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Road to Financial Independence 500K

 
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talia View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote talia Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 2:21pm
Originally posted by TokyoRose TokyoRose wrote:

I actually had to start preparing my own food and bringing my lunch last year.  We found out that the school lunches were contaminated with the Novovirus.  I didn't eat at school anymore after that...and it saved me about 2,000 yen (or $20) a week, just on lunch alone.

Wow, and here we are talking about saving money, and you're literally trying to save yourself from
not getting sick.  Wowzers..scary.  We have to be so careful as teachers...it is crazy.  At my school we've been taught about blood borne pathogens such as MRSA...and let me tell you, I make it a point to wash my hands frequently.  
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Post Options Post Options   Thanks (0) Thanks(0)   Quote talia Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 2:29pm
Originally posted by goodm3 goodm3 wrote:

I've taken Dave Ramsey's financial peace course. Its a great program - I definitely learned alot. I went to the classes in person (he offers an online version as well)....i found it was very helpful on accountability by going to the classes each week.

Just a note- is its geared towards married couples so you if you're single you may feel a little left out depending on the instructors.

Are there any salient notes that you could share with us online.  Like what are the most important things that people should do?  Besides not getting into debt....or consumer debt.
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Post Options Post Options   Thanks (2) Thanks(2)   Quote goodm3 Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 5:00pm
Great Article by the DailyWorth. I LOVE their articles.... and the founder Amanda Steinberg is awesome. I recommend you watch some of her interviews on youtube. Anywho...according to this article...our goal $500K can be doubled!
 
How to Save $1 Million Dollars

he elusive million dollar milestone...is it reachable? Well, in short, yes. But not without some careful planning and discipline. Time is a key factor, of course. It all depends on your age, when you plan to retire, what kinds of accounts you use, your investment costs, and your risk tolerance. The more you are able to save on a regular basis, the less risk you need to take and the less time it should take to hit that first million.

Start Saving Now

If you are 35 and starting from scratch, for example, you need to save around $735 per month to have $1 million by age 65, assuming an 8% average annual return. If you are 40, you need to save around $1,135 per month. If you were willing to take on more risk with your investments and managed to average a 10% annual return, you would only have to save around $506 per month from age 35, or around $850 each month from age 40. If you were more conservative, you would need to save more. You get the idea. (You can use the SEC's calculator to plug in your age and determine monthly contributions.)

Keep in mind that these numbers do not take potential investment costs into account like management fees and fund expense ratios, which could decrease your annual returns by more than 2%. This means that you will likely need to contribute more and/or take on more risk to meet your goal. They also don't take into account inflation and taxes (we'll get to that in a minute).

Max Out Your Retirement Accounts

So, where is the best place to save this money for retirement? In tax-advantaged retirement accounts, of course! We’re talking about your 401(k), 403(b), traditional IRA and/or Roth IRA. These kinds of accounts allow you to avoid paying taxes on market growth (capital gains), which really makes a big difference in how much you can accumulate over the long run.

If your company has a plan available, the easiest thing to do is to save there through automatic payroll deductions. These types of plans have a 2013 contribution limit of $17,500 or $23,000 if you are over 50. If your company offers a matching contribution (a.k.a free money), you definitely want to put in at least as much as they will match.

If you have maxed out contributions to your company plan and still want to save more, you can put an additional total of $5,500 (or $6,500 if you are over 50) for 2013 in a traditional or Roth IRA. Remember that Roth IRAs -- unlike their traditional counterparts -- allow you to grow post-tax money that you can potentially pull out totally tax-free in retirement. Some companies even offer a Roth IRA option as well as a 401(k) within their company plan, which means that you could potentially save $23,000 per year of tax-free money (or more, if you're over 50).

If you do not have a company plan available and are an entrepreneur, or even if you do have a company plan but also freelance part-time, you may be able to open a SEP IRA or Individual 401(k), two other types of traditional IRAs. These plans allow you to save as much as $51,000 (or $56,500 if you are over 50) on a tax-deferred basis, including any other potential savings in other retirement accounts.

Don't Forget About Taxes and Inflation

It's also important to remember that, while hitting that 7-figure mark is still a major milestone, $1 million today won't be worth that much in 25 years. Assuming an average inflation rate of 3%, it would only be worth around $475,000 in 25 years. (Over the last decade, the average annual inflation rate was less than 2.5%, but over the last quarter-century, the average annual inflation rate has been a little over 3%.) 

If you want an inflation and tax-adjusted balance of $1 million by age 65, you may need to save upwards of $2,600 per month from age 35, or $3,200 per month from age 40, assuming an 8% return, and not including investment fees or state taxes. (We know: GULP.) Of course, that's also assuming that you're starting from scratch and accountsing for 3% annual inflation. (You can do your own calculations with Bankrate's inflation calculator tool.)

We know that may seem daunting; most people aren't in a position to save $2,600 or more per month. But it does highlight the importance of starting early, or retiring a little later, in order to reach your retirement savings goal. Hopefully, you don't have to start from scratch and you can build upon some base savings. You will help yourself a lot by saving extra cash (e.g. bonuses, tax refunds, inheritances) in tax-advantaged retirement accounts whenever possible, opening no or low-fee IRAs at a discount brokerage firm, and choosing lower-cost investments like indexed mutual funds and exchange-traded funds. Whatever your goal, the most important step you can take is to start saving anything you can now so your money can start growing and you'll be that much closer to reaching $1 million, or whatever your personal retirement savings goal may be.

You Might Also Like:
What kind of investor are you?
Mutual Funds vs. ETFs
How high’s your risk tolerance?

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Post Options Post Options   Thanks (0) Thanks(0)   Quote goodm3 Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 5:15pm
Originally posted by talia talia wrote:

Originally posted by goodm3 goodm3 wrote:

I've taken Dave Ramsey's financial peace course. Its a great program - I definitely learned alot. I went to the classes in person (he offers an online version as well)....i found it was very helpful on accountability by going to the classes each week.

Just a note- is its geared towards married couples so you if you're single you may feel a little left out depending on the instructors.

Are there any salient notes that you could share with us online.  Like what are the most important things that people should do?  Besides not getting into debt....or consumer debt.
 
Surprisingly...the a big component is about relantionships. Knowing which partner is the spender and which is the saver. Dave makes it clear that BOTH roles are important in a relantionship. He also talks about lending family money as well.
 
He also has a GREAT session on insurance. What kind is needed for you, what kind do  your parents need if there are past a certain age. Dave is a BIG supporter of Term life insurance. he thinks whole life insurance guys are scum...lol.. This was probably my favorite session.
 
Also - he talks about kids... teaching them the value of money and its place in your life. he also talks about college and how parents need to have discussions with their kids about their majors. He's all for parents paying for college(if they have the money to) but he makes it clear that sending your child to a private school to major in art history is not a good idea. Its about choosing a major that leads into a career that will make money. He supports in-state schools vs private.
 
Overall ....Financial Peace University would be a great wedding gift. If a couple go get these concepts in the beginning of their marriage...they would on track to a solid financial future.
 
Also - Dave does take into consideration families that have 2 incomes vs families with a stay-at-home mom. he gives tips on how people can still have retirement for the spouse that doesnt work.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote talia Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 6:43pm
Originally posted by goodm3 goodm3 wrote:

Originally posted by talia talia wrote:

Originally posted by goodm3 goodm3 wrote:

I've taken Dave Ramsey's financial peace course. Its a great program - I definitely learned alot. I went to the classes in person (he offers an online version as well)....i found it was very helpful on accountability by going to the classes each week.

Just a note- is its geared towards married couples so you if you're single you may feel a little left out depending on the instructors.

Are there any salient notes that you could share with us online.  Like what are the most important things that people should do?  Besides not getting into debt....or consumer debt.
 
Surprisingly...the a big component is about relantionships. Knowing which partner is the spender and which is the saver. Dave makes it clear that BOTH roles are important in a relantionship. He also talks about lending family money as well.
 
He also has a GREAT session on insurance. What kind is needed for you, what kind do  your parents need if there are past a certain age. Dave is a BIG supporter of Term life insurance. he thinks whole life insurance guys are scum...lol.. This was probably my favorite session.
 
Also - he talks about kids... teaching them the value of money and its place in your life. he also talks about college and how parents need to have discussions with their kids about their majors. He's all for parents paying for college(if they have the money to) but he makes it clear that sending your child to a private school to major in art history is not a good idea. Its about choosing a major that leads into a career that will make money. He supports in-state schools vs private.
 
Overall ....Financial Peace University would be a great wedding gift. If a couple go get these concepts in the beginning of their marriage...they would on track to a solid financial future.
 
Also - Dave does take into consideration families that have 2 incomes vs families with a stay-at-home mom. he gives tips on how people can still have retirement for the spouse that doesnt work.


He's got that 100% on the dime....they are such scum buckets!  It sounds like a really interesting course and one that each couple should take before they get married, or move in with one another.  I think that with a course like this, couples won't encounter the - he spends too much or she's too thrifty....they are both on the same page at the onset.  Because money can be the great big divider....
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Post Options Post Options   Thanks (1) Thanks(1)   Quote talia Quote  Post ReplyReply Direct Link To This Post Posted: Apr 29 2013 at 6:48pm
Originally posted by goodm3 goodm3 wrote:

Great Article by the DailyWorth. I LOVE their articles.... and the founder Amanda Steinberg is awesome. I recommend you watch some of her interviews on youtube. Anywho...according to this article...our goal $500K can be doubled!
 
How to Save $1 Million Dollars

he elusive million dollar milestone...is it reachable? Well, in short, yes. But not without some careful planning and discipline. Time is a key factor, of course. It all depends on your age, when you plan to retire, what kinds of accounts you use, your investment costs, and your risk tolerance. The more you are able to save on a regular basis, the less risk you need to take and the less time it should take to hit that first million.

Start Saving Now

If you are 35 and starting from scratch, for example, you need to save around $735 per month to have $1 million by age 65, assuming an 8% average annual return. If you are 40, you need to save around $1,135 per month. If you were willing to take on more risk with your investments and managed to average a 10% annual return, you would only have to save around $506 per month from age 35, or around $850 each month from age 40. If you were more conservative, you would need to save more. You get the idea. (You can use the SEC's calculator to plug in your age and determine monthly contributions.)

Keep in mind that these numbers do not take potential investment costs into account like management fees and fund expense ratios, which could decrease your annual returns by more than 2%. This means that you will likely need to contribute more and/or take on more risk to meet your goal. They also don't take into account inflation and taxes (we'll get to that in a minute).

Max Out Your Retirement Accounts

So, where is the best place to save this money for retirement? In tax-advantaged retirement accounts, of course! We’re talking about your 401(k), 403(b), traditional IRA and/or Roth IRA. These kinds of accounts allow you to avoid paying taxes on market growth (capital gains), which really makes a big difference in how much you can accumulate over the long run.

If your company has a plan available, the easiest thing to do is to save there through automatic payroll deductions. These types of plans have a 2013 contribution limit of $17,500 or $23,000 if you are over 50. If your company offers a matching contribution (a.k.a free money), you definitely want to put in at least as much as they will match.

If you have maxed out contributions to your company plan and still want to save more, you can put an additional total of $5,500 (or $6,500 if you are over 50) for 2013 in a traditional or Roth IRA. Remember that Roth IRAs -- unlike their traditional counterparts -- allow you to grow post-tax money that you can potentially pull out totally tax-free in retirement. Some companies even offer a Roth IRA option as well as a 401(k) within their company plan, which means that you could potentially save $23,000 per year of tax-free money (or more, if you're over 50).

If you do not have a company plan available and are an entrepreneur, or even if you do have a company plan but also freelance part-time, you may be able to open a SEP IRA or Individual 401(k), two other types of traditional IRAs. These plans allow you to save as much as $51,000 (or $56,500 if you are over 50) on a tax-deferred basis, including any other potential savings in other retirement accounts.

Don't Forget About Taxes and Inflation

It's also important to remember that, while hitting that 7-figure mark is still a major milestone, $1 million today won't be worth that much in 25 years. Assuming an average inflation rate of 3%, it would only be worth around $475,000 in 25 years. (Over the last decade, the average annual inflation rate was less than 2.5%, but over the last quarter-century, the average annual inflation rate has been a little over 3%.) 

If you want an inflation and tax-adjusted balance of $1 million by age 65, you may need to save upwards of $2,600 per month from age 35, or $3,200 per month from age 40, assuming an 8% return, and not including investment fees or state taxes. (We know: GULP.) Of course, that's also assuming that you're starting from scratch and accountsing for 3% annual inflation. (You can do your own calculations with Bankrate's inflation calculator tool.)

We know that may seem daunting; most people aren't in a position to save $2,600 or more per month. But it does highlight the importance of starting early, or retiring a little later, in order to reach your retirement savings goal. Hopefully, you don't have to start from scratch and you can build upon some base savings. You will help yourself a lot by saving extra cash (e.g. bonuses, tax refunds, inheritances) in tax-advantaged retirement accounts whenever possible, opening no or low-fee IRAs at a discount brokerage firm, and choosing lower-cost investments like indexed mutual funds and exchange-traded funds. Whatever your goal, the most important step you can take is to start saving anything you can now so your money can start growing and you'll be that much closer to reaching $1 million, or whatever your personal retirement savings goal may be.

You Might Also Like:
What kind of investor are you?
Mutual Funds vs. ETFs
How high’s your risk tolerance?



OMG GoodM3 - I think I love youHeart
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Post Options Post Options   Thanks (1) Thanks(1)   Quote talia Quote  Post ReplyReply Direct Link To This Post Posted: Apr 30 2013 at 2:45pm
http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/retirement-gamble/how-retirement-fees-cost-you/


While eating lunch today I was reading on Frontline.  This is worthwhile for anyone to look at if you
have a 401K or if you are planning on opening one....it's all about the fees.  Over our lifetime we could
wind up paying $120,000 in fees....not cool.


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Post Options Post Options   Thanks (1) Thanks(1)   Quote .hott.pink. Quote  Post ReplyReply Direct Link To This Post Posted: Apr 30 2013 at 2:55pm
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Post Options Post Options   Thanks (1) Thanks(1)   Quote niecy Quote  Post ReplyReply Direct Link To This Post Posted: Apr 30 2013 at 3:00pm
I've messed up a little this month as far as spending money eating out a few times but for the most part I've opened up a savings account and any money I feel like I will end up spending on something I don't need I transfer to the savings account. 

I'm going to continue to do that for the rest of the year and see how much I save up by doing that. Whatever I do save up I will keep that said aside for use towards getting my own place.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote .hott.pink. Quote  Post ReplyReply Direct Link To This Post Posted: Apr 30 2013 at 3:50pm
Does anyone read financial help books? 
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