flowerbug
Super Self-Sufficient
this is a long post to kick things off about the things that motivated me from the start. 
sorry it got so long. questions always welcome of course and comments too. this can be a thread about pretty much anything financial and planning.
growing up on the lean side of the ledger i saw how it affected me and how others treated us and i also saw that our overall society is not really geared at all about teaching people how to manage money and investments. there were a few times in school when it was mentioned and we even had a class called home economics, but the topic of money management was not really there it was instead aimed more at cooking. that's ok, i liked cooking, yet most of what i learned was not from that class or any others at school.
since i didn't want to end up poor i started reading up on whatever i could find at the library (i spent a lot of time in several libraries including the one that my Mom started and ran out of the closet at the township offices, plus the church library which she organised and catalogued and also the main library in downtown Saginaw). the township library eventually turned into a metal out-building where i would spend hours sitting and looking through books (before i was reading very well but i could often figure things out by context and persistence). years later the out-building is now a nice place of it's own. it's a bit too far from here to visit often, but i have been there. some day i may ask them if they need any help. it would be an interesting circle to close.
ok, back to beginnings. wanting to have my own money, that i earned, savings so i could buy things, savings for eventual college. for some reason (probably a bit of understanding that creeped in from hearing parents arguing about money and then the divorce and seeing how Mom worked so hard to get by), but also how we were treated by others. i just decided that i was going to work very hard to do things differently. all my reading, studying and then i came across this system called the stock market and for some strange reason i got fixated on a company called IBM. it was all fantasy as i didn't have the money or resources to do anything then, but i kept following it and reading the news about the markets and then was learning about what it meant to invest in the stock market and the risks involved.
all during this time i am getting older, eventually i started mowing lawns and doing lawn work for money. i saved as much of it as i could and came up with enough money to buy my own ten-speed bike. a few years later i was working in the summers for the family business and could add more to my savings but i still was not investing in the market. a few more years later and i decided that yes i should go to college and so off i went. my savings didn't get me far and i had to take out some loans and work my way through college but i did eventually get through. i still had not invested in the stock market.
after graduating i had some debt. i hated being in debt. first priority was to get out of debt but also to start reaching my next goal which was quitting work full-time aka what i consider retirement or working when i find something interesting enough that it doesn't seem like work. randomly i picked the age of 33 to do that by. i had to split any amount of money i made over expenses in half to rebuild some savings and the other half went to paying off my debt. within 18 months i paid off my school loans and also had built up enough savings to cover my expenses for a year. yes this meant simple living, frugality and discipline, but i was so busy working at the time that it didn't bother me.
then i took a side-track for a year, i tried for a master's degree but through trying i ended up running into some course-work that told me i probably wasn't well suited for that sort of thing. then miscommunication with an instructor and the person who was also my advisor for my degree (i thought he told me i was done, but he didn't mean that at all). so i didn't schedule any more classes and decided to just get back to work and get back on track for my eventual goal of early retirement. i was also nearly broke yet again having spent any extra savings on the college coursework and so i was tired of being poor where i had to scramble every three months to come up with the next round of tuition and book money. i was lucky that my rent was often not much (or none at all but that is a different story i'll skip because this is already getting too long ).
what did happen is that my job i'd been working for those many years through school and the first few years after getting my degree was pretty much done. i'd written all the documents and manuals for the staff, the program needed no changes and it was time to move on. it just so happened that the university was getting ready to do a conversion from their mainframe computer to a mini-computer system and they posted four positions to help them work on that. i applied. things happened. nobody got hired. i talked to my sister out on the west coast and sent her some money to get a place where we could both stay. then i get the call that they were finally going to hire someone (note it was four, they ended up hiring one). me. the salary wasn't quite what i asked for but i did have cheap living and knew the place and really did like it there. so i had to write off the moving and money i'd sent and got to work again on a whole new project.
immediately that stalled out, the vendor who they'd found to supply the new hardware and software could not deliver. so it took some time for them to find a new vendor and supplier and i worked on some projects that were sitting around that i could do until it did get going on the main reason i was there.
my debts were long paid. my savings was back in place and i could live off a year off that if i had to quit or things changed. i kept on adding to that so eventually beyond savings i could buy Certificates of Deposit (CDs) (which is a loan you are making to the bank or credit union). the thing is that it is more like a contract in that you can't just go back and say you want your money back without having some penalty. it's a good way to get money out of immediate reach but it is available based upon what terms you set up with the bank. so you can buy them in various amounts for various lengths of time. every so often i would get enough in savings to take out another one and i'd keep adding to them so that i had one coming due every three months and then just keep extending the terms of the existing ones so they'd go longer (and pay more interest).
also, finally, i had mad money, money i could risk and it would not do me too much damage if i lost it completely. this is the mentality you do need for investing in stocks of some kinds because it does happen that companies go bankrupt or what you invest ends up being worth less than what you put in. so you have to be able to deal with this mentally as the chance it will change in value. there are ways of reducing risk and spreading your investment among many companies, and then there are other kinds of investments too. so it's not just stocks, but there are bonds, mutual funds, money market accounts, real-estat and insurance. now there are also these things called virtual currencies but i'm not going to get into those at the moment.
twenty years or so after i started learning about the stock market i could finally do something. my first stock? i'm not sure which it was and i won't talk about specific companies or amounts because that's a bit more private to me than i want to get into. i also joined a stock club that was going on campus. a stock club is where people join together and form a partnership or company to invest and you split the results and risks too based upon what percentage you own or some other agreement. we met once a month and talked about what we wanted to do. it was a good way to learn even more.
also with a real job, with benefits i actually had a retirement account that was added to with each paycheck and i could also put money into IRA accounts, so i was doing that (and eventually changed those into a Roth IRA). time went by... eventually the job of the conversion from the mainframe to the mini-computer was winding down and i didn't like how things were going for me there at work. it was looking like i was going to get stuck working with someone i really didn't get along with.
in the meantime my investments were doing good. i had savings and retirement accounts. i still lived pretty frugally. it was time to move on. i gave notice to my boss and then the following fall i was free for the first time in my life. i'd been working, going to school or both since age 12. i had time off here or there for a week or two, but never more than that. i'd reached my goal of quitting full-time work and missed the age i'd randomly picked by six months. not too bad considering. so i could travel around the country and check it out and see if i could find a new place to live that i liked.
i cashed out some of my stocks (paying a big chunk of taxes) and put that into more CDs so i was bringing in more income. i also was having fun at the casinos (pure mad money for sure there as you know they're not in the business of giving money away) to kill some time and hit a nice jackpot which i've put into savings for when i need to buy a house - a downpayment. since then i've worked a few times, part-time and for a bit i was doing full-time and part-time at the same time, but that got to be too much so i quit the full-time and just stuck with the part-time work. then the management changed and it got to be too stressful even at the part-time job and i figured out i was making as much money by growing vegetables as i was doing working a low-paying part-time job so i've pretty much been doing that for the past ten years.
so from all of this long story what can someone else who's trying to figure out what to do for the longer term for investments?
always save something from each paycheck. have your entire paycheck directly deposited into savings and then take at least 10% of that and put it into CDs at first until you get some savings and an emergency fund built up.
another 10% put aside for emergencies.
if you can use a IRA account or other retirement account (and really nice if you have an employer that will match money you put in) do that too (i prefer Roth IRAs vs. the other). i consider it a good idea to pay yourself first and to plan for the long term as much as you can. what i found was that if i got a raise i could often take most of that and put that into savings while only spending some percentage on toys or vacations. i still felt like i was making progress on all my goals and still enjoying the rewards of my work/salary.
with the way banks and credit unions operate these days you can usually set up automatic payments and i always suggest to people to do the three things above automatically so that you have that happening all the time so you can't interfere with it easily. you have to do something to make it stop. this is called paying yourself first.
after the above pay off debt as much as you can. if you need a mortgage that is a good use of resources as long as you can pay it off eventually. depends upon the rate and if you like the place and think you're going to be there long enough. it is usually better to pay off the highest interest rate loans you have first. any chance you get to refinance to a lower rate it is often worth checking out and doing.
credit cards, eek! danger! pay those off as soon as you use them. you have the above funds for emergencies and longer term expenses, don't use expensive financing if you can avoid it. if you end up having credit card debt look into consolidating them under a lower interest credit card and for sure make sure to pay that off as soon as you can. this would be a priority for me if i ever had to do it.
i know i've lived a much different life than most people and i'm ok with that. simple, frugal, i'm pretty happy with a few toys, gardening, i like where i live and who i'm with. i'm pretty lucky in that ways i think.
others may wonder how to get out of holes they've dug for themself. the first step is to stop digging. after that it may take some planning, discipline and sacrifice in the shorter term to get things worked out for the more longer tern. it's still worth the effort. there's help, there's things to learn. don't give up.
there are many different kinds of investments. i've only talked about a few so far. savings/CDs and stocks. i've not really gone into insurance, annuities (which can be seen as a type of insurance but you can also usually invest in different things via annuities so don't get hung up on that yet ), real-estate, bonds, etc. i don't even have some of these and no real intention to get into them (like i consider the current hoopla about virtual currencies to be not worth it and i don't trust them or like them but i won't get into that for the moment).
mistakes? yes, i've made a few. like when i was in one place for a long time i didn't really know how long i was going to be there so i didn't think to buy a house. another was when i thought of buying some stock and talked myself out of it. the other was cashing stuff out and paying taxes when i could have not cashed out so much and still had those investments now. those three things probably have cost me quite a bit. i also made some right decisions (not buying a place down south when i kept coming back here all the time to visit). i'm also not very good with local networking. like i didn't even know the place out back was for sale when it went on the market and i also missed when the land to the north of us got sold. i would have liked either of those to have worked out. i tried to buy some land from the guy who bought the land to the north of us but he wanted a lot more than i could afford. such is life. win some lose some.
i notice i didn't mention budgeting. yes, that's good to do too. more on that some other time...
sorry it got so long. questions always welcome of course and comments too. this can be a thread about pretty much anything financial and planning.growing up on the lean side of the ledger i saw how it affected me and how others treated us and i also saw that our overall society is not really geared at all about teaching people how to manage money and investments. there were a few times in school when it was mentioned and we even had a class called home economics, but the topic of money management was not really there it was instead aimed more at cooking. that's ok, i liked cooking, yet most of what i learned was not from that class or any others at school.
since i didn't want to end up poor i started reading up on whatever i could find at the library (i spent a lot of time in several libraries including the one that my Mom started and ran out of the closet at the township offices, plus the church library which she organised and catalogued and also the main library in downtown Saginaw). the township library eventually turned into a metal out-building where i would spend hours sitting and looking through books (before i was reading very well but i could often figure things out by context and persistence). years later the out-building is now a nice place of it's own. it's a bit too far from here to visit often, but i have been there. some day i may ask them if they need any help. it would be an interesting circle to close.
ok, back to beginnings. wanting to have my own money, that i earned, savings so i could buy things, savings for eventual college. for some reason (probably a bit of understanding that creeped in from hearing parents arguing about money and then the divorce and seeing how Mom worked so hard to get by), but also how we were treated by others. i just decided that i was going to work very hard to do things differently. all my reading, studying and then i came across this system called the stock market and for some strange reason i got fixated on a company called IBM. it was all fantasy as i didn't have the money or resources to do anything then, but i kept following it and reading the news about the markets and then was learning about what it meant to invest in the stock market and the risks involved.
all during this time i am getting older, eventually i started mowing lawns and doing lawn work for money. i saved as much of it as i could and came up with enough money to buy my own ten-speed bike. a few years later i was working in the summers for the family business and could add more to my savings but i still was not investing in the market. a few more years later and i decided that yes i should go to college and so off i went. my savings didn't get me far and i had to take out some loans and work my way through college but i did eventually get through. i still had not invested in the stock market.
after graduating i had some debt. i hated being in debt. first priority was to get out of debt but also to start reaching my next goal which was quitting work full-time aka what i consider retirement or working when i find something interesting enough that it doesn't seem like work. randomly i picked the age of 33 to do that by. i had to split any amount of money i made over expenses in half to rebuild some savings and the other half went to paying off my debt. within 18 months i paid off my school loans and also had built up enough savings to cover my expenses for a year. yes this meant simple living, frugality and discipline, but i was so busy working at the time that it didn't bother me.
then i took a side-track for a year, i tried for a master's degree but through trying i ended up running into some course-work that told me i probably wasn't well suited for that sort of thing. then miscommunication with an instructor and the person who was also my advisor for my degree (i thought he told me i was done, but he didn't mean that at all). so i didn't schedule any more classes and decided to just get back to work and get back on track for my eventual goal of early retirement. i was also nearly broke yet again having spent any extra savings on the college coursework and so i was tired of being poor where i had to scramble every three months to come up with the next round of tuition and book money. i was lucky that my rent was often not much (or none at all but that is a different story i'll skip because this is already getting too long
).what did happen is that my job i'd been working for those many years through school and the first few years after getting my degree was pretty much done. i'd written all the documents and manuals for the staff, the program needed no changes and it was time to move on. it just so happened that the university was getting ready to do a conversion from their mainframe computer to a mini-computer system and they posted four positions to help them work on that. i applied. things happened. nobody got hired. i talked to my sister out on the west coast and sent her some money to get a place where we could both stay. then i get the call that they were finally going to hire someone (note it was four, they ended up hiring one). me. the salary wasn't quite what i asked for but i did have cheap living and knew the place and really did like it there. so i had to write off the moving and money i'd sent and got to work again on a whole new project.
immediately that stalled out, the vendor who they'd found to supply the new hardware and software could not deliver. so it took some time for them to find a new vendor and supplier and i worked on some projects that were sitting around that i could do until it did get going on the main reason i was there.
my debts were long paid. my savings was back in place and i could live off a year off that if i had to quit or things changed. i kept on adding to that so eventually beyond savings i could buy Certificates of Deposit (CDs) (which is a loan you are making to the bank or credit union). the thing is that it is more like a contract in that you can't just go back and say you want your money back without having some penalty. it's a good way to get money out of immediate reach but it is available based upon what terms you set up with the bank. so you can buy them in various amounts for various lengths of time. every so often i would get enough in savings to take out another one and i'd keep adding to them so that i had one coming due every three months and then just keep extending the terms of the existing ones so they'd go longer (and pay more interest).
also, finally, i had mad money, money i could risk and it would not do me too much damage if i lost it completely. this is the mentality you do need for investing in stocks of some kinds because it does happen that companies go bankrupt or what you invest ends up being worth less than what you put in. so you have to be able to deal with this mentally as the chance it will change in value. there are ways of reducing risk and spreading your investment among many companies, and then there are other kinds of investments too. so it's not just stocks, but there are bonds, mutual funds, money market accounts, real-estat and insurance. now there are also these things called virtual currencies but i'm not going to get into those at the moment.
twenty years or so after i started learning about the stock market i could finally do something. my first stock? i'm not sure which it was and i won't talk about specific companies or amounts because that's a bit more private to me than i want to get into. i also joined a stock club that was going on campus. a stock club is where people join together and form a partnership or company to invest and you split the results and risks too based upon what percentage you own or some other agreement. we met once a month and talked about what we wanted to do. it was a good way to learn even more.
also with a real job, with benefits i actually had a retirement account that was added to with each paycheck and i could also put money into IRA accounts, so i was doing that (and eventually changed those into a Roth IRA). time went by... eventually the job of the conversion from the mainframe to the mini-computer was winding down and i didn't like how things were going for me there at work. it was looking like i was going to get stuck working with someone i really didn't get along with.
in the meantime my investments were doing good. i had savings and retirement accounts. i still lived pretty frugally. it was time to move on. i gave notice to my boss and then the following fall i was free for the first time in my life. i'd been working, going to school or both since age 12. i had time off here or there for a week or two, but never more than that. i'd reached my goal of quitting full-time work and missed the age i'd randomly picked by six months. not too bad considering. so i could travel around the country and check it out and see if i could find a new place to live that i liked.
i cashed out some of my stocks (paying a big chunk of taxes) and put that into more CDs so i was bringing in more income. i also was having fun at the casinos (pure mad money for sure there as you know they're not in the business of giving money away) to kill some time and hit a nice jackpot which i've put into savings for when i need to buy a house - a downpayment. since then i've worked a few times, part-time and for a bit i was doing full-time and part-time at the same time, but that got to be too much so i quit the full-time and just stuck with the part-time work. then the management changed and it got to be too stressful even at the part-time job and i figured out i was making as much money by growing vegetables as i was doing working a low-paying part-time job so i've pretty much been doing that for the past ten years.
so from all of this long story what can someone else who's trying to figure out what to do for the longer term for investments?
always save something from each paycheck. have your entire paycheck directly deposited into savings and then take at least 10% of that and put it into CDs at first until you get some savings and an emergency fund built up.
another 10% put aside for emergencies.
if you can use a IRA account or other retirement account (and really nice if you have an employer that will match money you put in) do that too (i prefer Roth IRAs vs. the other). i consider it a good idea to pay yourself first and to plan for the long term as much as you can. what i found was that if i got a raise i could often take most of that and put that into savings while only spending some percentage on toys or vacations. i still felt like i was making progress on all my goals and still enjoying the rewards of my work/salary.
with the way banks and credit unions operate these days you can usually set up automatic payments and i always suggest to people to do the three things above automatically so that you have that happening all the time so you can't interfere with it easily.
you have to do something to make it stop. this is called paying yourself first.after the above pay off debt as much as you can. if you need a mortgage that is a good use of resources as long as you can pay it off eventually. depends upon the rate and if you like the place and think you're going to be there long enough. it is usually better to pay off the highest interest rate loans you have first. any chance you get to refinance to a lower rate it is often worth checking out and doing.
credit cards, eek! danger! pay those off as soon as you use them. you have the above funds for emergencies and longer term expenses, don't use expensive financing if you can avoid it. if you end up having credit card debt look into consolidating them under a lower interest credit card and for sure make sure to pay that off as soon as you can. this would be a priority for me if i ever had to do it.
i know i've lived a much different life than most people and i'm ok with that. simple, frugal, i'm pretty happy with a few toys, gardening, i like where i live and who i'm with. i'm pretty lucky in that ways i think.
others may wonder how to get out of holes they've dug for themself. the first step is to stop digging. after that it may take some planning, discipline and sacrifice in the shorter term to get things worked out for the more longer tern. it's still worth the effort. there's help, there's things to learn. don't give up.
there are many different kinds of investments. i've only talked about a few so far. savings/CDs and stocks. i've not really gone into insurance, annuities (which can be seen as a type of insurance but you can also usually invest in different things via annuities so don't get hung up on that yet
), real-estate, bonds, etc. i don't even have some of these and no real intention to get into them (like i consider the current hoopla about virtual currencies to be not worth it and i don't trust them or like them but i won't get into that for the moment).mistakes? yes, i've made a few. like when i was in one place for a long time i didn't really know how long i was going to be there so i didn't think to buy a house. another was when i thought of buying some stock and talked myself out of it. the other was cashing stuff out and paying taxes when i could have not cashed out so much and still had those investments now. those three things probably have cost me quite a bit. i also made some right decisions (not buying a place down south when i kept coming back here all the time to visit). i'm also not very good with local networking. like i didn't even know the place out back was for sale when it went on the market and i also missed when the land to the north of us got sold. i would have liked either of those to have worked out. i tried to buy some land from the guy who bought the land to the north of us but he wanted a lot more than i could afford. such is life. win some lose some.
i notice i didn't mention budgeting. yes, that's good to do too.
more on that some other time...
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