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Some Advice - Life Lessons And Getting Older - Longer Titles Get More Clicks ;)

Discussion in 'Making Money' started by HelloInsomnia, Jan 31, 2015.

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  1. HelloInsomnia

    HelloInsomnia Jr. Executive VIP Jr. VIP

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    Hello friends. I've been here a long time now, about 6 years. In that time I've aged to a critical point in my life. Half of my friends are married, a lot are now on their second kid. Some have houses, some drive $80,000 cars, some are millionaires, some are broke.

    Here is what I can tell you about life.

    Debt is only good to build credit. Don't ever take on multiple debts at one time. If you have a car payment don't take on a mortgage. If you have credit card debt don't buy anything credit. If you want to be richer than 99% of the people out there then clear your debt. I talk with people a lot about this and the most common phrase I hear is this: "I don't have any debt, just my car payment." Well how much do you owe on your car - I ask. $15,000. Okay so you have $15k in debt. Why don't you realize that?!

    If you have multiple debts to pay off then take the cheapest one and pay it off first. This should be your #1 priority in life. Pay your debts. I just talked with a friend who had 2 student loans to pay off. One was $8k and the other $3k. He had $10k in his bank account. I said why so much when you have debts to pay? It made him feel good... Well that good feeling is costing you interest each month. After talking he literally grabbed this laptop i'm on now and paid off the $3k loan. Guess what? Now he doesn't have to pay interest on that every month. He is currently working like hell to pay off the $8k loan. Good for him, he will soon be richer than most.

    Buy yourself a cheap car. I have sooooo many friends who make $40-60k per year and own a $40,000 car. Guess what happens in 3 years? They get sick of that car and get a new one. Don't invest that much money into an asset that is just going to depreciate in value. Every dollar you save today is one you don't have to earn tomorrow - keep that in mind. These people will likely be paying for a car their entire life. While it may make you feel good today it will severely effect your bank account in the future.

    Buy a house as soon as you can. Renting is like lighting money on fire every month. This is something I personally struggle with since I've moved all over the country in the last couple of years. I still rent but I explain it to my friends like this: Buy a house. Even if it is a cheap house, the point is this you can pay $1k in rent every month which you will never see again. Or you can pay that in a mortgage which you will see again. Now all you're doing is putting that money into an asset which you can make a return on. Over the course of a year you can either take $12k and light it on fire and never see it again or you can take that $12k and maybe one day get back $12,200 for it. You can see how every year you live rent free you make yourself a little bit richer.

    Invest in a Roth IRA and mutual funds. Look up some calculators online if you don't know the potential of doing this. You want to retire a millionaire? This is how you do it.

    Make a budget, I still struggle with this today but since I've made a budget I've been able to see where I spend way too much money. You will be shocked at how much money you can save. Take that money and invest it into your online businesses.

    Do something crazy. I mean start a new business. You read BHW every day surely you have gotten some ideas that "sounded good" or read something and thought well if you did it a bit differently it could make more money. Go do it, take a day or two a week to do those crazy ideas, some of them will make you a lot of money. Give it some time to grow, invest some money into it. If the first 5 fail so what, it's just a bit of time and money you will get back in the long run when one of them works really well. You're investing into your own future.

    I know these rules of life are simple but trust me when I say that if you follow them you can have an excellent life in your 30's and beyond. You can start making investments that will take care of you in the long run and also make you rich. That guy who bought the cool car at 25 is still probably paying his car payments, paying his mortgage and will never actually get rich. At 32 you can go buy that cool car with cash when your investments are making a shit ton of money and you can actually afford to own it.
     
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  2. spectrejoe

    spectrejoe Jr. VIP Jr. VIP

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    Too bad I don't like debts and I always save money to pay for shit as soon as I buy things, I'm just that kind of person.



    But yea I guess you're right, there's some good tips here to help you get richer, wouldn't say you get rich just for this but you could definitely get richer
     
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  3. HelloInsomnia

    HelloInsomnia Jr. Executive VIP Jr. VIP

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    Believe it or not you can actually get rich doing this. Depending on how much you make it can take awhile. At the end of your life how much money do you really need though to be rich? If you make the right investments you can live off your investments. If you're 60 and have 1.5 million in investments and make 10% off that with no debts to pay then you make $150k per year doing nothing. Could you live off $150k per year? Would you consider that being rich? I think being rich is having no debt to pay, being able to travel whenever you want and being able to afford things without worry. Anyone can do that if they start to think about it when they're young and I think most people on this board are young.

    Being rich doesn't always mean just having excessive money, it's having the right amount of money to afford your lifestyle.
     
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  4. spectrejoe

    spectrejoe Jr. VIP Jr. VIP

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    Good choice of words and nice view of life however investments aren't always that easy, you can invest and turn out to be a major loss, it's not easy and by investing unless you literally have quite some extra money to spend, you'll be "sacrificing" a little bit of your money and this not have a "rich" lifestyle while young in return of having a good lifestyle and being "rich" when you're old.
     
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  5. HelloInsomnia

    HelloInsomnia Jr. Executive VIP Jr. VIP

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    I think a lot of people think this way and you do have to make a few sacrifices but probably not as much as you would think. Like I said in the post look up some financial calculators I think you will be shocked at how little you can start investing when you're young. As you grow older those investments will grow and also you will likely have more money to invest into them. You can make generally safe investments as well like I said mutual funds and an IRA will get you pretty far on their own. Investing into real estate is another good one. Markets go up and down, people have "lost a lot of money in the stock market" before for example but those who rode out the down years ended up getting their money back. I am no financial guru though, one of those investments you should make is into knowledge about this stuff. That is one thing I'm still working on.
     
  6. SPQR

    SPQR Elite Member

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    Too many people completely disregard the market and end up having their money devoured by inflation. An excuse I hear all the time is "the market fluctuates and I'm scared and I'd rather not invest"; this is some crap. Many stubborn people think that the market is for day trading. First of all, day trading is a great way to gamble and lose money and second, any investment should be thought of a 5+ year investment. Remember the 'Great Recession'? If one was to buy the day before the crash they would be above where they started if they held on and did not panic sell. I don't really know where to go from here. Philosophies behind investing vary and it is impossible to cover every misconception in one small post, in the end, I just hope that you guys don't stick all your hard-earned cash into some 1% bank account and have inflation make your money worthless.

    I guarantee if you were to buy ETFs and Mutuals that track the market, you will retire comfortably. But shit, what do I know?

    Also, thank you HelloInsomnia for this excellent post. As a young person growing up in this world, I appreciate all the wisdom that you have shared.
     
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  7. netmoney1

    netmoney1 Executive VIP

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    You made so many valid points, yet sadly most will skip over them.

    The debt thing is huge. I know so many people that put everything on credit and still live as if they have no debt. They make minimum payments so they can "maintain the debt" while still having money to go out to fancy dinners and drive expensive cars. They are just treading water so they don't drown. That is a shitty way to live.

    I've had 2 very close friends buy brand new cars this past week. One bought a brand new rang rover sport, super charged and loaded...I'm not sure what the sticker was, but I am guessing around $88,000 loaded. Then, my other friend purchased a brand new Ford Fusion and got it for right around $25,000 I believe. Now, one of these people is a grunt sales rep that makes about $50,000 a year...the other is the owner of a national health brand that does over $100M/year in sales. What car do you think was purchased by who? The broke idiot bought a car that is almost double his annual salary (pre-tax) and the guy with millions of liquid dollars to his name buys a $25k car. The rich friend will keep getting even more wealthy while the other one will struggle to keep his range rover full of gas.
     
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  8. spectrejoe

    spectrejoe Jr. VIP Jr. VIP

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    I'm not really into investing and I'm still 19, not working yet since I'm about to finish my studies (I'll finish next year once I turn 20) and I would like to learn more about investing and the market in general, however I don't know anyone who invests especially because my country isn't that much into market investing (portugal) but I'd love to try it since I don't plan to live here forever
     
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  9. SPQR

    SPQR Elite Member

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    I cannot tell if these were subtle excuses or not; but I just turned 15 and I have a decently allocated portfolio of ETFs and other equities. If you want to learn some basics, you should check out /r/investing. Take everything that everyone has said and will say with a grain of salt. The best information will come from experience. Don't rush things!
     
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  10. Cashington

    Cashington Regular Member

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    I agree with you , even though I'm still 21 and I'm always thinking about getting a sport car blabla (I am not a millionaire) lol.
    Loan is really good if its for investment as you said .

    Our landlord , he's only 40 years old , he has about 3 houses each valued about 0.7M$ . He works in a big company. When I had a chat with him he told me that these houses are from loans. We almost pay him the monthly loan cost ( the accommodates), the value of each house gets higher and higher each year ( I'm talking about a big city). So yeah this is good investment and will be worth it, investments which the value rises not decreases like cars .
     
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  11. HelloInsomnia

    HelloInsomnia Jr. Executive VIP Jr. VIP

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    We all think about getting that new car. Something I ask my friends who buy them is how much money they make (good friends of course who won't take offense). How much money do you make and how much do you have in the bank? Almost all of them purchase a car they can't afford. It's one thing to make a million dollars and buy a $60k car. If you make the money you can afford it. It's another however to put yourself $30k in debt when you only take home $30k at the end of the year. By the time you pay that car off you will likely want a new one and the circle of debt continues.

    If you make the money you can spend some of it to keep yourself happy otherwise what is the point? But if you don't make the money then you have to ask yourself what you can do to put yourself in a position of money.
     
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  12. msuper28

    msuper28 Power Member

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    I agree with you Hello. I'm a young guy too studying computers in college, but I don't think about buying new sport car for now or get a cool iphone etc like some guys in my college do.
    I'd prefer to spend money in future to get good trips around the world. As you said, you'll always want a nicer car and the circle of debt will continue. I think every day about business, startups and how to bring value to the world in order to make money with my own ideas. When I'll have good money I can afford to buy a nice car or long trips but until that moment, I must work hard to reach my goals and money.
     
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  13. Beat Drop

    Beat Drop Newbie

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    Solid advice, but dont bother with mutual funds, try hedge instead. Mutual funds take their cut weather or not they make you any money on your investment, hedge funds get more of a cut the more they make you.
     
  14. ChanzGrande

    ChanzGrande Elite Member

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    I appreciate this post greatly as well. I may not be a young whipper snapper anymore, but I still found tons of value and motivation. I like the healthy mix of conservative optimism. Invest, but hedge your bets. Don't burden yourself with unnecessary or unsustainable expenses.

    Totally agree with everything said ... now to work on discipline.
     
  15. KraftyKyle

    KraftyKyle Jr. Executive VIP Jr. VIP Premium Member

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    I thought I'd make a quick comment as your thread was linked to from this thread...

    OP is spot on. Also, check out Dave Ramsey if you're interested in this stuff (learning how to get out of debt and stay out of debt). You'll be glad you did.
     
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  16. Euphorix

    Euphorix Supreme Member

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    "The Total Money Makeover". Judging from this thread you've read it :)
     
  17. b1step-ahead

    b1step-ahead Power Member

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    Good Stuff. I recommend to everyone that buying a used car is best. Most credit unions will loan out to cars going back 7 years. So think about that for a second, the same chevy camero selling new today goes for 25k give or take. Now go back 7 model years to 2008. If you can find one with under 100k and you will since some are owned by the older crowd that just pamper their cars and drive no where, you will buy a asset that's hit 80% of it's depreciation, so if your lucky you might find one for 10k, now finance that sucker with the most months you can with low interest like 5% or so. Get your payment to under 200 a month and look where you are at. Your driving a vehicle that's nearly maxed out on depreciation, you've got nearly free money loaned to you (5% is not that bad) and your keeping your monthly below 200. Now if you run into to a pinch, just think how easy it would be to sell that late model low mileage car.
     
  18. pixelgrinder

    pixelgrinder Jr. VIP Jr. VIP

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    Great points here. The only thing I'd 'tweak' is the buying a house vs renting. Depending on your situation, sometimes renting is more cost effective. You have to take into consideration upkeep, prop tax, real estate growth in your area, etc. Here's a good article to illustrate my point: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
     
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  19. Reaver

    Reaver Jr. VIP Jr. VIP

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    I'd appreciate it if you didn't bump 2 year old threads. In fact, we all would.
     
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