How long did you finance for?

Ya the new target is 2mil. But that depends on lifestyle and what not. I’m sure in 30 years they will tell the next generation they need 5mil

 

You know, its really not that difficult (at least in theory, putting it into practice is where the rubber hits the road). Here is the model I followed and it worked out pretty well for me (you Ramsey fans will recognize most of this).

* first and foremost, live at or below your means! If you can't afford it, then don't buy it until you can! And watch the death of a thousand cut stuff like multiple runs to Starbucks every day or eating out a lot.
* keep your "stupid debt" (i.e credit cards) low if not zero. If you are carrying a credit card balance and making six figures, shame on you!
* Have a one to two thousand dollars that is easily accessible for your emergency fund. This money is untouchable unless something bad happens (fridge dies, etc)
* build up 3 to 6 months of savings to cover your essential living expenses should you lose your job. This money too is untouchable unless you are unemployed.
* with all of the above in place, start "paying yourself!" By this I mean save some money from every paycheck! Even if it's just $100 bucks, that is better than nothing.
* participate in your company 401K plan if they have it and contribute at least the minimum required to get the company match. Company match is free money!
* work up as quickly as you can to maximize your annual retirement savings no matter what it is (401K, IRA, etc)

Do all of the above faithfully for the rest of your working life, you will have a good shot at a solid financial future and a well funded retirement.

 

Great advice! I’ve managed to achieve most of these but still struggle with the first one...

 

100% down, $ 0 monthly payments.

 

Re: above statements about how much you need for retirement.

I use the “rule of 4%” you can Google it for more info but it’s a very ROUGH estimate of how much you’ll need at retirement. AGAIN this is JUST AN ESTIMATE, before people get all worked up with their own opinions. This is just one of many ways to figure out how much you’ll need.

rule of 4% is simply take how much you think you’ll need a year and divide it by 4%. IN THEROY when you hit that number (and have access to your money) you can retire since the basic rule has you only using interest never principle.

Example: you want to live on $75,000 per year, so $75,000 \ 4% = 1,875,000.

In theory if you have this amount you can withdrawal 75k a year and not be broke by the time you die.

Math works the other way as well so if you’d like to retire with 1M than $1,000,000 X 4% = 40k you can withdrawal 40k a year without touching your principle.

The idea is 4% is a very attainable return on Avg through the years even in very safe investments that you should be in by retirement.

What this doesn’t take into account is taxes (see my posts about why I do a ROTH 401k and Roth IRA’s many many pages back) since you’ll still be PAYING taxes with your money (IE if you want 40k after taxes you’ll need more than 40k to withdrawal).

This is only for educational purposes but can hopefully give people an idea of what they should target and than a little time with a 401k calculator should let them know if they are or are not on track.

Finally as I said in the beginning of this post this is an amount that you have access too, which for many of us means 59 1/2 at best, you can google the “Rule of 55” if you want to find out about access to your retirement incomes earlier, it’s possible for some, not others. Police, Military, and other Govt agencies have different rules as well.

So if you want to retire at 55 but can’t access retirement money until 59.5 it’s a good idea to plan a bridge to get you through those 4.5 years.

Hopefully someone finds this helpful, again this is ONLY a planning tool, giving you an idea on what you may need or at least a goal to work towards.

Keep future taxes in mind and if you’re young and reading this at least consider using a ROTH 401k (if available to you) or a ROTH IRA, personally those are my focus now as I mentioned earlier I have other traditional accounts already as well as a pension that will be taxed. My idea is to kind of split it up to allow me to use what’s best for me in a given year. None of us can predict the future but if you do your best to invest now at least you won’t regret trying.

I hope someone finds this useful, I spend a fair amount of time planning for the future. Good luck all!

 

For my 2021 Tacoma, $500 deposit. 30K cashiers check and 4500 on my credit card in early December. Mid January card paid off. For my wife’s 2020 4Runner last May, First Hawaiian Bank had something set up with the Dealer. Credit score of 760 or higher and max 35k loan for 5 years. 0% interest!

 

Last year was an outlier by a long shot. 7-8% is the long term average. Reality is a couple percent less than that when you factor in inflation.

Put another way, if every year was like last year, I would already be retired.

 

as far as bridging this gap from 55 yo 59.5; there is a little know rule for 401K's called the "over 55 rule" that can be used. There are a few "if's involved, but basically, here is how it works; if you retire or leave a company, and if you are over 55, and if you leave the money in the company's 401K (meaning you don't do a rollover of the 401K to a personal IRA), you can withdrawal money from that 401K penalty free! So if you are over 55 and have money in one or more old 401K's, you can pull that money early! You still have to pay taxes on the distribution, but there is no 10% penalty involved as long as you meet all the "ifs".

 

Look at the prices of new vehicles these days. There doing 96 month auto loans now.

 

96 months does seem a bit crazy (8 year auto loans!). But I could make a case for it. Save your cash, super low interest rate, stretch it out over time, run it as a business deduction, make double, triple or more payments. There are ways that could be a smart play ... for some people. There are no absolutes anymore in the new world of finances. There are so many variables that are constantly changing. New ways to think about equity, return on investment, etc.

This has been a really good discussion. Of course, everyone has a different comfort level -- and different incomes so what may make sense for one person may be terrible advice for another person. Take Dave Ramsey, for example. I think he is absolutely terrible. But that is just me. For some people, his advice has helped. Many people with sound investments know you can't save your way to financial independence ... you have to invest your way to get there.

My only advice to people is to get an accountant and a financial planner. Ask for their advice. Follow their advice. And question their advice at every turn.

 

O

Yep, that was in my original post, along with federal workers, police, military, there’s a few people that can retire earlier... Rule of 55 applies to some people only if there plan administrators allow it. And there’s a very specific set of rules to follow, as I’m pretty sure you’re aware. Biggest thing to me is the the growth you loose between 55 and say 62, easy math is 10% return doubles every 7 years, IE if you had 1M at 55 it COULD be 2M at 62, not so much if you’re drawing down already. So many variables it’s tough to really know until you get there...

 

72 months @ 1.9% but paying extra each month to pay off early.

 

Purchased. 0 down, 0% for 48 months. Free money. When they want your business...

 

29.99% APR for 96 months.....dealers finance guy said I was getting a bargain. Haha

 

OBVIOUSLY a joke, but holy shit, look a one hundred thousand dollar Tacoma!

 

I think selling your soul to the devil would have less interest than this

 

One thought I had is that a significant number of folks here have grown up in this extended period of low / no financial interest. Hell, there are even some countries that you have to pay the bank to keep your money there (i.e. negative interest rates). It's great if you are borrowing money for a house or car, but kind of sucks if you are looking for a safe haven way to earn some money outside of the equities markets. Hell, I remember back in the 70's when there was hyper inflation and interest rates on a home mortgage were in the mid teens! But on the other hand, if you had money to burn you could lock into a high-teens percent CD and make a risk free killing!

I certainly don't fault anyone from taking advantage of a zero percent loan on their Taco; like someone said it is a free loan. But it's also still debt, and I hate being in debt even if I'm not paying anything to be there!

 

I've always been a fan of paying things off and not having any debt, but it seems that in order to do anything involving credit this is certainly not the way to go. Plus telling a dealer you are paying in full right off the bat is not the best thing to do when trying to buy a vehicle. I put down ~29k and financed 9k for 60 months @ 1.99. Plan on paying it off in 6 months since i have cash.

 

Love Jackson Hole! The wife and flew in and out of there while visiting Yellowstone and the Grand Tetons a couple years back.
We still get a big kick out of seeing it on the weather map on the news every morning. Usually the coldest place West of the Mississippi.

 

$6k down and 60 month @ 3% paid it off in 48 months last summer. Was 29 and single when I bought it with no outstanding credit so interest rate wasn't my best. With the ex wife on cars and motorcycles buying together was getting 1.8 - 2%. Didn't figure it was bad for a young single guy knowing I'd pay it off early.
Just got 2.35% on my house in a few months ago, pretty happy with that considering my last house was 4.6% only a few streets away from where my new house is