Life is about taking risks right... Entertain me with your thoughts

**jIM_Ohio** · 10-10-2008, 04:18 AM

NO- because the market turn around might take 14 months before an upward trend emerges, and even then that trend may only be a 5-10% gain from the bottom.

Imagine you invest and market drops another 15%, then from the bottom, the increase is 10%. And all that is in 24-30 months, well past July 2009 and almost into 2011.

**kork13** · 10-10-2008, 04:37 AM

My opinion--I would personally be comfortable with reducing the payments I'm making on the SUV. Say, min pmnt is $300/mo, you're paying $600/mo. I would be fine with (and actually am doing this) reducing my overpayment by half, paying $450/mo to the SUV and freeing up the $150 to test out in the market. Nothing overly aggressive, but something to give you a shot at making a smart investment.

Side note--the SDP is a sick deal, as you outlined above... how does that actually work (putting it in, taking it out, and any timeframe req'ts)? I've heard you can only contribute money to it while deployed, but that's about all i know.

**Broken Arrow** · 10-10-2008, 05:06 AM

I do not know enough/trust the market enough to invest the cc money so I will probably keep that in ING.

Actually, I think that's your answer right there. There's nothing wrong with not knowing or trusting it enough, but if you don't, then I wouldn't buy into the market right now. Otherwise, you may not sleep well.

In general, market timing is a losing proposition anyway.

Even for those who are going to try to time it, both LIBOR and VIX are way off the normal range right now. The credit market is still frozen solid. I had HOPED that it would've thawed a bit with all the government action, but, still no progress.

That isn't to say people shouldn't buy in. If you've got a relatively high risk tolerance, and you've got money sitting around that you don't need anytime soon, then yes indeed, this is a great time to buy in. The "sale" is market-wide. Even great companies who have nothing to do with risky lending is being put on sale.

A blood-bath at the market is expected today. This is going to be very interesting....

**mrpaseo** · 10-10-2008, 05:42 AM

Originally posted by kork13 View Post

Side note--the SDP is a sick deal, as you outlined above... how does that actually work (putting it in, taking it out, and any timeframe req'ts)? I've heard you can only contribute money to it while deployed, but that's about all i know.

You are correct; you can only invest while you are deployed. I am currently enjoying (Sarcasm) my third tour in Iraq, actually tomorrow will be our one year mark and we have three months left.

The max allowed in the SDP is 10,000 dollars, but you cannot put in more than your take home pay so it takes at least two months (Took me longer) to get the full 10,000 invested. As stated the interest is 10% APY which pays quarterly 2.5%, that turns out to about 83 dollars per month.

You are allowed to put more than 10,000 in, but you will earn only on the first 10,000.

You are allowed to earn one additional quarter after you redeploy (Three more months). Which is about 250 dollars more (For the full three months). All in all, I will earn about 1200 dollars on the 10,000 I invested over the 15 months.

We are allowed cash investments or automatic payroll deduction, though the total invested per month cannot exceed your take home pay after allotments.

To get it out we have to fill out some paperwork and request it the money. I believe it all has to be taken out at once though this part if vague. The last time I deployed I did not max it out like I did this time and did not pull the money out until I got home at which time I took it all out at once.

For the record, this is my sixth deployment in 16.5 years. Haiti, Bosnia, Kosovo, three tours in Iraq (In the end I will have 39 months in Iraq).

**NYFinancialPro** · 10-10-2008, 07:09 AM

First off, thanks for your service to our country. My advice is, if you are looking for a short or medium term return on your investment "0-10 Years" , I would not test the market just yet. If you are expecting a long term return on the money, I would invest in the stocks of strong companys. Warren Buffet just heavily invested in Wells Fargo, Goldman Sachs, and GE. Actually Berkshire Hathaway is only 15 Billion liquid right now. Those might be some good picks for the long term return. If you have any more questions or need some advice feel free to contact me.

NYFinancialPro
Complete Financial Planning
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**MYOM** · 10-10-2008, 02:03 PM

You need an emergency fund of three months of your net income. Then if I were in your shoes, I would pay off the credit cards and car right now. Payments you would make on the car and cards could be used to dollar cost average yourself into the market.

Investing in your Financial Education can make you more money than the stock market.

Dan Clemons

**mrpaseo** · 10-10-2008, 10:02 PM

Originally posted by MYOM View Post

You need an emergency fund of three months of your net income. Then if I were in your shoes, I would pay off the credit cards and car right now. Payments you would make on the car and cards could be used to dollar cost average yourself into the market.

Investing in your Financial Education can make you more money than the stock market.

Dan Clemons

EF: True, my EF is currently lacking, though th emilitary does provide a certain level of job security and I do have 20,000 in a Savings account right now. My monthly bills are at least 1000 below my current income so at the moment, the cc floating money is my EF.

With the cc's I have two options:

1. I can pay off the balance now.
a. I earn nothing.
b. It costs me nothing.

2. I can carry the balance until mid June.
a. I will earn 50 dollars per month ($450 dollars).
b. It costs me nothing.

The cc debt is a no brainer for me, either way I go it costs me nothing, if I carry the balance I earn 450 dollars. I'm not sure about you but I like free money.

SUV: I do not currently have enough to pay off the vehicle. As stated above, 11,000 of the payment is tied up in the SDP earning 10% APY (I pay 5.1% on the loan). For the short term savings I will take the 4.9%, keep in mind I pay NO TAXES this year so I clear the 4.9%

As for the extra 1,000 in my pay (Noted above) that money is being diverted to ING to cover a loan I gave to someone (6,000), once I have the loan covered, the extra 1,000 will go to the SUV payment.

In February I should be able to fully cover the vehicle, I plan on paying it off on the 15th if not at the end of the month. In January my pay will drop (End of the deployment) but I will still live below my means. I will file a travel voucher and will receive about 1500, when I receive the loan back (6,000 by July 09) I will have 7,500 in my EF.

Before that, if I have an emergency, I will use the cc money to cover it.

Investing in your Financial Education can make you more money than the stock market.

I do my best to read one financial book per month, most of the books I have over here are about retirement (I am in the process of organizing my retirement portfolio). I attended my first financial class (Personal Finance, through Central Texas College on line), I am a mentor to the local Financial Peace University (FPU), in the last two classes we had over 260 people attend. And finally I came to this forum for knowledge.

As for the stock market, I have 100 per month alotted to stocks... that doesn't buy much but I am using that little amount to learn how it works. It has nothing to do with my investments, it's a learning tool and entertainment, a hobby if you will.

Thanks for your input,
Ray

**maat55** · 10-11-2008, 04:31 AM

Why can you not pull out of the ing paying off the cc, then use the 20k in savings to payoff the suv. I'm sure the ing account is earning less than 5.01%.

After funding your EF, I would put all extra funds into the market.

**mrpaseo** · 10-11-2008, 04:51 AM

Originally posted by maat55 View Post

Why can you not pull out of the ing paying off the cc, then use the 20k in savings to payoff the suv. I'm sure the ing account is earning less than 5.01%.

After funding your EF, I would put all extra funds into the market.

Ahhhh.... The 20,000 in ING is the savings. I can't use the money to pay off the cc's and the truck.

I could use the 20,000 in ING to pay off the SUV effectivly earning 5.1% (And carry the balance on the cc's), however, I once had a cc that went from a fixed int rate to a variable int rate. When I called and asked, they said "You did nothing wrong, we adjusted the interest rates to keep with the market". In fear of something happening and they start charging me interest I want the money available to pay off the cc's within a week.

Thanks for your post,
Ray

**maat55** · 10-11-2008, 11:39 AM

Originally posted by mrpaseo View Post

Ahhhh.... The 20,000 in ING is the savings. I can't use the money to pay off the cc's and the truck.

I could use the 20,000 in ING to pay off the SUV effectivly earning 5.1% (And carry the balance on the cc's), however, I once had a cc that went from a fixed int rate to a variable int rate. When I called and asked, they said "You did nothing wrong, we adjusted the interest rates to keep with the market". In fear of something happening and they start charging me interest I want the money available to pay off the cc's within a week.

Thanks for your post,
Ray

I thought you had a separate 20k as a backup. I miss understood. Personally, I would sell the SUV. You would probably take a loss, but not near as much as keeping it.

**mrpaseo** · 10-11-2008, 10:36 PM

Originally posted by maat55 View Post

I thought you had a separate 20k as a backup. I miss understood. Personally, I would sell the SUV. You would probably take a loss, but not near as much as keeping it.

Normally I would agree, many people over purchase their vehicle and feel that they cannot live without it. However, I believe my situation is different. Due to the management of my debt I am effectively paying only 2.12% on the vehicle loan, I will have it paid off in less than 24 months, and I plan on driving this vehicle for the next 20 years.

I purchased my last vehicle the same way, in 1994 I purchased my first new vehicle right off the lot, I paid it off within 2 years and I am still driving it today (Well, when I am not deployed).

In addition, I live below my means; I am paying about 2,000 per month on the vehicle (Between payments and savings into ING) which should tell us that I can afford the vehicle. It's not a matter of not being able to pay my bills; it's a matter of trying to find money to drop in a low market.

Ultimately I am happy with the financial decisions I have made, though against what most financial advisors usually teach, I feel this vehicle is not burden enough for me to sell it.

For the record, I have lived through a fire where I lost everything except the clothes on my back and my weapon systems (The last time I was deployed). That day I fully understood what materialistic items are. Basically everything that you think you need is just stuff, when you lose it, life goes on. The decision and financial plan to purchase this vehicle was long thought out. It was not a whim purchase, it was planned out financially for two years (No I did not save up for it of which I understand I should have but my finances were tied up with other obligations) by financially I mean the deployment money would help pay for the vehicle. I searched for the right vehicle for over a year before deciding on which would be the best for my family situation. I managed a very good deal, with a pretty good interest rate and a great financial plan that dropped the interest rate well below 3%.

Was it the best option to get a loan to purchase the vehicle? Heck no, but through planning out 50 years of my life this was an acceptable set back.

Yes, I have certain plans laid out for the next 50 years (Phase 3 of my life). Currently I am in what I call phase 1: Pre-retirement. Phase 1 is where I will establish my life, establish passive income (Retirement check), establish my two portfolios (Both underway but not solidified yet but I have a few more years in Phase 1) and plan for/set up Phase 2.

Phase two is post military retirement, pre-actual retirement (The ages between 39 and 50). At this point I will finish paying off the house, set up my next vehicle purchase (For phase 3), build/manage my portfolios and plan for phase 3.

Phase 3 is retirement, currently I am planning on age 50 at this time but there is plenty of room for flexibility. This is where I enjoy the fruits of phase 1 and 2 and we (Wife and I) enjoy our remaining years (Hopefully at least 50 years).

These phases go a lot deeper but this overview will help you all understand this was a thought out plan, not a fly by the pants purchase.

Thanks for your thoughts Maat.
Ray

**maat55** · 10-12-2008, 05:19 AM

mrpaseo,

I'd first like to thank you for your service.

As a DR fan, I've come to agree with him that many people buy vehicles they shouldn't buy, even if they can pay for them. Expensive vehicles rob you of wealth.

With that said, I bought an new 88 silverado and drove it for 15 years, proud as a peacock. My father-in-law uses it now for a hunting truck.

It's hard to know when the feeling you get from driving a vehicle that lights your fire is holding you back from more useful ahcievements. I only throw this out there for those who may be putting too much resourses into today and not enough into tomorrow.

Again thanks for your service to us and your troops.

**mrpaseo** · 10-12-2008, 06:26 AM

Originally posted by maat55 View Post

mrpaseo,

I'd first like to thank you for your service.

As a DR fan, I've come to agree with him that many people buy vehicles they shouldn't buy, even if they can pay for them. Expensive vehicles rob you of wealth.

With that said, I bought an new 88 Silverado and drove it for 15 years, proud as a peacock. My father-in-law uses it now for a hunting truck.

It's hard to know when the feeling you get from driving a vehicle that lights your fire is holding you back from more useful achievements. I only throw this out there for those who may be putting too much resources into today and not enough into tomorrow.

Again thanks for your service to us and your troops.

Truly the pleasure is all mine, I absolutely love doing what I do. My passion in life is to take care of others and what better place to do that then to have a Platoon of Americas finest to look after.

I agree with what you said about many people buying into a vehicle for the wrong reasons. Both times I purchased new vehicles I did so with the knowledge of driving the vehicle for 20+ years, a good financial plan (Of up to 15 years out) and the thought of retirement/future wealth in mind.
With not having a vehicle payment for 10 years and a very reliable vehicle for that long I have been able to bring my net worth into the six digit area. I purchased both of these vehicles with the same thought process, both with extra money earned while deployed. Also, with a plan to meet my lifetime financial goals� These vehicles are all part of the big picture, the full life plan.

Thanks for your kind words and answers to my questions,
Ray

Life is about taking risks right... Entertain me with your thoughts