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  • #1

    Strategy Ideas

    I started late in life and have been playing catchup ever since. So I thought I would ask everyone what they think of my current strategy.

    Single
    44 years of age
    Max out 401k contributions
    Max out Roth IRA contributions
    Have approximately a 2 1/2 year emergency fund

    I do the following
    -I live pretty much on a Credit Card and pay it off in full monthly
    -Billpay through local bank
    -Pay bills at the beginning of every month
    -Sweep most of my remaining cash to a Brokerage Acct
    (atm, check writing, billpay, auto overdraft from MM)
    -sweep this amount into a Money Market Mutual Fund(5.03%)
    -Determine goals for short term cash (emergencies, toys, etc)
    -Transfer amount over short term goals to a second Brokerage acct and invest in cds, money market funds, bonds funds, moderate funds, stock funds.

    I've learned, the hard way to leverage the credit made available to me but make it as much good debt as possible (home, low/no interest rate offers).

    I've also learned that I will do everything I can to not have money laying around in no/low interest rate accounts.

    If I'm working my a$$ off, my money better be too.

    One problem I have is that I've gotten pretty tight with my money. I have a tough time enjoying my money and letting it flow from time to time. It may stem from being so deep in debt, in the past or the fact that I've been off work over 2-6 month periods in the past.

    Anyone have comments/suggestions on this strategy and how you enjoy your financial freedom?
    Last edited by trainedmonkey; 11-04-2007, 05:26 PM.
    Tags: None
  • #2
    When setting up your monthly budget, be sure to include some fun money. It seems like you are doing great in terms of saving for retirement, so you shouldn't have to feel bad about enjoying your money some.

    Also, you mentioned being "deep in debt", but it wasn't mentioned. Do you currently have any debt?

    Comment

    • #3
      Originally posted by trainedmonkey View Post
      Anyone have comments/suggestions on this strategy and how you enjoy your financial freedom?
      Looks like you are on track. As far as how to enjoy the money? My only suggestion is you need to realize that enjoying the journey at least a little is the only way to keep yourself on the journey. In the long run, small splurges will benefit you more than getting fed up with not having fun and spending a lot on a boat, for example.

      Comment

      • #4
        Originally posted by trainedmonkey View Post
        I've learned, the hard way to leverage the credit made available to me but make it as much good debt as possible (home, low/no interest rate offers).
        If you're using no interest rate credit cards, you should use a cash rewards card instead seeing that you pay your bill off monthly. That way you'll get some money from that also.
        The easiest thing of all is to deceive one's self; for what a man wishes, he generally believes to be true.
        - Demosthenes

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        • #5
          Originally posted by ktmarvels View Post
          Also, you mentioned being "deep in debt", but it wasn't mentioned. Do you currently have any debt?
          Currently I only have a 6% mortgage, 7 yrs into a 30 yr (pay 15 payments a year and I paid 30% down). Been thinking that I should accelerate my payoff but right now I'm one that wants to go to my grave with a mortgage so we'll see. (mainly because I could earn 10-12% on the money I'd otherwise put into the house, plus the tax write off). If I liquidated my emergency fund I could pay the house off but it just seems that money makes more than it cost me to borrow the money so I can't justify it.

          I'm considering buying a car but its been a challenge. Poor car dealer must be sick of me. Dealer cost (through work), right now 3.9% financing so that is on my radar, possibly. Been thinking of making a smaller downpayment, taking a longer term and then pay off early and leave more money invested (average yearly return of my investments has been as low as 6% and as high as 22% for my liquid cash).

          Also the credit card I use is cash reward card. If I carry any longer term debt (besides the mortgage) I generally take advantage of 1,2 or 3 yr no interest offers if I purchase furniture or electronics, which isn't often.

          Comment

          • #6
            You're a very savvy investor if what you say is true.

            My only comment is if you want a good credit report, you may want to back off on charging monthly expenses and paying them off. You may raise an overdependency on credit flag.

            Comment

            • #7
              I thought 2.5 years as an emergency fund was a little excessive but then realized with your past experiance that you might be gun shy to drop that back a bit.

              Same boat here, started late and work my butt off, I typically work 3 weeks straight, 12 hours a day and then take a week off. I never used to take that weeke off but realized that I was working my life away and my family was doing all this cool stuff and I'd be like, Umm, no I have to work.

              My old man died at 54 so I learned quick you can't take it with you. Force yourself to smell the roses.

              Good luck

              Comment

              • #8
                Originally posted by InDebtInDC View Post
                My only comment is if you want a good credit report, you may want to back off on charging monthly expenses and paying them off. You may raise an overdependency on credit flag.
                Overdependency flag? Is that something real? Please share what you know. Who sees such a flag?
                "There is some ontological doubt as to whether it may even be possible in principle to nail down these things in the universe we're given to study." --text msg from my kid

                "It is easier to build strong children than to repair broken men." --Frederick Douglass

                Comment

                • #9
                  Originally posted by hawkster View Post
                  I thought 2.5 years as an emergency fund was a little excessive but then realized with your past experiance that you might be gun shy to drop that back a bit.
                  Just to clarify 8 months of that is in short term vehicles and the remainder is a little higher risk based (bond mfs,moderate mfs, stock mfs)

                  Comment

                  • #10
                    Originally posted by Joan.of.the.Arch View Post
                    Overdependency flag? Is that something real? Please share what you know. Who sees such a flag?
                    Yeah, I was going to ask that too.. I've never heard of such a thing.

                    Comment

                    • #11
                      Originally posted by kv968 View Post
                      If you're using no interest rate credit cards, you should use a cash rewards card instead seeing that you pay your bill off monthly. That way you'll get some money from that also.

                      I would suggest getting a CC which pays off the mortage. If your 1st mortgage is thru citi, wells fargro or GMAC, there are CC which send 1% of purchases to pay down mortgage.

                      You mention maxing the 401k and IRA, but did not mention current amounts in either account or how much you spend each month. This might suggest a gap in savings (even if you are saving more than 20k per year).

                      Comment

                      • #12
                        Originally posted by jIM_Ohio View Post
                        I would suggest getting a CC which pays off the mortage. If your 1st mortgage is thru citi, wells fargro or GMAC, there are CC which send 1% of purchases to pay down mortgage.
                        Which CCs offer this?

                        Edit: Never mind... I see you're talking about the rewards going toward the mortgage. I was thinking/hoping you were talking about a CC that you can use to pay your mortgage payment.
                        Last edited by sweeps; 11-05-2007, 06:59 AM.

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                        • #13
                          citi, wells fargo and GMAC as mentioned already

                          mortgage and CC need to be with same company

                          Comment

                          • #14
                            Yeah, but you can usually get more bang for the buck (>1% rewards) by using certain other cards. PenFed's and Fidelity's cards for example.

                            Comment

                            • #15
                              Originally posted by sweeps View Post
                              Yeah, I was going to ask that too.. I've never heard of such a thing.
                              I was hit with this right after college. I had a decent credit score (750 FICO) and good income ($50k), but I was declined a car loan.

                              The reason listed on the notice was "Overdependency on revolving credit".


                              After speaking with a few loan officers, apparently, the car payment would have been an acceptable percentage of disposable income, but I believe the creditor was concerned that I was having cashflow problems from my pattern of monthly credit card usage and payoff.

                              I think they were also concerned that I would be more at risk of putting myself into credit card debt.


                              I personally think it's a bogus reason, but it happened to me so maybe it could happen to others. Like I said above, I wouldn't worry about it if you don't care about your credit score.

                              Comment

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