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What is your Financial Philosophy?

maat

Registered Member
Do you have A financial philosophy and plan?

It seems that many americans just live payday to payday with no plan. In many cases they live beyond their means, and in some cases without even knowing it.

Many want to have and reach goals, but never really establish a plan that will achieve their goals and stick to it. I'm betting most young people do not even have an idea how to establish a plan.

There is more than one way to get from A to B, some ways are safer and some are risky, risky being living payday to payday while carrying debt.

My Back ground.

I grew up in a poor family. My parents had little to no knowledge of good personal finance. The only thing that stuck with me was the burden my dad endured due to maxed out credit cards from a bad marriage. So, I spent a good part of my twenties never having one.

About ten years ago, after accumulating a car loan, a home equity loan, a decent size mortgage and maxing out an acquired credit card while I was living check to check, my small business income dropped dramatically.

I was fortunate that right before my income dropped, I got turned down for a car loan. This angered me so much that I decided to never borrow from a bank again. I sold my house, paid off all my debt and half-heartedly started my quest to live a debtfree(other than mortgage) lifestyle.
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During this time period I also started listening to a financial talk show host name Dave Ramsey. This was the first time I had ever been exposed to a solid financial plan.

While I was half-heartedly starting my new financial plan I picked up a car note, I didn't really want it, I just justified it due to my beater was broken down.

Then came late 2007 and the "R" word was being mentioned alot. A lightbulb went off in my head reminding me of 2000. That was the true turning point in my mentality on money.

Since then, I have read more than 50 books on personal finance, while listening to endless situations on the radio. I was never a book reader in my life, now I read all the time.

My interest in this thread is to talk about and provide useful imformation to those who do not have a financial plan. I don't want anyone to get to their 40's wishing they had learned this subject earlier in life.

So, what are your goals and how do you plan to achieve them?
 
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Loyal-Friend

Registered Member
My philosophy is: Neither a borrower nor a lender be, and then your life will be carefree.

It certainly is true.
 

oxyMORON

A Darker Knight
Well, I'm asian. :D
No, but I'm not a cheap bastard. Those are Cantonese people. :lol:

I do believe that you should save your money, enough to have a nice cushion for when things may go wrong. Never be in debt. Save some money in the bank but also have some in cash at home.

It's pointless to have heaps of money and do nothing with it.
 

maat

Registered Member
What I am looking for are some fundamental do's and don'ts.

My do's are:

Invest at least 15% towards retirement.
Pay credit card in full each month.
Contribute a specified amount into car fund each month.
Pay all bills on time.
Maintain 6 months expenses in emergency fund.
Pay cash for all consumer goods(Tv's, eating out, cars, etc.)
Limit mortgage to 25% of take home pay.
Limit value of all vehicles combined to no more than half of one years income.

Don'ts:

Never borrow for anything that goes down in value(excluding mortgage).
Never carry a credit card balance.
Never co-sign a loan.
Never lend money to family(give or nothing at all).
Never use EF for luxuries.
Never get a second morgage or HEL.

What are your do's and don'ts?
 
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Dabs

Registered Member
I didn't grow up in a poor family.
But I am far from rich.
I pay all my bills on time, use cash or debit card, rarely a credit card...mostly when I travel.....and if I have to stand there and look at an item, or think about how bad I want that item or if I even need that item..for more than 3 minutes, I put it back and walk away.
I don't need it that badly if it means spending a ridiculous amount of time standing there looking at it.
I always have MAD money..money I save back for whenever I feel like just up and going somewhere.
I never buy anything on credit.....such as furniture...I buy it with cash, outright.
If I don't have enough money to buy something I need and/or want...then it will have to wait.
The only thing I would ever get a loan for would be to buy a house.
I don't owe any loans and I hope to never be in that situation.
The less money I owe out....the more I get to keep :)
 
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maat

Registered Member
It's pointless to have heaps of money and do nothing with it.
What is your retirement goal?

I do not accumulate wealth for the purpose of having a large sum of money doing nothing. I do it so that that large sum of money can work for me, then I will bless my favorite charity and family.
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My philosophy is: Neither a borrower nor a lender be, and then your life will be carefree.

It certainly is true.
I would have to agree with the exception that when you invest, you are basically lending your money.
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Which is a better situation to be in when you loose your income?

A. Having a mortgage 30+ of your take home pay, one or two car payments, a home equity loan and credit card debt of 8k.

B. Having a mortgage 25% or less of take home pay, no car loans, no HEL and no credit card debt. Yet, you do have a car fund, 3 months or more of expenses in an emergency fund and a discretionary(to pay cash for your consumer wants) fund.

Anyone that can afford a payment on a car, can afford to pay cash for a car. Anyone who can afford a 20k car, can buy a 10k car and put 10k into an emergency fund.

Anyone who can carry credit card debt and pay the high interest, can afford to pay cash for those same debts and keep the interest.

It all comes down to changing your mindset on debt and spending.
 
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Loyal-Friend

Registered Member
I suppose that even if you have a bank account at all then you are lending your money, but I'm not counting that in my philosophy.

I would certainly say avoid credit cards and personal loans.

I think that car finance and mortgages are a necessary evil though.
 

Dabs

Registered Member
I suppose that even if you have a bank account at all then you are lending your money, but I'm not counting that in my philosophy.

I would certainly say avoid credit cards and personal loans.

I think that car finance and mortgages are a necessary evil though.

Yes sadly, mortgages are a part of a family's life.....most times there is no getting around it.
Car finances tho, if you pay your car off quickly or use an older model car, a person could avoid a car payment.
I have 2 cars, no payments on either one.
It's a great feeling, believe me :)
 

maat

Registered Member
I think that car finance and mortgages are a necessary evil though.
Mortgages I would agree, but not so with cars.

My wife and I set aside 400 per month for autos. We replace a car every 3 years. We just paid 18k cash for my wifes 06 BMW. We are currently putting away to replace my 02 Exployer Sport Trac.

What I would like for you to get out of this thread is that, anything you are determined to do, you can do.

I used to think that you had to borrow for cars, but now, I would never dream of it. It has been real comforting, through this recession, to not have a car payment and to have extra money saved away if necessary.

What is great is that I earn 4.10% interest on my car fund and I never have to worry about being late with my transfer.

If you truely want to pay cash for cars, you can do it. I hope you give thought to the advantages of doing so.
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Yes sadly, mortgages are a part of a family's life.....most times there is no getting around it.
Car finances tho, if you pay your car off quickly or use an older model car, a person could avoid a car payment.
I have 2 cars, no payments on either one.
It's a great feeling, believe me :)
If not for my wife, I would sell my house and pay cash for a less expensive house. I would love to buy a bargain, fix it up and sell it every 2 to 3 years.

The advantage would be not paying 500+ per month in interest. That money could go directly towards moving up.

Great job with having no car payments. :nod:
 
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Loyal-Friend

Registered Member
I don't have a mortgage, never have.

I would never pay cash for a new car, they depreciate far too quickly.
I have bought cars for cash years back but always seem to end up paying out hundreds anyway for parts etc.
Once our new car is payed off though that's it we are keeping it.

But at the end of the day it's only money and it's not important to me really. I'm as far from materialistic as you can get.

I just don't see the point in accumulating objects and stockpiling cash. After all you never really own them, you are just borrowing them temporarily until you die. You also never really own your house either, you're just borrowing it from the bank until you have to sell it to pay for your old age care.
 
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