Personal monetary reserves
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I had a discussion a few days ago on the level of debt people in my country have. Way too many people can't even buy a new fridge without using their credits. I understand that I'm on the other side of the scale, as I can buy a new Mercedes tomorrow, in cash, if I would want to. (I don't, it's a waste of good money) But how much reserves do you have? And how much do you feel is a necessary minimum? Personally I feel that, if you're not able to buy a new fridge and pay the garage when your car has broken down, you're on the wrong side of the savings limit.
Wrong is evil and must be defeated. - Jeff Ello
The age old answer - it depends, a lot on if you start you family early or late. Kids are bloody expensive. For most of my life I lived hand to mouth, we had kids early, the credit card WAS my reserve. I imagine this is how most of us live in the early years of our careers and raising a family. Once free of the expense of raising the kids in my 40s I was also coming into my most lucrative earning period of my career so funds became a secondary issue. I don't like Mercedes.
Never underestimate the power of human stupidity RAH
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I had a discussion a few days ago on the level of debt people in my country have. Way too many people can't even buy a new fridge without using their credits. I understand that I'm on the other side of the scale, as I can buy a new Mercedes tomorrow, in cash, if I would want to. (I don't, it's a waste of good money) But how much reserves do you have? And how much do you feel is a necessary minimum? Personally I feel that, if you're not able to buy a new fridge and pay the garage when your car has broken down, you're on the wrong side of the savings limit.
Wrong is evil and must be defeated. - Jeff Ello
Jörgen Andersson wrote:
I can buy a new Mercedes tomorrow, in cash
Yeah, I heard they are shit these days.
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I had a discussion a few days ago on the level of debt people in my country have. Way too many people can't even buy a new fridge without using their credits. I understand that I'm on the other side of the scale, as I can buy a new Mercedes tomorrow, in cash, if I would want to. (I don't, it's a waste of good money) But how much reserves do you have? And how much do you feel is a necessary minimum? Personally I feel that, if you're not able to buy a new fridge and pay the garage when your car has broken down, you're on the wrong side of the savings limit.
Wrong is evil and must be defeated. - Jeff Ello
It's based upon life-style. I'm a minimalist and Mrs. wife is close enough. I've a pension that I could just scrape buy on right now - and when I retire, Social security will, between the two of us, allow some reasonable comfort. We buy small cars and keep them until they're essentially "used up" - not worth keeping. Usually, ten years or more. On the other side, more directly addressing your question, we can get by on what we have saved until that '90' mentioned elsewhere in the tread, without the pensions & Social Security - not accounting for inflation. BUT - that's in no small part due to our life-style; both buying what we needs and reasonably, what we want, and saving the remainder. Almost all of our spending is via Visa/Master Card. All bills paid in full when received. The rule, which I taught my children: don't buy on credit anything you don't have the money for on hand. (Exception would be a primary dwelling).
Those who can't buy anything without increasing their debt. Some, I will say, were pushed into bad circumstances. Mostly, however, it's unregulated self indulgence. I don't feel sympathy for them.
So - a subjective and definitive answer: If you can put enough away to cover your living expenses for as long as necessary (should you become unemployed) - you're there. Living without financial fear. Difficult, in part, because getting there means learning to tell yourself "No", both in the savings, and, if necessary, during the spending.
"The difference between genius and stupidity is that genius has its limits." - Albert Einstein
"If you are searching for perfection in others, then you seek disappointment. If you are seek perfection in yourself, then you will find failure." - Balboos HaGadol Mar 2010
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I had a discussion a few days ago on the level of debt people in my country have. Way too many people can't even buy a new fridge without using their credits. I understand that I'm on the other side of the scale, as I can buy a new Mercedes tomorrow, in cash, if I would want to. (I don't, it's a waste of good money) But how much reserves do you have? And how much do you feel is a necessary minimum? Personally I feel that, if you're not able to buy a new fridge and pay the garage when your car has broken down, you're on the wrong side of the savings limit.
Wrong is evil and must be defeated. - Jeff Ello
Actually, I buy most items in the U.S. with credit card, but they're paid in full when due. I do this because I receive 1% to 5% cash back. As far as loans, I never expect to take out a loan again. Also, I don't keep a lot of cash on hand, but I don't have many bills. Any extra money, gets sent to the brokerage I use and it eventually gets invested; in fact 3 weeks ago I only had $600 USD in reserves, but all my bills for the month were paid for. So yes, I can drive a new MB by writing a check (in about a week), but I'll stick to buying 1 year old former rental cars and driving them for 7 years until I replace it with another.
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I, too can by a car without credit, but for good reasons I would not buy even a fridge that way... With the pressure on the market I can get a fridge with good prize and excellent payments, so there is no reason to spend reserves or even use cash... I could get a fridge about 3500 NIS in one payment (immediate charge) and can get the same for 3600 NIS in 12 (300/month), and as a fridge is a long time investment I pay it long time. On the other hand, short time investments, like food, entertainment, holidays and so I pay cash (technically I use my card, but for immediate charge and not as credit)...
Skipper: We'll fix it. Alex: Fix it? How you gonna fix this? Skipper: Grit, spit and a whole lotta duct tape.
Kornfeld Eliyahu Peter wrote:
but for good reasons I would not buy even a fridge that way...
Kornfeld Eliyahu Peter wrote:
about 3500 NIS in one payment (immediate charge) and can get the same for 3600 NIS in 12 (300/month)
So you'll pay more for a fridge and you think that is a good thing? :confused:
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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The age old answer - it depends, a lot on if you start you family early or late. Kids are bloody expensive. For most of my life I lived hand to mouth, we had kids early, the credit card WAS my reserve. I imagine this is how most of us live in the early years of our careers and raising a family. Once free of the expense of raising the kids in my 40s I was also coming into my most lucrative earning period of my career so funds became a secondary issue. I don't like Mercedes.
Never underestimate the power of human stupidity RAH
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Actually, I buy most items in the U.S. with credit card, but they're paid in full when due. I do this because I receive 1% to 5% cash back. As far as loans, I never expect to take out a loan again. Also, I don't keep a lot of cash on hand, but I don't have many bills. Any extra money, gets sent to the brokerage I use and it eventually gets invested; in fact 3 weeks ago I only had $600 USD in reserves, but all my bills for the month were paid for. So yes, I can drive a new MB by writing a check (in about a week), but I'll stick to buying 1 year old former rental cars and driving them for 7 years until I replace it with another.
jgakenhe wrote:
I do this because I receive 1% to 5% cash back.
It is somewhat tempting to do that. However, no wealthy person has ever claimed their wealth came from credit card rewards. :-D And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash, even if you pay off your balance every month. You may not be like that but many are. Just something to think about.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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Kornfeld Eliyahu Peter wrote:
but for good reasons I would not buy even a fridge that way...
Kornfeld Eliyahu Peter wrote:
about 3500 NIS in one payment (immediate charge) and can get the same for 3600 NIS in 12 (300/month)
So you'll pay more for a fridge and you think that is a good thing? :confused:
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
In this case - yes. I add a 100 NIS and fold the new fridge into my monthly payments, without touching the reserves... It is definitely a good one... If the difference were higher I probably wouldn't do it, but for $30?
Skipper: We'll fix it. Alex: Fix it? How you gonna fix this? Skipper: Grit, spit and a whole lotta duct tape.
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jgakenhe wrote:
I do this because I receive 1% to 5% cash back.
It is somewhat tempting to do that. However, no wealthy person has ever claimed their wealth came from credit card rewards. :-D And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash, even if you pay off your balance every month. You may not be like that but many are. Just something to think about.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
RyanDev wrote:
And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash
:confused: Can you provide a link or detailed explanation? :confused:
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
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jgakenhe wrote:
I do this because I receive 1% to 5% cash back.
It is somewhat tempting to do that. However, no wealthy person has ever claimed their wealth came from credit card rewards. :-D And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash, even if you pay off your balance every month. You may not be like that but many are. Just something to think about.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
RyanDev wrote:
And studies have shown that people tend to spend about 18% more when paying with credit card
Assuming you're not talking about the enormous interest rate - but these studies tend to find what they're looking for. That being said, I agree that people spend more easily when they don't have to actually count out the money. Buying some potato chips, or a 60" HDTV, are equally easy with plastic money. And then, of course, there's the debit card! I won't even own one. As for the 1%-5%? A few hundred $US/year extra is OK for me - because I'm NOT one of those wealthy people to which you refer! It all comes down to whether you consider that plastic specie to be a tool or a license.
"The difference between genius and stupidity is that genius has its limits." - Albert Einstein
"If you are searching for perfection in others, then you seek disappointment. If you are seek perfection in yourself, then you will find failure." - Balboos HaGadol Mar 2010
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RyanDev wrote:
And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash
:confused: Can you provide a link or detailed explanation? :confused:
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
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I had a discussion a few days ago on the level of debt people in my country have. Way too many people can't even buy a new fridge without using their credits. I understand that I'm on the other side of the scale, as I can buy a new Mercedes tomorrow, in cash, if I would want to. (I don't, it's a waste of good money) But how much reserves do you have? And how much do you feel is a necessary minimum? Personally I feel that, if you're not able to buy a new fridge and pay the garage when your car has broken down, you're on the wrong side of the savings limit.
Wrong is evil and must be defeated. - Jeff Ello
Like others have mentioned - early in my life / career I earned less and spent more (house, kids, etc...). Reserves were at a minimum. Now I'm 50+ years old and totally debt free (no mortgage, no car loans, no revolving credit card debt, etc...) and reserves are building rapidly despite my lifestyle improving as well. My wife and I both drive new-ish vehicles, we take regular vacations, we're always making improvements around the house. Buying a new fridge is never a problem. If I lost my job, I can easily go 2-3 years without starving or becoming homeless. P.S. While I could have chosen to buy a Mercedes with cash - I bought the Honda Accord (with cash) instead. ;P
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
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RyanDev wrote:
And studies have shown that people tend to spend about 18% more when paying with credit card
Assuming you're not talking about the enormous interest rate - but these studies tend to find what they're looking for. That being said, I agree that people spend more easily when they don't have to actually count out the money. Buying some potato chips, or a 60" HDTV, are equally easy with plastic money. And then, of course, there's the debit card! I won't even own one. As for the 1%-5%? A few hundred $US/year extra is OK for me - because I'm NOT one of those wealthy people to which you refer! It all comes down to whether you consider that plastic specie to be a tool or a license.
"The difference between genius and stupidity is that genius has its limits." - Albert Einstein
"If you are searching for perfection in others, then you seek disappointment. If you are seek perfection in yourself, then you will find failure." - Balboos HaGadol Mar 2010
W∴ Balboos wrote:
I agree that people spend more easily when they don't have to actually count out the money.
:thumbsup:
W∴ Balboos wrote:
because I'm NOT one of those wealthy people to which you refer!
Most millionaires pay with cash. There's a good book written a while ago called "The Millionaire Next Door". You might be surprised to find out what most millionaires are like.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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Dave Ramsey.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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RyanDev wrote:
Dave Ramsey.
Never mind. :|
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
Mike Mullikin wrote:
Never mind. :|
What does that mean? You don't like Dave Ramsey?
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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Mike Mullikin wrote:
Never mind. :|
What does that mean? You don't like Dave Ramsey?
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
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Jörgen Andersson wrote:
I can buy a new Mercedes tomorrow, in cash,
Wow. :omg:
Jörgen Andersson wrote:
But how much reserves do you have?
Watning: Reserves low. Er... wait. Reserves dry.
Jörgen Andersson wrote:
And how much do you feel is a necessary minimum?
Would depend on the counrty you live in I guess.
Mobile Apps - Sound Meter | Color Analyzer | SMBC | Football Doodles
Abhinav S wrote:
Jörgen Andersson wrote:
I can buy a new Mercedes tomorrow, in cash,
Wow. :OMG:
It'd take me a bit longer than a day to do that since I can't write a check against my savings account. OTOH doing so would set me back a half dozen years on my plans of home ownership; so a few months ago I took out a loan for a Honda. :cool:
Did you ever see history portrayed as an old man with a wise brow and pulseless heart, weighing all things in the balance of reason? Is not rather the genius of history like an eternal, imploring maiden, full of fire, with a burning heart and flaming soul, humanly warm and humanly beautiful? --Zachris Topelius Training a telescope on one’s own belly button will only reveal lint. You like that? You go right on staring at it. I prefer looking at galaxies. -- Sarah Hoyt
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His name was not an explanation to your claim about the "studies".
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
A simple google search shows that it was Dun and Bradstreet that did the study. 12-18%. I learned it from Dave Ramsey who is very reliable and trustworthy on financial matters. I thought you knew who he was and didn't need it explained beyond that. My mistake.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
-
It's based upon life-style. I'm a minimalist and Mrs. wife is close enough. I've a pension that I could just scrape buy on right now - and when I retire, Social security will, between the two of us, allow some reasonable comfort. We buy small cars and keep them until they're essentially "used up" - not worth keeping. Usually, ten years or more. On the other side, more directly addressing your question, we can get by on what we have saved until that '90' mentioned elsewhere in the tread, without the pensions & Social Security - not accounting for inflation. BUT - that's in no small part due to our life-style; both buying what we needs and reasonably, what we want, and saving the remainder. Almost all of our spending is via Visa/Master Card. All bills paid in full when received. The rule, which I taught my children: don't buy on credit anything you don't have the money for on hand. (Exception would be a primary dwelling).
Those who can't buy anything without increasing their debt. Some, I will say, were pushed into bad circumstances. Mostly, however, it's unregulated self indulgence. I don't feel sympathy for them.
So - a subjective and definitive answer: If you can put enough away to cover your living expenses for as long as necessary (should you become unemployed) - you're there. Living without financial fear. Difficult, in part, because getting there means learning to tell yourself "No", both in the savings, and, if necessary, during the spending.
"The difference between genius and stupidity is that genius has its limits." - Albert Einstein
"If you are searching for perfection in others, then you seek disappointment. If you are seek perfection in yourself, then you will find failure." - Balboos HaGadol Mar 2010
W∴ Balboos wrote:
Those who can't buy anything without increasing their debt. Some, I will say, were pushed into bad circumstances. Mostly, however, it's unregulated self indulgence. I don't feel sympathy for them.
I'm mildly surprised you're able to get away with that level of markup. I thought the forum worked on an html whitelist to keep out abuse.
Did you ever see history portrayed as an old man with a wise brow and pulseless heart, weighing all things in the balance of reason? Is not rather the genius of history like an eternal, imploring maiden, full of fire, with a burning heart and flaming soul, humanly warm and humanly beautiful? --Zachris Topelius Training a telescope on one’s own belly button will only reveal lint. You like that? You go right on staring at it. I prefer looking at galaxies. -- Sarah Hoyt
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jgakenhe wrote:
I do this because I receive 1% to 5% cash back.
It is somewhat tempting to do that. However, no wealthy person has ever claimed their wealth came from credit card rewards. :-D And studies have shown that people tend to spend about 18% more when paying with credit card vs. with cash because it hurts to pay with cash, even if you pay off your balance every month. You may not be like that but many are. Just something to think about.
There are two kinds of people in the world: those who can extrapolate from incomplete data. There are only 10 types of people in the world, those who understand binary and those who don't.
