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Thread: Money Management

  1. #1

    Money Management

    Yes...another money thread, can you guess what has been on my mind lately? Just kidding, I'm not money hungry, however I can see the need to be money smart and also I can see my lack of money smarts. I remember bits and pieces from a statistics class in high school, but that is now 3 years ago (WHAT??). So I am looking to become a little more educated on how to manage my money in a realistic, non get rich scheme kind of way. I have never believed you get something for nothing, and I have generally applied this to how I have earned money as well as saved it...but I would like to know some money management tips, and even better WHERE I could go to learn. I don't start college for more than a month, and I am currently job hunting, and in the meantime I would like to become a little more educated. Thanks for the help!

    cookiecutter
    better off outdoors

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  3. #2
    ephemeral excursionist blueeyes's Avatar
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    daveramsey.com

    Started listening to him when we lived in Tennessee. The man has excellent info on money management.

    Sent from my DROID X2 using Tapatalk
    Chere'




  4. #3
    Two keys- Income and Expenses. If you have your income always more than your expenses are, you'll be fine.

    A few things I try and do.
    Put everything on my credit card. A % back sure is nice to get a some money back later on. I NEVER carry a balance though.
    Earmark different amounts of my income toward certain future expenses- home, car, medical, trips, etc.
    Cashflow- if you can get paid as soon as possible, but put off paying bills as late as possible (without being late), you'll have more money in the long run.

  5. #4
    My money management skills began with a really good book I read when I was about 18. The book was good because it explained how to get your money to work for you in a simple format that was easy for an 18 y/o to understand. Unfortunately I no-longer have the book and don't remember its name. I wish I still had it as I'd like my kids to read it. Maybe it's time I looked for anther good book.

    FWIW: The very first thing I did when I decided to make my money work for me was open an IRA and deposit $25 ($50 in todays dollars) into the account every paycheck (twice a month). By doing that I never really noticed the money was missing because I made the deposit right up front. If you don't have an IRA or retirement plan this should be the first thing you do, even if you can only put $10 or $20 bucks into it each paycheck. Once you get a couple grand in your IRA you can do a lot of different things with it to make it grow faster.

    The second thing I did was not run out and buy a new car. I had just paid off my first car and it was in great shape. So I stashed my car fund money into a bank account and kept making my normal car payment into the account. After something like 18 months I had the money to pay cash for a new car. I've maintained this strategy with regards to vehicles ever since. You will find you can actually buy your next car (new or used) in about 1/2 the time if you are not making interest payments.

  6. #5
    Quote Originally Posted by Iceaxe View Post
    My money management skills began with a really good book I read when I was about 18. The book was good because it explained how to get your money to work for you in a simple format that was easy for an 18 y/o to understand. Unfortunately I no-longer have the book and don't remember its name. I wish I still had it as I'd like my kids to read it. Maybe it's time I looked for anther good book.
    This is a loooooooong shot I know, but that book didn't happen to be "Common Sense" by A L Williams did it?

    Even if it's not the same book, Common Sense has some great info. I read this simple, easy to understand book back in the late 80's and learned a great deal about saving, investing and money management. This book is out of print, but I found a copy that someone scanned and made available for anyone to read. Some of it might be a little dated, but the overall concepts are sound.

    Check it out http://achievebalance.com/commonsense/

  7. #6
    I'll agree with all the previous posters and suggest an additional resource that I found extremely helpful:

    http://personalfinance.byu.edu/

    Whether you love or hate BYU is irrelevant. The site is chock full of easy-to-understand information about money management, and it walks you through from the very beginning basic lessons on through more complicated investing, etc. etc. The good thing is that you can go at your own pace and take what you like and leave what you don't. It's easy to understand and very helpful.

    Good for you for being proactive and getting things in order early. I honestly wish they would include more personal finance curriculum in high schools. There are so many that have no clue and have been taught by no one.
    Just where is it I could find bear, beaver, and other critters worth cash money when skint?

  8. #7
    Quote Originally Posted by Sun Dance View Post
    I'll agree with all the previous posters and suggest an additional resource that I found extremely helpful:

    http://personalfinance.byu.edu/

    Whether you love or hate BYU is irrelevant. The site is chock full of easy-to-understand information about money management, and it walks you through from the very beginning basic lessons on through more complicated investing, etc. etc. The good thing is that you can go at your own pace and take what you like and leave what you don't. It's easy to understand and very helpful.


    Yes, I think that was what I was looking for to the T

    Thanks!
    better off outdoors

  9. #8
    Quote Originally Posted by Sandstone Addiction View Post
    This is a loooooooong shot I know, but that book didn't happen to be "Common Sense" by A L Williams did it?


    That's the baby!!!!! That book changed my life for the better.

    Here is the direct link to the book in PDF format:
    http://achievebalance.com/commonsense/CommonSense.pdf

    I just printed up a copy and it will be required reading for my kids.

  10. #9
    FYI: I just read Commonsense again and 95% of whats in the book still holds true.... the book can be read in a couple of hours and should be required reading of every 20 to 25 y/o.

    Some of the numbers in the book are a little out dated (new homes cost $70,000 in 1983), but I noticed multiplying the numbers given by a factor of 3 brought everything up to a reasonable 2012 number that is good enough to bring everything back into line.

    The biggest change to savings that is not in the book is a ROTH IRA is now avaiable along with the Trad IRA talked about in the book.


  11. #10
    I believe Iceaxe's program will net you about 10% more in the long run.

  12. #11
    Many investment books talk about how important it is to invest in stocks or stock mutual funds. This last downturn shows the risk inherent in the stock market. It might not be as good of an investment as many people believe it is. A steady 6% return can be made by investing in bond mutual funds. 6% doesn't seem much, but the return normally goes up when the stock market does down. In fact, the best investment vehical of 2011 was treasuries. I got 12% with almost no downside risk last year through my treasury mutual funds.

    Stocks work best if you buy and sell frequently. The stock market tracks the general increase in overall economic growth, which in reality is never very much in a well developed country such as the US. Anything over that growth rate are gains from picking the right companies to invest in and selling at the right times. Something that is almost impossible for anyone to successfully do on a consistent basis.

  13. #12
    Quote Originally Posted by reverse_dyno View Post
    A steady 6% return can be made by investing in bond mutual funds. 6% doesn't seem much,
    I don't think I'd be happy at 6%, your mileage may vary.

    My portfolio is a nice mix of everything.... It has averaged 9% over the past 10 years.

    For reference: if we both start with $10,000 at the end of 10 years our orginal investments will look like this.

    6% = $17908.00
    9% = $23673.00

    A 6% investment will double every 12 years. A 9% investment will double every 8 years. I guess it just depends on what your goals are and your tolerance to risk.

    And for the record, inflation over the past 10 years has average about 2.8%, so if you are not at least making that on your investment you are losing money.

  14. #13
    Another good book to look at is The Richest Man in Babylon. It was written quite a while ago, but a good primer on learing how to manage your money.

  15. #14
    Wealthy Barber

    Millionaire next door

    Subscribe to Kiplingers, Money, Inc, and the Wall Street Journal.

    Great reads, a little basic, but get the idea in your head that the wealthy are not the ones who look wealthy. I am almost 40 years old and have a net worth far in excess of most of my friends and yet our standard of living is lower and I drive a 2003 Blazer ....... You do the math.

    Its called wealth accumulation for a reason.

  16. #15
    I have learned an important truth, in order to manage money, one first must have money to manage. I just secured a job (whoo hoo!) I've got college paid for with scholarship, so things are working out well. Thanks all for the advice and resources. I just may turn out all right after all..and speaking of money, anyone interested in buying an 06 summit snowmobile? (just a plug, not an add. I understand this isn't the place, but since money is the topic for tonight...)

    I have really enjoyed getting everyone's opinion about this stuff... my appreciation I send to all, whooosh---
    better off outdoors

  17. #16

    YMOYL

    "Your Money or Your Life" is also excellent. It approaches "budgeting" from a different angle (budgeting doesn't work!) and really makes your think about what is important in your life and align your time and money investments with your goals.

  18. #17
    Quote Originally Posted by cookiecutter View Post
    I have learned an important truth, in order to manage money, one first must have money to manage.
    Actually I think you have it reversed. You must know how to manage money in order to have money. If you had read through some of the suggestions above you would know this.... at least one of the books above even details how to obtain the money you need to begin.

  19. #18
    I learned a lot from 'The Wealthy Barber' - its Canadian but rewritten every year so is always current and the general advice is excellent. My keys are 1. it is not what you make but what you spend. 2. marry a woman without expensive tastes - a very nice house with 2 new cars and expensive furniture, expensive holidays staying in high priced hotels is not the way to accumulate wealth. Ask you prospective wife if they like to sleep in a tent - that tends to separate them out. 3. save at least 10% of every pay check (and hopefully more) every month by automatically deducting it out every month. 4. when you invest make sure you are well diviersified - in the US, Canadian and International markets.

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  21. #19
    Couldn't agree more, Ron. Well said.
    Just where is it I could find bear, beaver, and other critters worth cash money when skint?

  22. #20
    ephemeral excursionist blueeyes's Avatar
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    Quote Originally Posted by Ron Perrier View Post
    Ask you prospective wife if they like to sleep in a tent - that tends to separate them out.
    This made me chuckle. I keep spouting this advice to my son.
    Chere'




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