have textbooks to buy, one last medical bill from DD's surgery, and car insurance deductible (small accident while on vacation -- we hit a piece of metal that was rolling around the interstate).

Other August goals:
--sell a couple things on eBay
--start the process of moving my Edward Jones IRAs to Vanguard


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Aug 16, 2012 4:30 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Emergency fund progress-
Balance: $6,110/$20,000
Percent Complete: 31%

Things are going well, except for lots of back-to-school spending (why do textbooks have to be so expensive???). The transfer of my IRA's from Edward Jones to Vanguard is underway.


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Aug 30, 2012 4:43 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Emergency fund progress-
Balance: $6,817/$20,000
Percent Complete: 34% -- over a third of the way there! :D

Transfer of IRA's to Vanguard is in progress and I sold my ebay items for the month. The goal for September is to get the e-fund to $7800. We've never had more than $7500 in there, so this will be new territory for us.

And now, the bad news. Husband has been coming down with new car fever for the past year, and he succumbed to it this week. ;( I had visions of completing the emergency fund and then saving up to replace his car, but I knew he wouldn't wait that long. I probably could have convinced him to hold off a few more months, but not without creating a lot of anger and resentment.

So he will cover the car payments out of his extra money each month. He tends to spend whatever he has left over, so I'm trying to convince myself that this way at least his money is going to something more useful than clothes, lunches out, and gadgets. Even if we make no extra payments, the total interest paid will be $1,040. I've decided that's an acceptable price to pay for harmony at home.

Once the emergency fund is complete (early next summer?):
--Increase Roth contributions to $5k/year
--Increase college fund to $2k/year
--Pay off car loan
--Start car replacement fund


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Aug 30, 2012 4:28 pm 

Joined: Mon Aug 08, 2011 9:13 pm
Posts: 182
Location: Brisbane, Australia
We've just put some cash down on a new car as well. :(

Had to be done, current one has 175,000+kms on the clock and we needed to do something about reducing the tax Nicole is paying, so new car was one step towards that via salary sacrifice.


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 Post subject: Re: Holding Fiddlefaddle Accountable!
PostPosted: Thu Sep 13, 2012 4:56 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 200
Whew Geoff, I'm glad I'm not the only one having to confess a car purchase!

Emergency fund progress-
Balance: $7,605/$20,000
Percent Complete: 38%

Edward Jones IRA's are closed and moved to Vanguard. From a long term perspective, that might be my best financial decision of the year.

I'm getting emergency fund fatigue. I just want to move on to the next goal! Hopefully we'll hit the halfway mark sometime in November and at least it will be downhill from there.


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