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Don’t just be satisfied with “the stock market has returned x% over the last 100 years”. That doesn’t tell you anything about the next 10. Spend time looking for better opportunities, they’re out there.

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Congrats on your success, but for every person like you, there are several more that get burned. Putting all your money in one company's stock is really risky. I'd rather take the safe return than risk having to work all the time just to get by (or worse).

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food... so much money on food...

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Yup, this is where I get hurt. My car is a 10 year old carolla. I'd like to learn how to do more of the maintennace myself to save on repair bills, but still, this thing is a trooper. Clothes I'm pretty frugal on. And its not like I have to wear suits to work anyway. But food...man. I'm trying to use my crock pot a lot because its easy and its nice to come home to a hot meal, but after fighting with my alarm every morning I never seem to have time to cook, and its always "well, I'll eat out just this once..."

I'm a lucker on this board, but I have to say this thread was an interesting read. Good advice.

We are not there yet (early thirties), but well on our way. Hopefully in 5-6 years. We don't own a company, but both have good jobs. We tend to follow what everybody here is saying: max 401k's, automatic monthly investments, no debt outside of mortgage, we drive our cars for ten years. I mow my own yard and do most home a auto repairs myself. Every time we sit down and look at our spending the one item that always has massive room to cut is food. It really, really adds up.

[This message has been edited by AggieT (edited 1/31/2013 2:11p).]

Food, along with weekend bar tabs. It's fun, but man I know I'm burning through some serious cash.

wealth is only a word. It means nothing. Enjoy life without acting like an idiot. Invest along the way with your ultimate goal of leaving your loved ones with a great head start in life.

I am surprised this thread has turned into what it has. I am truly enjoying almost ever response. It seems my wife and I are like most on here. I don't have my own business, wife is a teacher.

Having a million dollars has just been a goal of mine for a while. Right now my wife and I have been focuses on paying off our house. I have read some where that having your house paid off is the "new status symbol".

Thanks again for the responses, please keep them coming.

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I'm in the exact same boat - plan on being an expat for the first 15-20 years of my career and hopefully settle back in Houston so my son can have a stable HS life in the States. I will be in Korea next year and ??? after that.

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Glad you never took that job I originally approached you about?!

Wish I had the same opportunity as you.

Would agree with most of the above that the key tenets would be maxing retirement and investment account contributions, forced savings, and living below your means.

Contributing to a 401(k) isn't as sexy as a bar tab when you're fresh out of school, but it pays off in the long run.

My biggest thing is setting up the auto drafts into other accounts. My wife and I get our checks deposited into a single checking account. From there the money is distributed.

Here is my break down.
10% 401(k), recently bumped to 14%
$416.67/month to wife's ROTH
$416.67/month to my ROTH
$500/month investing account
Periodically slide money into a cash account, although this is about where I am comfortable so will be stepping up the investing account.

The last (3) a spread out over the month so that my checking account stays funded "fully"

The tough part for us is food. It is much easier to run to panera or something than it is to cook dinner.

I've never been a fan of the maxing of 401K's. I do agree with putting as much as your employer matches. That money is basically frozen and while it's great for a LONG time from now, it's still frozen. However, it's hard to argue when people do go big into 401k's.....very understandable.

Im 33... my wife and I will hit 1 mil mark in net worth (assets minus liabilities) in a few months. We have gotten there by being smart with our money, investing wisely in the market, and maximizing our IRA and 401k contribution since we got out of school. We also waited to have children, 1st is on the way now, so that has helped as well.

I already feel that I have established some good habits while I am young, but man this thread is inspiring! Makes me want to go home and reevaluate all of my distributions and be sure I am holding myself accountable for the long run.

A million bucks may not go as far as it used to, but it's important to note how few people have $100k.

http://blogs.wsj.com/wealth/2007/02/01/rich-o-meter-20/

I am frequently astounded by the levels of consumption that I see on a daily basis, relative to what I know to be the income and net worth distribution in America.

It looks like the rich-o-meter above came out in early 2007. I would like to see that number adjusted to today.

These are interesting numbers, looks like from 2011
http://www.freemoneyfinance.com/2011/02/finances-of-the-average-american.html

[This message has been edited by AFarmer95 (edited 1/31/2013 8:08p).]

Fascinating.

This one also blows my mind:

http://www.freakonomics.com/2010/11/18/freakonomics-radio-could-a-lottery-be-the-answer-to-americas-poor-savings-rate/

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Peter Tufano is a Harvard Business School professor who specializes in consumer finance. He recently helped conduct a survey in several countries, including the U.S., which asked people if they could come up with $2,000 in 30 days if they had to. It turns out that nearly half of Americans couldn’t – “which means,” Tufano says in the podcast, “that they stand only one emergency or crisis away from really quite dire circumstances. This isn’t picked up in the national economic statistics.”

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Interesting thread. 8 to 10 years out of law school I was making more than I ever have made since then. My financial planner (who made $$ off me investing) told me that he had never seen anyone so focused on saving and retiring and that I was missing out on the journey that is life. That made me loosen up some. I got to where I hated the private practice of law so I ran for District Attorney and have been in the public sector ever since. I spend $$ on A&M football and travel. Those are our 2 vices. It takes LOTS of $$ to send kids to college. You must start saving for that as soon as they are born, if not before. We might end up with $1M, plus our annuities from our public sector jobs (she is a county employee) but we are enjoying life. Specially with one kid out of college and the second--and last--out soon.

Ok, I guess I will keep prying.

How do yall have your assets allocated? Currently my wife and I are at

40% Cash
5% Personal investments
30% 401K
25% Equity in House

Any advice on improvements that I should make. Like I mentioned before I will be starting the baby's college fund soon, and would like to get our personal investment percentage up to around 10-15%. Thought?

Gig Em

You have a good plan. And I would also add that if your mort rate is low, don't worry so much about paying it off early. Build a good nest egg that will pay you back. Then tackle the debt.

a couple of points...

on the 401k...if you roll it to an ira and you decide to cash it out, you will pay income taxes on the amount plus a 10% penalty. not advisable to do so imo... many companies offer the ability to borrow from your 401k... not advisable either... but at least you have access to your cash if needed

on insurance...

someone earlier mentioned to make sure that you have enough insurance...etc... which i do agree with...but... in my opinion, learn to hate insurance!

don't get me completely wrong... i love my insurance guy... it is a necessary evil.. insurance is expensive and it tends to apply more to people that don't prepare for the unexpected

for instance, when you drive a car for 10 years, you can get collision only insurance at year 5... that can save you a ton of money over that time.. always get the highest deductibles that you can afford on your house

your goal should be to get to the point where you don't need life insurance... why? well life insurance (if u die) pays the wife a lot of money, pays off the house & pays for kids colleges (in theory)... when you prepare your finances, you won't need life insurance

there are cases where u still need life insurance... like serps, ILITs or if you have maxed out every other savings vehicle...and in these cases it makes a lot of sense

in most cases, insurance does not further personal investment objectives

to respond to boris... you can still be frugal and enjoy things... keeping a budget and saving goals help you to enjoy things that you like to do... my wife and i like nice restaurants (on occasion) and nice vacations... if you aren't watching your spending, then you can spend 'stupid' money... money that flies out the door quickly, and u might not have received as much in value as you thought... big bar tabs mentioned earlier would be an example

highly recommend putting all your spending on Quicken (including cash)...i've used it since 1997 and it is extremely helpful in knowing where the money goes, tracking investments and setting goals

order of investing for me over the years: non-mortgage debts, pre tax retirement - 401k, ira, other non-taxable investments, 529s, mortgage, personal savings in taxable accts

[edit - assets allocation]
20% house
20% 401ks
5% 529's, hedges & misc
10% personal investments (liquid)
15% cash
30% business assets/real estate

[This message has been edited by Ag92NGranbury (edited 2/1/2013 9:38a).]

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Not there yet. 2 years in grad school and a career change slowed things a bit. Hoping by 42, instead of the original plan of 40.

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I think that a lot of us are in that boat. The opportunity cost of a graduate degree is a large part of the reason that the net expected value of so many of them, including law, is negative.

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your goal should be to get to the point where you don't need life insurance... why? well life insurance (if u die) pays the wife a lot of money, pays off the house & pays for kids colleges (in theory)... when you prepare your finances, you won't need life insurance

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I entirely agree with this. Life insurance is a useful tool when you are young and it is dirt cheap. But its utility diminishes as your assets grow and the reaper approaches.

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on the 401k...if you roll it to an ira and you decide to cash it out, you will pay income taxes on the amount plus a 10% penalty. not advisable to do so imo...

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My understanding is that, if you make the Roth election on your 401(k) payments, you can withdraw contributions from the rollover on a tax-free basis. Is that not correct? Again, I haven't had to try this stunt, but I understand that it exists.

In terms of thinking about money, here's another random thought. I exclude my home equity from any net worth calculation. I just basically assume that houses are illiquid and therefore valueless.

This is probably a reaction to the diabolical volatility in home prices that we have witnessed over the last 5 years.

[This message has been edited by Vestal_Flame (edited 2/1/2013 10:17a).]

Great thread! One of the best i've seen so far on the B&I board.

Vestal - I look at my net worth through two lenses.

Net worth = assets - liabilities This includes perceived equity, retirement fund balances, jewelry, etc.

Tangible net worth = liquid (non-retirement) cash and securities + ~60% of retirement assets. This is what I have available to live on should I need it. With the volatility in the market, RE can be included at about 80% of "value" less mortgage debt. Cars and jewelry, etc are not included unless you are prepared to sell them.

As others have said, a million isn't what it used to be, but its a whole lot more than most. Paying off a house may not be the best "return" on your money, but the reduction in required expenses is helpful in times of need.

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In terms of thinking about money, here's another random thought. I exclude my home equity from any net worth calculation. I just basically assume that houses are illiquid and therefore valueless.

This is probably a reaction to the diabolical volatility in home prices that we have witnessed over the last 5 years.

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i understand why u do this...but there is value in a home

first, i conservatively estimate home value

second, when you have a home paid off... u can always go to a bank and mortgage it for any cash if needed...therefore, there is value

third, with homesteading in texas, if you get sued for whatever the reason, they can't touch the value of your home (in most cases- not tax or mortgage related)

keep taxes low if you can on your home. there is a big difference between 1.5% and 2.3% ad valorem on home values

on the roth 401k, i'm not exactly sure on the tax laws, although the roth implies that you have put post tax money into the savings vehicle

My good looks, hard work, calculated risk taking, an extreme bias against bad debt and a tendency to live well beneath my means. Mainly my looks though.

[This message has been edited by Pelayo (edited 2/1/2013 10:34a).]

My tendency not to count home equity as an asset probably explains the fact that my monthly mortgage P&I is less than my 2-week income tax withholding.

I can in 20 years.