Anybody want to be a millionaire?

[Guest imported_El Mamerro]

Gee, I can't wait to be 65 and have a million bucks in the bank to spend on medicine.

[GnomeToys]

pwned.

[KaBar2]

Okay, have it your way, guys. Don't invest, don't cut up your credit cards, and don't be a millionaire.

 

There's nothing theoretical about this. My calculations are usually based on 6% interest. That's about half of what the average mutual fund returned last year.

 

This is not rocket science. You put in $50 a week. You get back over a million dollars if you are persistant. What the heck, don't depend on my figures, just type in "weekly investment compound interest calculator" into your search engine and run the figures yourself.

 

You guys act like it's some kind of nefarious plot to fuck you over to try and convince you to not crush yourself in debt and to get the System working for you instead of against you.

 

Debt = Compound Interest Working AGAINST You

 

Investments = Compound Interest Working FOR You.

 

This is not difficult to understand. HAVE A WRITTEN PLAN. Do not borrow money. Pay off ALL debt, or simply DO NOT ACQUIRE ANY DEBT. Get a good job. LIVE WITHIN YOUR MEANS. Save up an Emergency Fund of $1,000, first. Then, expand it later to an Emergency Fund of 3-6 months expenses in a savings account. Save up money and invest it in diversified mutual funds. Save up money and invest it for your retirement. Save up money for your (probably unborn yet) children's education.

 

Do not blow your money on unnecessary bullshit. This is pretty simple stuff, fellas. I mean, which would you rather be, broke and in debt, or flush with savings and investments and debt free? If you start at age 16, you will be a millionaire, and more, by age 65.

[La Cosa Nostra]

Originally posted by harvey wallbanger+Oct 5 2005, 06:04 PM--><div class='quotetop'>QUOTE (harvey wallbanger - Oct 5 2005, 06:04 PM)</div><div class='quotemain'>Telling Kabar "Welcome to reality" is a funny thing to do.

Quoted post

[/b]

I agree.

 

however.

 

<!--QuoteBegin-KaBar2@Oct 7 2005, 01:23 AM

How much is a pack of cigarettes? $2.50? A six-pack is what, three or four bucks? For the price of two packs of smokes and a six-pack a day, you could be investing $50 a week.

Quoted post

homie, who smokes two packs a day, and drinks a six-pac a day?

[POIESIS]

ah yes, it's all so simple.......

[theGOON]

i wish i'd read (and taken to heart) these points a few years ago. 2 car loans, school loans, bad habits and a credit card... i've got a few years before i see a shiny spot in all of this.

meh...

[GnomeToys]

I'll just go back in time and somehow make sure my parents are rich and can support me all through college so I don't have to spend all my own money on food and rent, and then I'll go tell my high school self not to do any of the hobbies I had back then because I'll enjoy the money more when I'm an old man. Then my 16 year old self will invest a bunch of money in mutual funds which will slowly gain interest until 1999-2000 when the stock market will go straight to fucking hell and I'll have less money than I started with, making it essentially useless to have had anything in mutal funds before then at all.

[WeakSauce]

too late about them loans... ive got $9000 each 4 years im going to have to pay back...

[RumPuncher]

first....

 

telling people not to travel is insane.

Travel is one of the few (IMO) 'wasted expenses'

that everyone should make. Travel doesn't have to

be expensive, but it's part of what makes us understand

the world we live in. Do it on a motorcycle with a hammock,

or hop a boxcar. Whatever works.

 

second,

 

I have to live in my city to work in my industry.

The only cities I could live in and do my job are

NYC, LA, Atlanta, Toronto, Vancover or maybe Bombay India.

The cost of housing in my particular city is outrageous,

and the AVERAGE cost of a house is 450K. I never want to

be a slave to the commute, so I will live in the city,

near to where I'm working. I cant even imagine living in the

suburbs or in the country and having a two hour daily commute.

The only thing in my city under 200K is a shitty box condo.

 

Not everyone has the luxury to go 'where the trade winds blow'

and settle down in an inexpensive city. Maybe a mechnaic can

work in any city, but I have to be where my industry exists.

[KaBar2]

first....

 

Okay, fine, do it your way. I travelled all over creation, both by hitching, trainhopping, motorcycle and living in a van. While I was travelling, I could have been saving and investing major amounts of my income. (Yes, I had some income, but usually I'd work for a while, save up some money, then quit my job and live off my savings for several months. Had I continued to work steadily, save and invest, I'd be a lot better off than I am today.)

 

Those of you who wish to be wealthy, re-read the above posts. Those of you who want to make excuses about how it's too hard, go back to sleep.

[GnomeToys]

YOU'RE not a millionaire, so this is all pretty much just math and theory, right?

 

 

 

 

That's what I thought.

[KaBar2]

No, I am not a millionaire. The period of time where I would have had to begun making major contributions to mutual funds (a couple of thousand dollars a year) is about forty years behind me. I sure wish I had known then what I know now.

 

Like I said, those of you who wish to be millionaires, re-read the posts. Those of you who do not, go back to sleep.

 

The average return on mutual funds is about 12%. My calculations are based on 6% return. You could still break a million by age 65 if you invested $50 a week.

[RumPuncher]

I dont think anyone is questioning the value of savings,

or the returns on those investments. They're just saying

that some people feels it's impossible to save money

while being a student, poor or in debt.

 

That attitute will probably keep most people poor all their

life and working untill they drop dead on the job.

 

I 100% agree in the value of putting away money so that it

can work for you in a higher return investment. A bank rate

on a savings account doesn't give you shit.

[Dr. Dazzle]

Credit Cards, and banks, are a necessary evil. Try buying a house, or a car, with cash. Good luck. In today's world, unfortunately, you need a good credit rating if you're going to get any of the things you want. The trick is to know that you're BORROWING money, spending money that you don't have, so you better be able to pay it off and not be stupid about it.

 

I use my credit card like a debit card. I'll buy a cd, or a meal at a restaurant, or something else small that once my bill comes around, I can easily pay it off, thus ensuring a perfect credit rating. People get in trouble when they start treating credit cards like free money, and they forget that they have to pay it off.

 

I agree with what you're saying, KaBar. My parents have been drilling the same thing in to me for years, and only now, at 22, am I starting to listen. Once I get back from my trip to Europe, I'm defintely going to start investing.

[villain]

I just want to reiterate my statement about mutual funds being more and more corrupted all the time. Especially with the economy as bad as it is now. Shrewd investors are looking for good places to dump junk stocks and bonds, and mutual funds are very tempting since most people don't even know what's IN a mutual fund, let alone control whats in it.

If I were to deal with the financial markets I would just straight up buy and sell stocks. You need a good amount of start up cash though, that's why I'm not doing it as of today. You can buy a shitload of pennystocks for cheap however. But it's harder to gauge the performance of penny stocks since they are relatively new companies and start ups. Could get lucky though.

[the_gooch]

Originally posted by RumPuncher@Oct 6 2005, 04:40 PM

^ wow..... you 13?

Quoted post

 

 

hahaha

[the_gooch]

Originally posted by villain@Oct 18 2005, 03:40 PM

I just want to reiterate my statement about mutual funds being more and more corrupted all the time. Especially with the economy as bad as it is now. Shrewd investors are looking for good places to dump junk stocks and bonds, and mutual funds are very tempting since most people don't even know what's IN a mutual fund, let alone control whats in it.

If I were to deal with the financial markets I would just straight up buy and sell stocks. You need a good amount of start up cash though, that's why I'm not doing it as of today. You can buy a shitload of pennystocks for cheap however. But it's harder to gauge the performance of penny stocks since they are relatively new companies and start ups. Could get lucky though.

Quoted post

 

 

i just went in this direction (penny stocks). i bought a decent amount of stock in this company:

 

http://kenilworthsystemscorporation.com/roulabette.html

 

i know i don't have enough to buy into bigger stocks at the moment, so i figured i would get my feet wet with this.

[POIESIS]

like what rumpunchr said, i agree completely with the gist of your advice kabar.

it's basic, common sense stuff. i would rather be a rich old geezer than just an

old geezer. that said, it's not always as simple as one would hope, hence my

comment that some of your advice is more theoretically sound, but rare in a practical sense...meaning very few people are able to save and pay cash in

real estate markets like rumpunchers or mine. 'i can't' should not be an option, but life isn't always that clear cut. there are ways to get ahead in

real estate for regular joe's, but it's not by being a miser for 40years(or however

retarded amount of years it would take to pay cash for a home in my market) throwing rent money down the drain.

[KaBar2]

POESIS---

 

I never said anybody needed to be a miser. I said people should not blow their money on bullshit. (Mind you, I blew a LOT of money on bullshit, so I know whereof I speak, . . er, write.)

 

I do not believe credit cards are a necessary evil. If everybody used credit cards appropriately, they would charge only things that they could afford, and pay it off in full every month. But, unfortunately, people don't use them correctly, especially young people. Why do you think credit card companies are so eager to get their cards into the hands of high-school and college students? Especially at high rates of interest? It's like giving a drunk a fifth of whiskey. OF COURSE he's going to drink it. He's going to drink ALL of it.

 

I do not believe that people need to build a "credit history." If you aren't trying to borrow money, you don't really need a credit history. I was 27 years old before I ever got any consumer loans. I did okay before that, I just didn't buy anything that I couldn't pay cash for, which frankly, is not a bad plan. I wish I had stuck with that.

 

You can most certainly buy a house with cash. I wouldn't take a suitcase full of bundles of 100's to the closing, but I bet a cashier's check would just please them all to hell.

 

There are a number of subcultures that deal strictly in cash. Bikers. Gypsies. Obviously, drug dealers. "Gold bugs." (In fact, some gold bugs deal strictly in gold. Paper money is just so much shitpaper to a really serious gold bug.) Arms dealers. Etc.

 

The reason the government wants you to run all business transactions through a bank is so they can track every penny you spend. Dealing in cash can be problematic, but the most cash I every had on me at one time was the purchase of a Harley, when I had about $6,000 in $100 bills in one pocket of my leather jacket and a locked and cocked .45 in the other.

 

If you have NO DEBT, raising cash in large amounts for something like the purchase of a house is a lot easier. But I'm cool with buying a house on a note, as long as it is a straight-up real estate deal ON A FIXED INTEREST RATE. No balloon payments, no 20/80 deals, none of that bullshit. Put down as much as you possibly can, finance the rest on a FIFTEEN YEAR, FIXED-INTEREST RATE LOAN. Make double and triple payments if you can, to beat down the principal and pay that bitch off as fast as you can. Every cent extra and above your regularly scheduled payment must come OFF THE PRINCIPAL. Make sure your attorney understands what you require. Do not accept anything else, because paying off that house as fast as humanly possible will save you thousands and thousands and thousands of dollars.

[Spike]

Kabar - I agree with pretty much everything you've said so far, except for property purchase

One very smart way of buying property is to save up a down payment, then get a fixed rate loan/mortgage where the monthly payments are roughly equivalent to your monthly rent payments

 

That way, instead of rent going down the drain, you have a place to live AND you are effectively slowly buying a huge lump of capital. I personally recommend this as soon as you have a regular job and you're paying regular rent - I don't know the laws in the US, but in the UK if you choose to move you can move your mortgage onto the new property for a small fee, and if your house/apartment value has gone up it counts as payment towards the capital. If you live smart and get a good deal, you pay no more than you usually would to rent and you end up with property at the end of it

 

And yes, if you pay back double and triple payments, you can have a very substantial piece of property within 5 years, which you can then choose to either live in (and thus no longer have any rent) or use it as collateral towards getting something bigger, but maintaining the same monthly repayment = rent per month formula

 

Also, here's an ever more fun way of effectively getting a free house as long as you have a small lump sum to put down: I don't know whether you folk have the same kinda place, but in the UK there's a large demand for rented houses, which can either be rented room by room or as a whole house to a family. Get one of these, and set the mortgage repayment at the amount you should be making for rent per month minus whatever rent you need to be paying per month, unless you want to take a room in the house (usually awkward and not advised, as effectively you are the landlord). Get it managed by a property agency (who will usually take about 5% of rent, in the UK anyway) and effectively you are no longer paying rent, and your little house is effectively paying itself off over time. Once the mortgage is paid off, bam, instant house

 

I know a guy who used his student loan as a downpayment for a house (since in the UK student loans don't have to be paid back until you have a salaried job pulling in an income over a certain amount) and right now, he owns a house worth about 180,000 pounds (that's about $300,000) and has 3 other properties that he rents out. He's 26, but you can do this at any point in your life

[KaBar2]

I like it, but here in the U.S. it is illegal to use a student loan for anything but school expenses. Of course, if you use you student loan to replace that $50,000 your parents saved for your college education, who's to know?

 

The main problem I see with filling a house with renters is that they have a tendency to tear up the house, because a great number of people here in the U.S. are complete assholes who could not care less about anybody else's property, and think that that because they pay rent they can behave like savages while living in a rented house. Of course, acquiring property is a good way to build wealth, it just requires that you deal with renters all the time, which is a real hassle. I have never owned a rent house, but when my wife and I moved out of her house in Santa Ana, CA, we rented it to a nice couple that eventually bought it from us. Their biggest complaint was that we installed bullet-proof Lexan plastic in the windows on the sides of the house that faced the street, because the local gangbangers kept shooting at each other on our street and she had experienced ELEVEN burglaries where they broke a window to get in.

 

I laid in wait for them several times, but was unable to catch them in the act. They were locals, had to be, because they knew when we were there and when we were not. Finally we just gave in and joined the White Flight exodus from Santa Ana. Fuck it. It was a nice neighborhood at one time, but living in a war zone wears you down.

 

I question the characterization of rent as pouring money down the drain. It's true that you aren't buying the property, but renting can be very advantageous. You can leave a lot easier from a rented house than you can if you own it. You are not responsible for major repairs or most maintenance. The biggest advantage is that you are putting a roof over your head, so you are getting value for your money. But it doesn't make sense in the long run.

 

If I was going to buy on a home loan, I would get a good job, rent an INEXPENSIVE PLACE, and save, save, save every dime I could towards a LARGE down payment on a house or property. The advantage of doing this is that you can drop the principal way down, and financing a smaller amount on a FIFTEEN-YEAR, FIXED-RATE MORTGAGE will be easier to afford. It's important that you guys understand that the SHORTER PERIOD OF TIME THAT YOU FINANCE, THE MORE YOU SAVE. Don't think in terms of "Can I afford the payments?" This is the sucker's way of thinking. Think "What is the TOTAL COST?"

[kido]

My salary satisfies. I dont need a million dollars

[Spike]

I think that the reason that what I say doesn't ring as true in the US is because of the completely different attitude to renting over here - for the most part, tenants HAVE to be well behaved because for the most part the law is on the landlord's side. Also, for the most part there are large management agencies that line up tenants and property, and they handle all the stuff like repairs, money collection etc. Also, unless there is a major disaster (and that can usually be claimed on insurance) other than making sure that the property is fit for tenancy before renting it out in the first place, you don't have to sink any more capital into the house beyond the down payment on the loan

 

Also, in the UK, you can move your mortgage from house to house with many mortgage providers for a small fee, and best of all if you're smart with your property selection, if the house price rises while you're living in it, you benefit. This is why I personally see rent as a money down the drain: sure, you're paying for a roof over your head, but you could be paying the -same amount- AND get almost all your money back at the end (assuming that you're not drawing out the repayment process and getting raped by interest)

 

Just my 2 pence

[KaBar2]

Thanks for the insight on renting property in the UK, Spike. I've never lived in UK, and have only the vaguest idea of what life is like there, although I've always wanted to visit. One cannot move one's mortgage from place to place here, but essentially that's what one does when you sell one place and take the equity to the new real estate deal. If I buy a house for $50,000, and it goes up in value to $65,000 when I sell it, I can then take that $15,000 increased value to the next deal. If I "take the profit" in cash, I must pay taxes on it. If I re-invest it in another property, I do not.

 

At first, when you are paying off a mortgage, 99% of your payment goes to interest. Lets say you have a thirty-year note. That's 360 monthly payments. The first 180 payments are going to be more interest than principal. The last 180 are going to be more principal than interest. The first payment is only going to reduce the principal by less than $100. The last payment is going to pay MOSTLY principal, and a few dollars interest. THEY GET THEIR INTEREST MONEY UP FRONT, because they know that most people do not keep a house for thirty years any more. So---if you pay your regular note, and then another $100 or $200 on top of that, you are beating down the principal much faster than the blood-suckers intended. They really don't care what you do, as long as you pay your note. But if you don't, they will be glad to foreclose on the house, forcing you to sell it, or forcing you to abandon it. They will then sell it to somebody else at a foreclosure auction for whatever they can get, and will then SUE YOU FOR THE BALANCE.

 

This is why I say, try to pay cash for property. If you cannot save up enough cash (it would take years, no doubt) then save up as large a down payment as you can (half would be great) and finance the rest on a FIFTEEN-YEAR, FIXED-RATE MORTGAGE. You do NOT want an "adjustable rate" anything. Which way do you suppose they intend to adjust the interest? Down? Get serious. It will only go one way---up, UP, UP.

 

Regardless of for how long your mortgage is financed, PAY IT OFF EARLY. Double or triple payments would be the way to go. They cannot prevent you from paying "extra" on the principal, and doing so will save you thousands and thousands in interest. Of course, their intent is to keep you in mortgage slavery all your life. THIS IS HOW THE RICH GET RICHER AND THE POOR GET POORER.

 

Do NOT go into debt, unless it is for something (like real estate) that you can sell and pay off the obligation. Your mortgage note should NEVER be more than 25% of your NET income. (This is a rather conservative, old-fashioned idea.) If you make $1500 a month, take-home, your rent or mortgage should not be more than $375. Obviously, this means (for most people, in most cities) you need to be making more than $11 an hour to afford a $375 dollar a month apartment. Can you pay more than $375 a month if you make $11 an hour? Of course, but that doesn't leave you with enough money to save for a down payment on a house, to build an emergency fund, to start saving for retirement or much of anything else. If you pay 50% of your take-home pay for a really nice apartment (that would be a $750 a month apartment--which is about average in Houston for a decent place) you stay poor, and the apartment owner gets richer and richer. If you cannot find an apartment for 25% of your income, YOU NEED MORE INCOME. To calculate how much income you need (well, beyond "As much as possible") take your rent, and MULTIPLY IT BY FOUR.

 

If your rent is $600 a month, that would be $2400 a month, take-home. Multiply that times 1.28 (taxes are about 28% of your pay) which gives you $3,072. Multiply that times 12 months/year, which is $36,864. Divide that by 2080 (the number of hours in a work year: 52 weeks x 40 hours/week) and that gives you $17.72 PER HOUR to support a $600 a month apartment. If you aren't making that much, and cannot get a better job, get a second job, start a little business, work the flea market on the weekend, take a telephone solicitation job from home, SOMETHING. You will be getting fucked if you spend all your money on rent, or a big, unnecessary car note, or any expense like that. BUDGET YOUR MONEY STRICTLY SO YOU CAN ACCUMULATE WEALTH.

 

Cars are hugely attractive to young people, especially young men. This is because girls are supposedly attracted by cool cars. NEVER go into debt for a car. Cars depreciate very rapidly in value, and so do mobile homes. PAY CASH FOR CARS. PAY CASH FOR MOBILE HOMES, if you just must buy one. Anything that depreciates in value is a lousy purchase. Never buy a new car unless you are rich. It is a total rip-off, they drop in value 20-25% the second you drive it off the car lot.

 

And girls, to what (or whom) you should be attracted is a young man who is already saving for his children's education BEFORE HE IS EVEN MARRIED. Fuck a "cool car," they are for silly ass, immature boys. MEN are providers and protectors, not party boys. Everybody always thinks "Oh, I have plenty of time for being responsible LATER. Right now, I just want to have a good time and enjoy being young."

 

And poor. You'll get to enjoy being poor when you're older, as well, if you don't prepare well for adult life. Subcultures that value bullshit appearances and glitz over solid substance, education and diligence are doomed to poverty and domination by others. Do not be FRIVOLOUS. Carefully plan and prepare for your future.

 

Mind you, I did not do this. And I am PAYING FOR IT NOW, and so is my family, as I struggle to make something out of a life filled with poor choices and immature behavior. Don't do what I did---it was stupid and reckless. Plan and prepare your life carefully.

[fatbastard]

Originally posted by KaBar2@Oct 21 2005, 04:49 PM

Everybody always thinks " I just want to have a good time and enjoy being young."

Quoted post

 

Whats wrong with this mentality? While I agree that credit cards are the worst trap to fall into, I also think your twenties and even thirties are the most valuable years of your life, with little responsibility almost perfect health (in most cases) and the ability to still be suprised and fascinated by what life has to offer. this is the best time to take trips, have fun and spend money. Especially considering the way the world is right now. life is valuable, it can end at any minute, leaving all those pinched penny's in the mutal fund accounts useless.

 

Personally i think its about balance, i've never been in any debt whatsoever, am able to take overseas trips, and splurge on occasional luxuries and still contribute regularly to my savings account.

[KaBar2]

Fatbastard---

 

There's absolutely nothing wrong with being the grasshopper instead of the ant. Somebody has to fill all those jobs as WalMart greeters and elderly McDonald's employees. Why not you? It's okey-dokey with me. Don't worry about a thing, man. It will all work out just fine. Go back to sleep.

[RumPuncher]

^ damn kabar, that was overly harsh.

 

fatbastard AGREES with you about credit card debt.

He just said that you can't sacrifice the present for the promise of the future,

and you go telling him to go 'back to sleep' and that he'll be working a McJob? That's harsh!

 

Just like everything, the moderate middle ground is usually the best option.

Save your money and invest, but not at the expense of living life.

I could go buy a 100 pound bag of potatos for $10 and eat nothing

but potatos all Winter. I'd save a fortune, but I'd go insane in the process.

[KaBar2]

No, you wouldn't go insane. You'd just get awfully tired of potatoes. I'm not even advocating those kinds of serious deprivations. We're talking about a lousy FIFTY BUCKS A WEEK for Christ's sake. Whatever. Why am I trying to convince someone who doesn't want to invest ANYWAY? If you want to make excuses and be poor, fine, go ahead. I don't really give a shit. It's just that I frequently think "I wish to hell someone had MADE ME UNDERSTAND when I was sixteen how unbelieveably important it is to invest your money." Nobody did, I was too immature and too self-centered to see it, and here I am at age (almost) 55, "not a millionaire." But I could easily have BEEN a millionaire, and SO CAN YOU. Fifty bucks a week. It's CHUMP CHANGE.

[RumPuncher]

okay then. there's your point.

 

no need to berate the people who aren't listening.

If they dont want to hear it, they wont, no matter how loud you yell.

[MrJackDaniels]

to be honest, i dont know that many people who could afford to put aside £50 a week or £200 a month out of their wages...especially younger people..

 

once you take out living expenses - food, electric, rent and all those other small essentials you NEED to pay its usually hard to scrape together enough to enjoy maybe a couple nights out / social events / anything "fun" really.

 

and think about all us poor suckers who are students. hell at the moment id have troubke putting aside 50p a week.