YNAB (You Need A Budget)

Discussion in 'Finance, Investments, and Careers' started by Superbone, Sep 14, 2013.

  1. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    Most people have to prioritize and can’t accomplish that. Paying down debt is a sure thing. Once it’s gone you don’t have the downside. Investing is not a sure thing. Market dips or poor investment selection/diversification and you’re behind the eight ball. If an individual is trying to get themselves right financially they should first do the sure thing and then move to the calculated gamble.

    My just-out-of-law-school self is a great cautionary tale. I was earning more than expected and hadn’t really had experience with managing it or credit cards. I allowed credit cards to get up $45,000 (yup, young ouchie-z-clown was idiot-z-clown). But I had money in two investments that were going gangbusters. Both had earnings in excess of the interest rates on my credit cards. So on paper I was ahead. Until both investments cratered, almost overnight. Then all I was left with was the debt. Took me more than a few years to pay that down to zip. So not only did I lose the money I invested, I also lost all the interest that was accruing on my debt that wasn’t being paid down because in my head it was offset by my investments.

    It was a valuable lesson learned. And glad it happened early in life to recover and reform my actions.
     
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  2. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    Now this I support fully.
     
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  3. Superbone

    Superbone Phoenix native; Lifelong Suns Fan

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    I agree with this for a taxable account but I would still be contributing to a retirement account, at least a little, while getting out of debt. But like you said, I'd be putting every extra taxable dollar outside of that toward my high interest rate debt.
     
  4. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    I’d do the retirement account to max out a company match (again, consistent with my concept of the “sure thing”). But once you’ve maxed the match, the rest should pay down debt. And I say that as the head of a national registered investment advisory firm that has $600 billion in retirement assets under influence (in other words, I want everyone to invest as much as possible in their retirement plan!).
     
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  5. iLLmatiC

    iLLmatiC Drive-by Poster

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    Agree to disagree. I still believe you should be paying yourself first. Also, you never lose the money you invested unless you sold the investment.
     
  6. AZCB34

    AZCB34 Registered User

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    Or it was Enron.
     
  7. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    Or the investment goes bust. It happens. I’ve experienced it first hand. But we can agree to disagree.
     
  8. iLLmatiC

    iLLmatiC Drive-by Poster

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    That's why investing in speculative stocks is a bad idea especially if it's money designated for retirement.
     
  9. Superbone

    Superbone Phoenix native; Lifelong Suns Fan

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    Yep, invest in index funds. I've played with individual stocks. Some winners; some losers. I can't beat the total stock market or even the S&P 500.
     
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  10. Bada0Bing

    Bada0Bing Don't Stop Believin'

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    Agreed. I started a budget in 1998 in excel when my wife and I were poor college students with a young child trying to scrape by. Since then I've tracked every dollar earned and spent in the excel model, which now includes net worth statements, amort schedules, etc. I've got my budget projected out to 2074. I figure if I live to 100 I won't care anymore.

    I think having this budget/forecast in place has been the primary reason my wife and I have never fought about money in 23 years of marriage. We each get our monthly stipend to waste how we'd like, but every expense is budgeted for in advance.

    Just takes a bit of discipline. If it's not in the forecast we don't buy it. If we want to buy it, we make it work in the forecast.
     
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