Sure mathematically it makes sense...But you have that theory, and then you have Dave Ramsey who believes in the "Debt Snowball", effect of killing the lowest balance first to build up the psychological Victory...

Two different theories to get to the same result...debt free except a mortgage...

I never bought Dave ramsey's stuff, but I did use some techniques to get debt free...I do use and pay credit cards and have ahigh FICO..Ramsey doesn't believe in that, But to answer your question, the debt snowball theory is the other method...Or you attack your highest rate loan first...:cheers:

They are the Dogs of investing...But we need to have them to get company matching, and to have tax deffered assets...

Then the company changes plans and you have to do it all over again..

But we can squeeze as much as we can out of the Dogs...

Most of my money is in Schwab...Is that he best thing to do ????

For me it is....I am in control of it, and it is liquid...

Ah Steven.... You open a can o'worms my friend!

#1 -- Sorry

#2 -- :thumbsup:

#3 -- I'm not for paying down low interest rate loans... I'm for paying down -- or better yet - not creating - Credit card debt....

So there's about as many opinions on this as there are people. IF -- BIG IF -- you can handle the debt AND save... the savings (especially the kind we're talking about) will help you pay off the debt.

So it's a balancing act. If your cash flow is adequate -- it should actually grow over time -- making the debt a smaller and smaller piece of the pie... and if you're saving at the same time -- that should also GROW...

TIME -- IF YOU'RE YOUNG is the biggest factor in all of this! Savings/INVESTING -- should return you 10% or so compounded over time... that is just HUGE...

Your debt is declining over time... and if they're student loans -- they have a very favorable interest rate that is fixed(?) The problem with most people is that they continue to pile on debt -- and never save... so the best advice to give them is to pay down debt.

Here's my thinking.... If you have 100K in the bank -- and you owe 100K... two years from now you should have 120K in the bank and you should only owe 95K... and this keeps going like this... decreasing debt -- compounded investments. It's why big commercial companies borrow money... because they make money on their money. But they're also very much in control of their cash flow and their expenses and they have CFO's and Boards of Directors watching over these relationships.

Mere mortels don't watch over these things and tend to let them get out of balance. More debt - no savings... totally upside-down!

So if you can't control yourself - and have a bad ass case of the "I wants" -- then even if you pay down your debt.... you're going to be in debt again shortly. So what's the friggin' point. Now you're just older -- getting closer to being retired and you haven't saved/invested. You're screwed and you have nobody to thank but yourself!

SO ---- If you're young -- and IF you think your income - over time - will grow... and your current cash flow is "okay"... then I'd put just a little EXTRA each month on the debt... If you're paying $450 a month -- just write the check for $500 and keep plugging along.... and make sure you are also SAVING NOW every stinking dime that you can. And that's not saving to spend later -- it's real savings for investing.... and when you get a grand -- buy some stock -- get another grand buy some more. As your income rises -- don't pee it away.... INCREASE your savings...

The math is so powerful! Compounded interest -- I did this earlier in the thread -- way back...

TIME -- that's what you need!

1000 now - 7 years later -- 2000 -- 7 more years -- 4000 -- 7 more years -- 8000 -- 7 more years 16,000 -- 7 more years 32,000

So in just 35 years - you're lousy $1000 is now $32,000 -- and the biggest gain was THE LAST 7 YEARS -- not the first 7!

SO if you save a couple grand every year beginning at 21 years of age -- and only save until you're 31 -- you'll have nearly a million at retirement

If you start saving a couple grand a year at 31 and do that every year until you retire - you'll have about half that.

Pretty powerful that thing we call TIME....

I'll be 54 in May, small 12.5 year mortgage, insurance and utilities are the extent of debt. Separate Retirement acct. Personal stock account of which this IRA would represent 2-3%.

Gusto, something that could put a smirk on your face annually.

Or I could just give it Blake up north eh?

Albert and Greg...

I got that reality on a new thread today...

" We don't need no stinking money management and investment Help"...Is what i was told...

I said well OK.... I tripled a portfolio in three years but whatever..No I DID NOT TELL THEM THAT...But I was a little upset.

But then I read their posts of turbos, and 2010 trades for 2012 cars, and I realized, give it up Mike...Move on...

So Albert..you found me at the right time...And now you have found the Elite crew here I told you about..

Yes, the others wanted the secret, or the easy answer... The others thought I am a Jerk for thinking their money management skills need work...Well they did, and do need work .

Almost ALL of them need it.. But I am learning when and who to help as not to look like a Jerk..

Because I am not one...If i was , I would NOT have tried to direct people here.. A jerk would have Tried to PLAY top dog on the other site...Haha, NOT ME..I bring you here where I am a Guppy compared to Greg...

But your knowledge was my passion, not my Ego...So I recommended smart people to help you..

For your effort, you will gain greatly...Others will lose long term..But I learned. Other than here I am a deaf Mute from now on, on ALL other sites..I learned :cheers:

Don't let a bad apple ruin the tree. let it roll off your back and move on. :) people get jealous of other successful people. its just the way it is.. lol.

Drive to the nearest Casino -- put it all on Black....


:willy: :rofl:


You're in good shape... well... not physically... but you have a while longer to live...:unibrow: I'd put it into a good high dividend payer... PM - MO - CHKR - NNN - T - VZ - KMP

They're all 6% and growth (well not so much on T and VZ)...

The dividend will help you compound while you're busy sleeping... and there should be enough growth over 10+ years to bag you near a triple. Then you'll be like Warren Buffet and you'll be getting paid dividends more than you're initial investment!

It is cool Albert...If one person learned something...I am happy...And YOUR smart questions to Greg and your eagerness to actually do the work is refreshing to me and I will bet to Greg and others..

So again welcome, and keep at it...These Guys here are COOL and SMART..Deadly combo...

I am the lucky and somewhat smart guy. So no i am not burned by it.. Luckily i did not start any new thread, and I went through and deleted any posting info...All is good..

Actually if they were not going to study and were just going to ask stupid questions like "lookie lou's" window shopping and not buying, then we are better off they dropped off.. they want to drive through and get the answer..

ATM them the magic bullet.. Instant results and wealth..WHO am I ....TOMMY VU ??? because i can do a MEAN Tommy VU impersonation....You may be too young for Tommy VU...Don Lapre ? Dave the belly Del Dotto ?? LMAO>>

Greg's long post about money management a few post ago was beautiful..



I recently bought the Wife a newer car...Paid cash for most of it, but was going to pull the money out and pay for all of it.

But I can leave that money making three times the loan rate...So the loan gets paid and I have two thirds left... But I do hate loans..


Next is the "warren Buffett" truck..I have proven my point at 200K miles on it and 2000 dollars maintinence in the last 5 years ...Only gas, reg, and insurance...

But I have decided to splurge.. But I can, or i would drive the truck forever if I had to...

Thank you.:cheers:

Want to give away the old truck? hahaha ;)


All kidding aside. I do hope the questions i do ask here are seen as me trying to learn, not just for quick answers, but insight as to "why" you came up the the answer you did....

Im a quick learner, I soak things in, and absorb a good portion of it. I'm analytical, and simplistic. The fastest/easiest approach is my goal (not just talking about investing)... Thats what makes me pretty good at my normal job (Q/A Supervisor for a small software firm.. but started out in tech support, and still do a good portion of it).

Not on maple leaf red?

I won't ever over-estimate my longevity, lost too many too soon. The next breath is a gift, not an entitlement. :thumbsup:

The stock account already has MO - T - VZ........PM is naughty........I like it. But I'll research the others and see if they push the fun button. :D

Again, thank you for your enthusiastic, educational, real-world contributions to the cause. :thumbsup:

Seriously I don't like to recommend names... It makes me uncomfortable and just is not my gig. I'm better at the "thinking" part.. and then you get to choose on your own. I actually like the comparison conversation where we can just drill down on a couple names, over the "what should I do" kinda conversations.

Glad to see you have some good names going already:thumbsup:

Hey Greg,

I wanted to say thanks for all this info. I have been thinking about what you are saying, or typing. I met with my advisor, and I have made alot of changes. I have showed him the very little info I have learned, and some of yours, We have made the changes and now no looking back.

Now we're talking!! Good to hear Mike... Hope your broker didn't think that I'm a total a hole fool! :D

Laura needs to retire rich so we can all go racing off into the wild blue yonder!

EEEEEEEEEEEEEEEEEHHHHHHHHAAAAAAAA!


Hey -- you going to be at RTTC?? Bobby B - and Tim "the tool" Bruning and I are headed down Wednesday -- be in San Fran to pick up the roadster from Brizio -- and then off to Bakertucky fo' some finger lickin' BBQ at Ironworks on Thursday.

You're questions are GREAT!

Keep 'em comin' --- they make me have to think! I don't do that much of it.... :rolleyes:

I have planned a lifetime for a long and wealthy lifetime..

Two years ago, I almost died twice....We are all on borrowed Time..

I am working on the "Balance' now... I have enough, how much do I spend and not worry ?

Tough call, but Compound Interest and TIME, have given me the tools and the money to at 52, to be able to walk away from working, and to start Living.. Slightly less healthy(brain and heart), but still healthy enough to start using this wealth before I end up dying...

Well not all of It....I am wired to always have buckets of assets somewhere..

But I love this crazy thread...:lateral: :cheers: :woot:

Here's why I love dividends.... the market is off a bit --- so what?!?!

I check the Schwab account used for examples here.... and bada bing bada boom... I'm a happy guy today! :lol:


03/01/2012 KFN KKR FINANCIAL HLDGS LLC REIT
type: ORD DIV - CASH
$2,700.00

03/01/2012 JPM+I JPMORGAN CHASE 8.625%PFDDEP SHS REPSTG 1/400 NON
type: QUALIFIED DIV
$4,042.97

03/01/2012 CHKR CHESAPEAKE GRANITE WASH
type: QUALIFIED DIV
$7,277.00


NOTE THE DIFFERENCE IN DIVIDENDS --- KFN -- "ORD DIV" (Ordinary Dividend) that's normal income tax rates! The other two are QUALIFIED DIV -- QUALIFIED DIVIDENDS are taxed at 15% !! Make sure you know the difference in these and check BEFORE YOU BUY -- if the names are held in an ordinary account.

SOME REITS (Real Estate Investment Trusts) are considered a "return of capital" so aren't taxed until they've returned all of your capital -- and after that the "dividend" would then be income... So my point here is -- you need to know these differences BEFORE you end up with an income event you didn't plan for.

Sweet!

I just sold off one of my ETF's in my roth, since it consisted of a bunch of companies i was planning to buy anyway. lol. Then i could take full advantage of their dividends. also transferred the remaining amount i needed to max out the ROTH for 2011 contributions.

So, i'll have about $4500 to work with... and 35yrs for ROI :D

Thinking of going $1k/each with: MO, T, CVX, PEP. that going to be diversified enough to start? (have about $1k in MCD already, and a few hundred in tech stuff, CSCO, AAPL, MSFT).

Also found out Sharebuilder doesnt allow LP stocks.. so no KMP for me. :(

Note: I am doing all this under my ROTH IRA.

I still have a little left over, any certain industry/sector/area i should work on for more balance?

Funny..... just noticed SeekingAlpha published a report/article today on 5 stocks to "buy and hold"... MCD, PEP and MO were all on there... now I feel I'm following "the masses". lol :wow:

But, I didn't let the article persuade me. That's the key diff.:thumbsup:

Man, this thread moves fast! Thanks for answering my loan interest questions above solar & greg!

Finally made some progress on my end though nothing great. I moved the money in my Roth around so I'll be able to purchase the stocks I choose soon. Hopefully sometime towards the end of next week. I have to go blow some stuff up half a mile underground at the beginning of next week so we will see what the second half of the week brings.

Also, I found out I already have a brokerage account with Fidelity. Turns out that my ESPP plan simply takes money from me every pay check and then puts it into an account that twice a year then purchases company stock for me. The company stock is then in the brokerage account. The "ESPP account" is simply a holding account for the twice a year purchase of the stock. I thought the ESPP account was all by itself. So anyway, I can link a bank account to my brokerage account and purchase stock that way. Unfortunately, my 401k account can't be linked to a brokerage account. I'm stuck with choosing from a list of mutual funds. No big deal though, I get sweet company matches.

I'm also doing even better than I previously though in terms of money saved towards retirement. Good day overall.

Good for you Trey!


Hey -- from one guy that has blown up his fair share of stuff, to another... be careful out there!

Fire in the hole! :D

Got a interesting one
 

I hate carrying Debt,,, 0 credit card debt, paid off the student loans.... have cash in the S&P 500, some basic Div stocks, MCD JNJ XOM. All DRIP's.... and some tax free Muni.. + ESPP @ 15 % .....

Have a home that's underwater.. a HELOC @ 9% interest .. which yields a tax deduction on the interest..... do I take some of the money and pay off the HELOC .. which will still leave the house underwater...... Nobody wants to help anyone with some money in the bank and current on thier loans... its BS.. a bad loan is a bad loan.. (BTW the HELOC is from the 80% 20% I got to buy the house... not from cash taken out...

So - We all know that the devil is in the details! Right? I mean - that's got to be the 3rd oldest saying in the universe!


So I was looking at all these "total return" numbers and trying to find the differences in calculations from one place to another... and I still haven't figured it out -- but something else has always bothered me on the Schwab website.

When you pull up a total return tab in Schwab -- it is accompanied with a chart showing the "hypothetical growth of 10,000" -- and I always wondered why the chart never quite "matched up" with the TOTAL RETURN numbers shown.

I mean - if 10 grand is shown growing to 15,000 grand over 5 years -- that's 50% growth - but the total return number might say it "returned" 100%...

I then actually read the "fine print".... the Total Return is calculated using reinvested dividends.... The GRAPH is only showing share price growth with NO reinvested dividends. Go figure. :rolleyes:



The Total Return is the rate of return representing the price appreciation of a stock with cash dividends reinvested on the pay date for the most recent 1, 3 and 5 fiscal years.

This growth of 10,000 graph represents the growth of a hypothetical investment of $10,000. It does not assume reinvestment of dividends with capital gains.

Wow! What a great question!! Not sure I can answer it... but I will discuss "my" thinking about it.

#1 -- Your real interest rate depends on your income tax rate... So we can't do any real math -- and frankly -- for this discussion - we don't really need to.

#2 -- 9% is crazy stupid interest to be paying -- on the surface -- but that bigger number is also reaping a bigger tax benefit (see #1) so while the base number seems "stupid" -- it might not be as bad as you think.

#3 -- The house being under water really isn't as important as you think it is. Yeah -- it's under water now... and yeah -- nobody knows when the market is going to crawl it's way back... but eventually you're going to gain on that "deficit". And -- you have to live somewhere... so right now you're paying rent instead of making headway on the mortgage and building "equity".

#4 -- I wouldn't pull money out of savings or anywhere else -- just to put it on an underwater mortgage... UNLESS.... Unless you could refi the house and get a under 4% 30 year fixed rate mortgage -- that was going to allow you to put that money BACK in short order... and then continue to save every month from here out.

So if you could pay down the mortgage and get a new 80% mortgage you might be ahead over the VERY long run. Either way -- you're stuck in your house until the market rebounds.... Because in the end - you've still (currently) paid more than the house is worth regardless of the financing.

Does that make sense?

SO ----- you're making money --- probably at a faster rate -- on your INVESTMENTS than you are on your house rebounding (big if right now). The more you make on your investments the better off you are in the long run because of the compounding. And as those grow - and hopefully the house starts to gain some ground too -- the difference in the value of the house is shrinks. As it gets closer to what you owe -- and you have more CASH ASSETS you become a better credit risk... If your investments continue to compound -- you might be able to pull out far less to do a refi.

I think the biggest "item" here --- is that regardless of the interest rate - you're still sinking money into an asset that has no real value... CASH is king (cash is any salable asset in my book - and the house "isn't" one!)... and just to save a bit (not sure how much because we have no numbers to work with) on the monthly payment doesn't really help you out much... ya still owe the dough.

Ordinarily -- you'd say anything you're not paying out monthly is money saved and would be a good thing. But to try to fil a hole in a big bucket that you can't really fill up ain't going to do you much good. I think you're better off sitting tight and hope that the market starts to go your way.


So just a "real life" example --- I had bought a condo in Tempe area for the kids to live in while attending ASU... we paid $307K for it in 2007... the market since went south --- and I had paid cash for this property. I just sold it and closed last week... for $110K. It really doesn't make any difference whether I owned it - or was making payments or anything else... it's still a LOSS. Period. If I was living there and making payments... I'd be underwater -- but I have to live somewhere.... and I wouldn't actually be loosing the money (yet) - ya don't lose til ya sell.... And if the market came back to say $175K --- if I was to sell - I'd have lost "less"....

Now -- as above -- by having all that cash in the place -- I also had an "opportunity cost" attached to that money. I wasn't making ANY income off that money -- and there is a real cost associated with that. Had I been making money off the $307 - let's say I financed $250K.... and I'd have made 10% per year -- $25K - over the 5 years -- that's $125K (not compounded even!). Less the financing costs... and less the tax deduction for the interest rate paid etc... I think I'd have been ahead (not much) if I'd have made payments!

Good catch.. .i was wondering why the two didnt really jive together. but i didnt look THAT close at it. but knew something just wasnt quite right... thanks, now i know :)

Hey Albert! I've been investing for 30+ years and never figured it out... never took the time to actually look at it. You guys make me dig around for info etc with your questions -- so see there! You guys made ME learn something!!

:rofl: :thumbsup:

So here's my creative solution to funding the IRA. My 13 year old son has Chron's which limits many young kid activities, he's also TAG level IQ and an Xbox Modern Warefare or similar junkie. I don't love the Xbox addiction but the Chron's limits normal sports and outdoor activities to a degree so.....

He's very strong in math and memory recall so I decided I'b buy something he could relate to and turn it into a learning experience that will hopefully pay off in his lifetime. He's 13 I'm heading to 54 so he's going to need to cover his own butt earlier than I had too. :D

I stumbled across GME (Gamestop Corp) which is a company he is very familiar with. Besides being a relatively successful company that pays a 2.6% dividend they just announced they'll be marketing used Apple equipment so I funded the IRA with 100 shares of GME.

I came home tonight and sat him down on his Apple AirBook and we created his Yahoo account and stock portfolio with GME, DJI/S&P/NAS for him and explained in detail my reasoning behind the stock selection and the potential upsides of their new market venture so he can follow the "potential" growth of the investment and begin learning the world of investing and compounding at a "leveraging" age.

The best part of the whole experience was I manage to hold his attention the entire time. Then I took him to the Lat-G Investing 102 thread and explained how it all started and gave him some background on the gentleman responsible for it.

Hopefully the seed sprouts.

:lateral:

Thanks.. Greg... ok Phase II... (your answer triggered this) I also have a Condo that I own same loan situation 80/20 underwater... the HELOC is at 8.5... Same situation.. i pay off the HELOC and its still under water.... I rent it out and have so for about 5 years...it just about break even annually... give of take a few hundred bucks..... do I pay off that HELOC?

Good deal Seig. Get them started early so that they can take advantage of their age and hopefully when they start making money on their own you can point to the account and say remember what we started with and see where it is now. I think a lot of young people don't get into investing/saving simply because they don't see an immediate return on that effort. Why save your money and earn a few more dollars on it when you could have bought a cool new car or gone on that overseas vacation etc? Good job in starting him early.

Thanks Trey - He's a sleeper when is comes to rat-holing his gift money. I could see his wheels turning last night so I'm looking forward to the watching the project over the next few months.

Great idea Seig! My 5yo daughter asked me if when she turns 7 can she help me pay bills and "do that stock stuff" with me. I was checking out some of Schwab's training classes the other day, and they offer a workshop called "Raising Money Wise Kids". I've taken a few of their workshops on options, and they are pretty good.

Here is their link:
http://www.schwab.com/public/schwab/...nch_workshops#

...and here's a list of their Financial Essentials workshops:
Behavioral Finance: How Emotions Impact Financial Decisions
College Savings Options
ETFs Explained
Get Started With Investing
Put Schwab to Work for You
Put Your Investment Plan Into Action
Raising Money-Wise Kids
Spend and Manage Debt Wisely
Take Charge of Your Money: Savings Fundamentals
Understanding ETFs
What Works: A Time-Tested Approach to Investing
Why Everyone Needs an Estate Plan

Unfortunately we are not going this year, wasn't in the cards. Hope you guys have fun, take lots of pictures. Congrats on you hot rod!! Enjoy driving it. We will catch you next time you are down here. Dinner on us.

NO -- Someone else is already doing that for you.... the renter!

Take the write off.... let the render spend his money paying down your mortgage... eventually the property will be cash flow positive and hopefully will also increase in value. Meantime your cash should be earning money at a separate rate...

This question may of gotten over looked....

anyhow.. what's people opinion on balance? and/or diversity? not diverse enough? too reliant on "consumer purchase"?

List of good Div Stocks
 

I was told for dividend investment you should spread out over industries...

MCD fast food
IBM Tech
COKE Bev
XOX Fuel...
JNJ Goods..

Anything else One should consider? Was hoping for like a to 10 that you might invest in equally...

Some I am considering.. Chevron, Microsoft,

What about the next big thing... Yelp? facebook... REDBOX... could they be the next GOOG

Looks okay to me.

But yes... you don't have enough diversity... so I'd put new money to work in other areas than where you are now. You don't have any utilities - financials - industrials - healthcare... etc.

Lists of sectors are "everywhere" if you just google - or look on Schwab etc. and then see where you're at and what you're missing. Diversity DOES NOT mean you have to be in everything or ALL sectors -- just don't pile in all tech or all healthcare etc. You're pretty tech -- although I'd call MSFT and CSCO and INTC - "old tech"...

These "underwater mortgage" questions got me thinking about all the variations etc that must be out there... and I came to an interesting "investing 102" parallel....

Buying a house is a big deal. Huge. We sometimes don't treat it that way - but it is a MAJOR investment and commitment. So maybe the parallel is that a home is like buying a stock. You have to really like it before you buy it - it might not always go up - just because it did so in the past.... so, like a stock, you need to want to love it and want to be in it through good times and bad.

The Sector we mention all the time could be thought of as the city or neighborhood.... better think about the "hood" because you might be there awhile! And like a house -- you don't want to have to sell it in a down market -- so don't put all your cash into something that clearly might not be so "liquid".

In fact.... You may choose to (like a stock in a down market) add on to the house or remodel it because you're in it for the long haul and know that eventually it will pay off. And the dividend in a home is that you are living "somewhere" - regardless of the cash value at the time --- just like the dividend will pay you every quarter regardless of the stocks daily price.

All of this -- of course -- is based on having made a good purchase in the first place. So if you were in love with the home and city and neighborhood when you bought - then you don't mind living there for awhile. If you bough just based on you thought the house would immediately double - and you hate the place... and it didn't double... Well... then you're a weak holder and will sell at a loss the first chance you (you - being anyone, not a particular "you") get.

Thanks for the feedback guys. :thumbsup:

I will look on Schwab to see what the show for the different sectors.. :)

i was looking at utilities, and they seemed so up/down. I wasnt sure if i would be better off diving into a more "steady eddie" (ie. PEP) vs what i seen in the utilities sector (PG&E, Edison, etc).