by "CB" (jrcb)
Published 11/12/2017 at 11:16
by "CB" (jrcb)
Published 11/12/2017 at 11:16
Tags: Advice with Uncle CB
; advice from uncle CB
STARS: 3
There are a lot of young/younger Opponauts on here, so I thought it would be a good idea if we gave some financial advice to each other, since it’s not something you learn at school and kind of end up learning a lot on your own. So, for those with financial experience, what advice do you have to keep people in the clear financially? And for those who have no clue what to do, what questions do you have?
For starters, I have two bits of financial advice:
1) Don’t treat a credit card like it’s unlimited money. Never spend more than you have with one, and try to find one that works for you. Yeah, that 4% cash back card looks fine and dandy, but if it has an annual fee and you barely spend enough to cover that fee, you might as well go with the free one.
2) Have a six month emergency fund. You never know how if you’ll be without work, so have some money saved up to give yourself some buffer room. Adjust your emergency fund as your life expenses change. Did your rent go up? Factor that in. Are you starting a new gym membership or buy a new car? Add the payments in. Just had a kid? Yup, time to save up some more money. That way, if something does go wrong, you’re not immediately screwed.
So, what advice do you have?
"Captain of the Enterprise" (justanotherdayinparadise)
11/12/2017 at 11:27, STARS: 2
my best advice is to take a personal finance class like I’ did during my sophomore year of college. I’ learned a lot of things that I’ think should have been taught in high school like budgeting, loans (house, auto, personal), credit card basics, risks, interests and safety, building credit, bankruptcy, retirement plans, stocks and investing and even more. I’ highly recommend it. I’ enjoyed it a lot because it’s practical information that you can immediately start to use.
"vicali" (vicali)
11/12/2017 at 11:30, STARS: 3
Make yourself a monthly budget and stick to it...
I went through college saying,’When I get a real job I’m going to get a sweet car and mod it up’... enter my first real job- two weeks later I’ve got a mk3 Jetta put on cupkits with euro mirror coming in from the motherland.. and no money for groceries.. I skipped real food and ate garbage like ramen and rice for two years- scrounged until each payday- and put everything into the car.. looking back now I wish I had found a mk2 at a third of the price and enjoyed my time with money to actually do things.
And if you can start putting away money when you are in your 30s - we’ve been lucky and have managed to save a bit and it makes catastrophes like headgaskets go much smoother when you have a savings account and an emergency fund.
"CB" (jrcb)
11/12/2017 at 11:30, STARS: 1
Shit, I wish I had learned about retirement plans and investing. Good advice!
"wafflesnfalafel" (wafflesnfalafel1)
11/12/2017 at 11:31, STARS: 6
I could never hack the active budgeting thing, (too lazy, I guess..) But what I have found very helpful are “set it and forget it” options like having a set amount deducted from each paycheck into a separate savings account, having a set but quick/easy routine to pay bills weekly, having a separate savings account at a credit union if one is available to get access to cheap/free other financial services.
"rillweid - Now with more TRD and less TDI" (rillweid)
11/12/2017 at 11:32, STARS: 1
That’s pretty solid advice overall. Only thing I would add on the basic level is to keep track of your expenses/budget. There are plenty of free apps like Mint or similar to help you. This will help you get in the practice of making financially sound decisions, and maybe inspire you to learn more.
"CB" (jrcb)
11/12/2017 at 11:32, STARS: 0
Excellent advice. I’ve been wanting my own car for a long time, but each time I crunched the numbers I went “this is a terrible idea since I won’t be able to eat”. Within a year or two I might be able to afford one, but I’m glad I’ve waited.
"G_Body_Man: Sponsored by the number 3" (gbodyman)
11/12/2017 at 11:36, STARS: 0
+1 for credit unions.
"G_Body_Man: Sponsored by the number 3" (gbodyman)
11/12/2017 at 11:39, STARS: 5
Wait.
Whatever you’re thinking of buying or whatever you really want, sit on it for a bit. Make sure you have time to think about if you really need it, where the money is coming from, and if there’s any cheaper but still good alternative. Chances are that most of the stuff you “really want” isn’t that important to you anyway.
"Nibby" (nibby68)
11/12/2017 at 11:42, STARS: 0
invest all your money in bitcoin!
"Mercedes Streeter" (smart)
11/12/2017 at 11:45, STARS: 5
My only true advice is that a 6 month emergency fund is near impossible for most individuals in the modern age. The expenses of living outpace wages. Someone working a near minimum wage job will spend practically every dime on just surviving.
But yes, if you’re lucky enough to be able to save six months of income, DO IT.
My other advice is to spoil yourself sometimes. Life is hard, don’t fall into the trap that just because one is not wealthy that one isn’t allowed to have fun every once in a while. Getting caught in that trap is highly detrimental to mental health.
"interstate366, now In The Industry" (interstate366)
11/12/2017 at 11:47, STARS: 2
When trying to establish credit (to get a car loan and such), start off small, because you pretty much have to. Without sufficient credit history, places (even stores or gas stations) won’t give you a credit card, and if you somehow can get a car loan, you’d have a large interest rate. Go to a bank or a credit union and get a small loan or secured credit card, then pay it off over 6-12 months. You’ll then have credit history.
"CB" (jrcb)
11/12/2017 at 11:52, STARS: 1
It’s tough, yes, but if you play your cards right (which isn’t easy and definitely doesn’t make you happy), it’s possible. I lived at home for a year after university to help save up money, where I was only charged $200 a month in rent. I crunched the numbers, knew I could do better, and used that emergency fund to move out west. Now, I’m making significantly more than I was at home (nearly 50% more), and I’m almost back up to where I need to be for my emergency fund. Like you said, it’s tough, but savings are definitely worth it.
Your second one is too true, but I really emphasize the “sometimes”. It’s easy to start going “I’ve had a tough day/week, I deserve xyz” and let it become a common thing, which can be really bad for your financial health.
"Frenchlicker" (frenchlicker)
11/12/2017 at 11:53, STARS: 2
Actually pay attention to the 401k and insurance options if/when your job offers them. Don’t just look at them based on price especially on the insurance front. Don’t just say “I’m healthy so I’ll go with the cheapest option.”
"Captain of the Enterprise" (justanotherdayinparadise)
11/12/2017 at 11:53, STARS: 0
Thanks! I recommend it to everyone who asked me or is talking about signing up for classes. It really should be taught to everyone.
"BvdV - The Dutch Engineer" (dutchengineer)
11/12/2017 at 11:55, STARS: 1
My advice is to never buy something if it would cost you all the money you have (or more). I learned this the hard way when I was 8 years old when I put every cent of my savings into buying a Mecano F1 car (luckily my parents had a savings account which I couldn’t touch, so all wasn’t lost, but it did feel like it).
Now at 22, as a full time student, I always try to set aside some remaining money each month, in order to build some savings. I found this to work rather well, and ammassed a nice sum in a savings account which I opened especially for this purpose. I try to only use this money for buying big things, and to supplement my bank account in expensive months (most of the time a couple of 100, which I see as a loan to myself, so try to repay as quickly as possible).
Also, moving to the other side of the world was a bad idea from a financial point of view...
"Jordan and the Slowrunner, Boomer Intensifies" (jordanwphillips)
11/12/2017 at 11:57, STARS: 0
Financial Advice for Car Buying: If your old car is breaking constantly and you think replacing it was something newer will save you money, it won’t. In my case, that vehicle won’t break down again out of spite, after it’s duties are replaced.
"Frenchlicker" (frenchlicker)
11/12/2017 at 11:58, STARS: 3
The biggest problem with the six month emergency fund is that many lower income people(my background very much so) never really know such a thing exists. They strive to pay their bills. Currently my girlfriend and I are striving to stair step to the point where we can do it. It started with slightly better jobs in an area that pays low, then onto catching up on bills from previous bad decisions, then onto a car that is realizable instead of cheap, next is saving for a move to a better area and it progresses a little bit each time. People need to know that there isn’t a holy grail moment that pulls them up and out of poverty. There isn’t a solid way to do it and nobody really helps. It is just the grinding.
"CB" (jrcb)
11/12/2017 at 11:59, STARS: 1
Solid advice!
And to one of the most expensive cities in Canada at that! But hopefully the experience leads to opportunities that others won’t have.
"BvdV - The Dutch Engineer" (dutchengineer)
11/12/2017 at 12:04, STARS: 1
Thanks!
Yes, haha, especially the rent is terrible. Other stuff isn’t that much worse as in the Netherlands. The first opportunity is already in, as I get to carry on with the project I’m currently working on when I get back to the Netherlands.
"CB" (jrcb)
11/12/2017 at 12:14, STARS: 0
My bank has a free credit card, so I just use that. Easy to apply for, and three years later having made all my payments on time, my credit score was over 800. It was just groceries on it to start, but then it became bigger purchases I knew I could pay off with the money I had. So yes, I highly recommend the starting off small thing.
"vondon302" (vondon302)
11/12/2017 at 12:20, STARS: 1
Credit union credit union and never carry a balance on a credit card if at all possible .
"Dr. Zoidberg - RIP Oppo" (thetomselleck)
11/12/2017 at 12:28, STARS: 5
I’m going to disagree. I’m a big believe in the 6-month rule, and even when I made no money I was able to pull it off with some extreme anti-social behavior and lots of top ramen.
Saying no is something most people don’t seem to be good at. “Wanna go out to eat?” No. “Should we buy this bottle of—” No. “Wanna go on vacation?” No. “Do I need this new TV?” No. The Nos add up quickly. Saying No today leads to many, and better, Yeses in the future.
"6SPD5.0" (6spd5p0)
11/12/2017 at 12:42, STARS: 1
I research a lot of personal finance stuff, but I’ll say my best advice is to take all of your savings out of your paycheck before you even see it. The money I use for my monthly expenses and then all the unknowns (food, gas, entertainment etc) can’t affect how much I save, and makes me adjust appropriately rather than saving less.
"Manny05x" (Manny05x)
11/12/2017 at 13:10, STARS: 1
Never pull cash from your credit card i learned this the hard way.
"just-a-scratch" (just-a-scratch)
11/12/2017 at 13:12, STARS: 1
Start saving , or rather, investing for retirement early. How early? Try four decades ahead of time.
"nermal" (nermal)
11/12/2017 at 13:18, STARS: 3
The key to being wealthy isn’t how much you earn, or how much you spend. It’s how much you spend in relation to what you earn.
Also, ramen. It’s a few bucks for a case @ Aldi’s, and will feed you for a week.
"Chuckles" (chucklesw37)
11/12/2017 at 13:29, STARS: 3
Watch the small stuff. It’s actually pretty easy to hold off on buying an expensive car or a house you can’t afford, but it’s amazing how much money you can spend on things like going out to eat. If you work Monday to Friday and go out for lunch everyday, you’re probably spending over $50 a week on lunches. It could easily be $75 a week. That’s over $300 a month. For just workday lunches. That’s a car payment right there. Combine that with going out to dinner, and you can end up spending way too much money on food.
"Chuckles" (chucklesw37)
11/12/2017 at 13:31, STARS: 0
It’s also a lot easier to maintain once you get there. The hardest part is initially adjusting your lifestyle to accommodate a smaller budget. One way to make that easier is just maintaining your budget any time you get a raise. Put any pay increase directly into savings.
"Dr. Zoidberg - RIP Oppo" (thetomselleck)
11/12/2017 at 13:35, STARS: 1
Precisely. When you start at the bottom, there’s nowhere to go but up. The first year I made over 25 grand (which by the way, is a pitiful amount of money in this area), I still made financial decisions as if I were still making 17 grand. That’s an extra ~8k (before taxes :[ ) towards my rainy day fund and a lot less anxiety about worrying about said rainy day.
"Chuckles" (chucklesw37)
11/12/2017 at 14:06, STARS: 1
I’m with you 100% about occasionally spoiling yourself, as long it is truly occasionally and doesn’t just become regularly overspending.
The savings part is hard. Really hard. 6 months is daunting, and it might take a few years to get there. But start small. Could you spend $10 less per week? I probably could. That’s $520 a year. Bump it to $20 a week and that’s over a thousand dollars a year without drastic life changes. It’s not much, but it’s a start.
"TheRealBicycleBuck" (therealbicyclebuck)
11/12/2017 at 14:37, STARS: 1
As others have said, monthly budget, savings, work on developing good credit.
To that, I would add a bit of advice regarding investment: http://freakonomics.com/podcast/stupidest-money/
"My citroen won't start" (lucasboechat)
11/12/2017 at 15:06, STARS: 0
Not having children before 35.
Not getting married before 30.
Live of your parents for as long as possible before going your own way (in a reasonable manner and when possible). If your family depends on you or if you have a bad relationship, ignore this bit.
Your 20 - 30 should be spend focusing on creating a name for yourself in your area of business or getting yourself stablished. Wife and kids should always come after that.
"gmctavish needs more space" (gmctavish)
11/12/2017 at 15:14, STARS: 1
I got my first credit card earlier in the year and I just use it for everything, groceries, gas, all my usual purchases, and pay it off each month. It amazes me how people can get themselves in such trouble with credit cards, when they’re not having money trouble. I worked with a guy who was 5 grand in debt because he “just kept buying things” and not making payments, or just the minimum payments.
"E90M3" (e90m3)
11/12/2017 at 15:38, STARS: 1
After spending 11 months unemployed, I wholeheartedly endorse the idea of an emergency fund.
"Mercedes Streeter" (smart)
11/12/2017 at 16:47, STARS: 1
“It’s tough, yes, but if you play your cards right (which isn’t easy and definitely doesn’t make you happy), it’s possible.”
Realistically speaking, for a good percentage of America it’s literally impossible. I’m not talking that it’s hard to get into the mindset or poor spending choices, but rather when that check gets posted, nearly 100% of that cash is accounted for.
You could say “well then pay off your debt and reduce your amount of bills”. But that costs additional money, money that isn’t there. It’s a vicious cycle that many cannot escape. Some people are in a place where it’s impossible to save because of factors not even in their own control.
For people in even worse situations, more than 100% of that check is accounted for, making “saving” a paradox. That’s where my parents were for the past 15 years or so. Their monthly expenses totaled 150+% of their combined income.
I’m privileged enough today that the sum of my expenses are less than my income, but 2016 was a sobering year for me. It’s depressing to experience firsthand how powerless one is when you get paid and know that somehow, you still aren’t going to get by.
"Mercedes Streeter" (smart)
11/12/2017 at 16:57, STARS: 0
I guess we’ll have to agree to disagree. I know firsthand that there are situations from which saving is impossible and the solution isn’t just saying “no”.
Many poor people are like my parents, where they ended up in that situation through their own choices.
However, many others are also in a situation where saving is impossible for reasons beyond their control. That’s where I spent 2015 and most of 2016. I had so little money that I had to cut out pretty much ALL unnecessary spending. Yet, despite cutting it out of my budget, the bills I had (apartment, utilities, healthcare, and car) still exceeded my income. The ONLY solution was to move up in my career.
"E92M3" (E46M3)
11/12/2017 at 17:13, STARS: 0
I didn’t read thru all the comments, so I apologize if I’m repeating advice already given. Here are 2 things I think are very important.
1st: Start investing as early as possible. I don’t care if it’s $10 a week. The sooner you start the more years that money has to compound, and the less you have to save later in life. Someone that starts at 21 is way ahead of someone that starts in their 30's.
2. If your employer offers a 401k match, make sure you contribute enough to get the full match. Otherwise you’re throwing away FREE money. If you have more to invest after the match, put it in a Roth IRA. Example, your employer matches 6%, don’t put 10% in your 401k. Put the other 4% in a Roth. If you max out the yearly Roth limit, and still have more to invest, then increase your 401k contribution past the match.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
11/12/2017 at 20:48, STARS: 1
Sad as it may sound to the collective ear of Oppo and as likely as it is do be ignored...
Don’t buy a car before you absolutely must have one.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
11/12/2017 at 20:54, STARS: 1
This is truth. I tracked all my expenses for a while... then I switched phones and because I was just using an app I lost it and didn’t start again... but I was amazed where the money actually went. I was expecting the big ticket items to add up most, but it’s the small stuff that gets you. It slips through the cracks because it seems so small it doesn’t matter.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
11/12/2017 at 20:58, STARS: 0
Also, keep track of everything you spend. If that sounds like a pain in the ass, it is. I found it was an effective excuse not to spend money.
Then there’s the obvious benefit of knowing exactly where your money went... You might be shocked. The little stuff you think is insignificant can actually be the lion’s share. Big ticket purchases are easy to avoid. Smaller ones are hard to resist. Special attention should be paid to fast food. It may have a fattening effect on you but it’s a sure-fire weight loss program for your wallet.
"Chuckles" (chucklesw37)
11/13/2017 at 08:44, STARS: 0
Speaking from experience, it happens gradually at first. Like you, I got a credit card and used it for everyday expenses. But I also used it for discretionary spending, like going out to eat, buying a new video game, etc. The problem for me was a mentality shift. Instead of saying “let me check my account real quick to make sure I can afford this thing,” it turned into “I can just use my credit card. I can probably afford it, but even if I can’t I’ll just carry it on my card until I get paid on Friday.” It wasn’t a drastic change in spending, but it was a change. I was still paying off the balance every payday, but the amount I was paying off was increasing each month. Then what usually happens is something unexpected comes up, like a big car repair. Maybe you put the repair on the card, or maybe you pay cash but then you can’t pay off your balance in full and you end up carrying over a balance. That’s how it started for me. Once I started carrying a balance it was easy to just keep one. Over time it became a few thousand dollars. It’s paid off now, and I’m trying my best to keep it that way. I still have 2 credit cards, because for the purposes of your credit score, keeping accounts open for a long time is better than closing them and opening new ones every few years. I don’t carry them, but I’ll use them each about once a month just to keep the account active, and I always pay it off right away.
"Chuckles" (chucklesw37)
11/13/2017 at 08:45, STARS: 0
What app were you using? Would you recommend it?
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
11/13/2017 at 09:49, STARS: 1
It was called Daily Expense Manager. It worked. Probably not the best one available but not bad
"gmctavish needs more space" (gmctavish)
11/13/2017 at 11:38, STARS: 0
Fair enough, I can understand that.
"Chuckles" (chucklesw37)
11/13/2017 at 12:34, STARS: 0
It happens, but if you’re decent at budgeting (unlike I was), it’s avoidable.
"gmctavish needs more space" (gmctavish)
11/13/2017 at 14:31, STARS: 0
I don’t write down budgets, but I have them in my head and stick to them. I’m also hyper aware of credit card use because my parents had lots of credit card debt that took them years to pay off.
"davesaddiction @ opposite-lock.com" (davesaddiction)
11/13/2017 at 14:58, STARS: 1
Live well beneath your means.
Save, save, save. Max out 401k if possible.
When you buy a home, limit yourself to a 15 year (fixed) mortgage.
Only borrow for home & cars - never leave a balance on your credit card.
As much as we love them, cars are depreciating assets. Buy appropriately, used > new, and with cash savings if at all possible.
Mind the “slow drain” expenses: expensive lunches & coffees, monthly subscriptions, etc. They seem small, but add up to real money on a monthly/yearly basis.
"davesaddiction @ opposite-lock.com" (davesaddiction)
11/13/2017 at 15:04, STARS: 1
This is great advice. I’ve prevented myself from making so many frivolous purchases this way.