Rich Programmer, Poor Programmer
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I was reading Rich Dad, Poor Dad on the way to work (I am slowly learning the art of reading in the sardine tin that is the Tube.) My third management/business/finance book in three weeks, oh no! As usual what the guy talks about makes a lot of sense, it is just actually applying it which is the hard bit. It got me curious about the rest of you and how you handled your finances. I am bad with money, nay, I am terrible with money. Money pushes me around a lot and I am getting so sick of it. I earn a good enough salary and don't have that many expenses, but I still end up with a nice fat zero at the end of every month. What really gets to me was that I can start renting a flat at R2000 per month and still end up with zero while right now I am not renting and yet I still end up with zero. That tells me that there was R2000 floating around which I somehow spent a month on nothing much really. So I have decided to get serious, and strict, about my money habits and was wondering what your situation was like. Do you live month to month? Do you have some nice investments or savings accounts? Are you banking on a retirement fund to get you through the last 30 years or so? Basically, are you smart or stupid with your money? And what can you tell me that actually works or doesn't work? regards, Paul Watson Bluegrass Cape Town, South Africa "The greatest thing you will ever learn is to love, and be loved in return" - Moulin Rouge Martin Marvinski wrote: Unfortunatly Deep Throat isn't my cup of tea Do you Sonork? I do! 100.9903 Stormfront
I think the key here is to be obsessively cheap. For instance: - Buy down-rev computer stuff. 500 Mhz., 2 mega-pixel camera, etc. You can get this stuff for dirt. - Drive an older car. - Buy used clothes at an upscale thrift store or buy clearance items (tough, since they're clearance for a reason) - Don't always buy the best. For instance, why spend $350 for a set of tires??? - Don't be generous with friends! It's tough to resist, sometimes. - Shop heavily for price on everything, especially financing terms (mortgages, etc.) - Don't make investments with high management fees. - Have cheap hobbies that don't involve goats. (hiking, movies, etc.) I've been doing C++ for pay for 3 years now and recently bought a house and have 6 months pay in an emergency fund. And I don't really take home all that much. No debt except the mortgage. It's worth it, except for the "quit being a cheap a$$" ribbing I take from friends (and the girlfriend)...
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Although I spend my days as a programmer, I also do financial planning for families and businesses. Here are a few details about the US that are pretty surprising: Current Statistics state that of every 100 people who will reach age 67 in the year 2005 in the US: 54 will be dead broke (and need to rely on Social security or family). 41 will still be working. 4 will be able to retire ( with around $1M) and 1 will be Financially independent. Most people have been caught up in the commercial lie that more is better, and spend their whole lives aquiring debt. I was in the same situation, Credit cards and car loans. I am now down to my mortgage and one other loan, and I'll have everything paid off in under 8 years. I for one am never going to allow myself to be indebted to anyone again after I get everything paid off. One more interesting statistic, in the US 65% of people cannot put their hands on $1000 cash. If they sold everything they own, and paid off all their debts, they would have a net worth of less than $1000. Start early, and save regularly. It can make a big difference. And make sure that you are getting at least 10% return, or you'll not beat inflation after taxes (in the US, at least). From an internal company e-mail November, 2001 -- "Would the person who stole the ethics training manual from the class last Friday please return it."
Steven Mitcham wrote: One more interesting statistic, in the US 65% of people cannot put their hands on $1000 cash. If they sold everything they own, and paid off all their debts, they would have a net worth of less than $1000. That is just horrifying. What did/do they all work for? Just to stay one step ahead of the collectors? (I also could not put my hands on $1000, but that is worth R14000 which is about half the price of a car. If I sold all I owned, which is not much, I would not come close to that either. But then I am just 22, and only just starting the debt-race :) ) Steven Mitcham wrote: Start early, and save regularly. It can make a big difference. And make sure that you are getting at least 10% return, or you'll not beat inflation after taxes (in the US, at least). I have seen so many graphs predicting savings and the number one commonality between them is: The earlier you start, the better you end off. Compound interest is an incredible force, should be up there with gravity and Linux... ;) Steven Mitcham wrote: Current Statistics state that of every 100 people who will reach age 67 in the year 2005 in the US: 54 will be dead broke (and need to rely on Social security or family). 41 will still be working. 4 will be able to retire ( with around $1M) and 1 will be Financially independent. And that 1 probably got all the others to work for him, rather than working for someone else. Thanks for the info Steven, very useful, much appreciated :) regards, Paul Watson Bluegrass Cape Town, South Africa "The greatest thing you will ever learn is to love, and be loved in return" - Moulin Rouge Martin Marvinski wrote: Unfortunatly Deep Throat isn't my cup of tea Do you Sonork? I do! 100.9903 Stormfront
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There's a classic example that illustrates the mistake that most of us (myself included) make. It definately sobers you up if you're no longer just out of college and haven't started saving yet. Here it is: Let's take to hypothetical people, Jane and John. Jane starts saving when she's 21 and invests $100 a month for only 10 years, not saving anything after she turns 31. At that point here total investment has been $12,000 (not counting the interest she's earned) and she just lets the investment (and the interest) sit until she retires at 65. John on the other hand doesn't start to save until he's 35, but unlike Jane he invests $100 a month all the way up until he retires at 65. So, his total investment was $36,000. Assuming an annual return of 8% on their savings, Jane retires with $300,053 while John retires with only $150,023! John invested nearly three times as much as Jane but ends up with nearly half of what Jane does! If Jane hadn't stopped at 31 her total investment would have been $52,800, but her return would have been $489,120. Save early. No matter how little you think you can invest, the return is MUCH greater then saving later. An interesting extreme to this: if you have a baby and immediately start saving $100 a month for him, but do so only until his 6 years old, and that money just sits earning interest until he retires, the return is $1,107,869! Another scary thought is that the magic of compound interest also works in exactly the same way against you... the only trouble is that you pay a much higher interest rate when you borrow then you get when you invest. (Waits for the sound of everyone here cutting up their credit cards.) William E. Kempf
William E. Kempf wrote: Another scary thought is that the magic of compound interest also works in exactly the same way against you... the only trouble is that you pay a much higher interest rate when you borrow then you get when you invest. (Waits for the sound of everyone here cutting up their credit cards.) Exactly. I reckon Compound Interest should be added as a force of nature, up there with gravity and women... :-D Your example of Jane and John is the same as I have been told many times and every time I am amazed and galvanised to save. Hopefully this time I will actually do it :) regards, Paul Watson Bluegrass Cape Town, South Africa "The greatest thing you will ever learn is to love, and be loved in return" - Moulin Rouge Martin Marvinski wrote: Unfortunatly Deep Throat isn't my cup of tea Do you Sonork? I do! 100.9903 Stormfront
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I think the key here is to be obsessively cheap. For instance: - Buy down-rev computer stuff. 500 Mhz., 2 mega-pixel camera, etc. You can get this stuff for dirt. - Drive an older car. - Buy used clothes at an upscale thrift store or buy clearance items (tough, since they're clearance for a reason) - Don't always buy the best. For instance, why spend $350 for a set of tires??? - Don't be generous with friends! It's tough to resist, sometimes. - Shop heavily for price on everything, especially financing terms (mortgages, etc.) - Don't make investments with high management fees. - Have cheap hobbies that don't involve goats. (hiking, movies, etc.) I've been doing C++ for pay for 3 years now and recently bought a house and have 6 months pay in an emergency fund. And I don't really take home all that much. No debt except the mortgage. It's worth it, except for the "quit being a cheap a$$" ribbing I take from friends (and the girlfriend)...
Bill Carlson wrote: Don't be generous with friends! It's tough to resist, sometimes. Yeah, amazing how expensive a couple of drinks for friends becomes :) Though I know generous people who are well off and generous people who are dirt poor. Bill, do you friends call you "Scrooge" ? ;) I think that going to extremes in saving and scraping money is just as bad as spending it unwisely. In Rich Dad, Poor Dad they call it "an equal psychosis." I have to agree. Money is meant to be used and to pay for a good life. regards, Paul Watson Bluegrass Cape Town, South Africa "The greatest thing you will ever learn is to love, and be loved in return" - Moulin Rouge Martin Marvinski wrote: Unfortunatly Deep Throat isn't my cup of tea Do you Sonork? I do! 100.9903 Stormfront
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Bill Carlson wrote: Don't be generous with friends! It's tough to resist, sometimes. Yeah, amazing how expensive a couple of drinks for friends becomes :) Though I know generous people who are well off and generous people who are dirt poor. Bill, do you friends call you "Scrooge" ? ;) I think that going to extremes in saving and scraping money is just as bad as spending it unwisely. In Rich Dad, Poor Dad they call it "an equal psychosis." I have to agree. Money is meant to be used and to pay for a good life. regards, Paul Watson Bluegrass Cape Town, South Africa "The greatest thing you will ever learn is to love, and be loved in return" - Moulin Rouge Martin Marvinski wrote: Unfortunatly Deep Throat isn't my cup of tea Do you Sonork? I do! 100.9903 Stormfront
Yeah, it's tough. I'm generous with loans and "emergency aid" to friends and family, but not with drinks (unless the two overlap). :) Having a substantial emergency fund has some nice rewards. Having the ability to tell your company to "stuff it" is nice. Not that I would actually do it, but having the power is kind of cool. Not having to be anyone's "bit*h". The most tempting this is to be able to retire at an early age or at least psuedo-retirement (work every other year). Also, with compounding over the years, you can get a nice stash for travelling, etc. Doing this before you're senile and tied to a walker is preferable. Maybe the most important consideration is the relative benefit of higher priced stuff. It often isn't as big a deal as it's made out to be. For example: - A $5,000 car still has four wheels, is comfortable, and reliable. Same as a $30,000 car. - A $500 computer runs most of the same stuff as a $3,000 one. - A $80 dinner for two won't taste any better than a $35 one. - A $30 coat is just as warm as a $180 one. - Your young kids won't know that you only spent $2 for their toy at a garage sale. - Broadband internet over 56K. Okay, never mind on that one... :) If I can be cheap like that and retire at 55 and see the world, I'm all for it!