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271 votes

Why do people save so much?

When people over 60 reflect back on their life, they generally do not say: I wish I took out more student loans. I wish I bought more expensive cars. I wish I bought fancier clothes. I wish I didn't ...
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215 votes

Why do people save so much?

Why do they need so much money as old people? The future is unexpected. My country has universal healthcare, so medical expenses are not a worry. Will it have UHC in 50 years? Probably... but ...
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  • 48.9k
187 votes
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Spouse wants to pay all debt in a month but I don’t. Is this a good idea?

Split the difference. Keep $30K in the bank and pay $25K of loans now. Use your $4,300/month to pay the remainder of the loans over the next 6 months, and then use the following 6 months to replenish ...
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145 votes

I'm 23 and was given $50k. What should I do?

Here are some possibilities: pay off the credit cards (and don't incur anymore revolving debt) if your employment has a 401(k) or 403(b) fully fund (to the maximum extent % possible) and keep doing ...
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  • 2,040
119 votes

Should I spend 3/4 of my savings to buy a new car that costs about a year of my annual salary?

If your current savings represents 15 months of salary and the car you are looking at purchasing costs 75% of your current savings, that means that buying a car that costs 11.25 months of your current ...
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  • 20.4k
111 votes
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Can saving/investing 15% of your income starting age 25, likely make you a millionaire?

Can a middle class family do it with 15%? Yes, quite easily, in fact. You left a lot of numbers out, so lets start with some assumptions. If you are at the median of middle income families in the ...
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109 votes

Why do people save so much?

The reason some people save so much so young is that they understand the growth potential of COMPOUND INTEREST. Every dollar that I put away for my daughter at 2 years old can be worth $1,000 when she ...
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103 votes

How much money should I save in order to generate $1000/month for the rest of my life?

Endowment manager here. An endowment is a large lump of money that is invested to create "forever income". They are held by universities and the like, and there are countless billions of dollars in ...
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76 votes

Spouse wants to pay all debt in a month but I don’t. Is this a good idea?

If your interest on those loans accumulates monthly, it's cheaper to pay them off now (unless the interest rate is below what your money earns you in the savings), though I would make sure I have ...
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  • 2,366
71 votes
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Company with high match for 401K vs IRA, which to choose?

Max out the 401k. The uncapped match is a free 50% rate of return and no other investment can match this.
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  • 6,989
70 votes

I'm 23 and was given $50k. What should I do?

First, I would point you to this question: Oversimplify it for me: the correct order of investing With the $50k that you have inherited, you have enough money to pay off all your debt ($40k), ...
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66 votes
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Good allowance savings plan?

This is a great question. Kudos to you for recognizing that you want to make a change. The secret to saving is to have a goal in mind. Saving money for the future is great, but unless you have a ...
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65 votes

Spouse wants to pay all debt in a month but I don’t. Is this a good idea?

Look at how much interest keeping that amount in cash is costing you. At 5% interest, that's $200 a month wasted in interest payments just for the peace of mind of having cash in the bank. I agree ...
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  • 114k
64 votes

Is paying off your mortage a #1 personal finance priority?

Paying off your house quickly should be a #2-level priority, behind making sure you have some basic savings but definitely ahead of any investing concerns, because your house is not an investment; it'...
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60 votes

Why do people save so much?

For myself, I saved because having accumulated a nice pile of money - enough to live modestly on the income (what I call being "independently poor") is both security and freedom. Take security. What ...
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  • 11.1k
58 votes

Have I saved too much for retirement so far?

Nobody ever got to retirement age and said "Wow, I saved too much". Your wealth has a direct effect on your quality-of-life in retirement - how much you travel, whether you go to movies vs. the ...
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58 votes

How much money should I save in order to generate $1000/month for the rest of my life?

What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die. Included in this calculation are estimates of (1) how long you will live (2) how much ...
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  • 14.9k
58 votes
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Did I save enough for my age? Am I falling behind and should be saving more or take some investment risks to earn more?

40% of Americans can't cover a surprise $400 expense out of saving The average American has $6,200 in credit card debt You are way ahead of most Americans Like buying a house, investing in a second ...
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  • 3,861
57 votes

Should I spend 3/4 of my savings to buy a new car that costs about a year of my annual salary?

I just bought my daughter a car. A 2018 just coming off lease. 21,000 miles, and about half the price of the same car new. The money saved on insurance alone is significant. Her prior car was driven ...
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55 votes

Can saving/investing 15% of your income starting age 25, likely make you a millionaire?

It depends on how much you save, how much your savings earns each year. You can model it with a very simple spreadsheet: Formula view: You can change this simple model with any other assumptions ...
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  • 1,214
54 votes

I'm 18 and have 6 grand. What should I do with it?

A Roth IRA is a great idea. You can only put in as much as you earn (as in, get in paychecks) each year, but that shouldn't be too much of a problem for you right now. You're paying nothing in taxes,...
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  • 34.7k
54 votes
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Is it possible to lock in a high interest rate in savings, when general interest rates are high?

Flexible savings accounts are almost all variable interest, meaning the rates go up and down with market rates. The reason for this is that if they did not, people could pay into the fixed interest ...
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  • 30.6k
54 votes

Won the lottery - how do I keep the money?

All of the above can happen. Lottery winners are invariably people with little experience in handling extremely large amounts of money. For most lottery winners, everything about their life changes ...
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54 votes
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In Reddit vs. Wall Street, what are the ramifications of those who had money with the bankrupt firms?

What brokerage firms have failed or are about to fail because of GameStop? It's the hedge funds who got whacked not the little guy. But I can't help but think that the investors of some of the now ...
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  • 73.8k
52 votes

I'm 18 and have 6 grand. What should I do with it?

Unlike others, I do NOT recommend putting your $6k into a retirement fund this early. It's a bad idea.1 If you're overflowing with money after college and don't know what to do with this $6,000 then, ...
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  • 3,267
50 votes

Why do people save so much?

I'll be living in my own house that is already paid off at that point, so no rent or mortgage payments. This very much depends on where you live. In the major cities of the costal USA many folks ...
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49 votes

Mortgage or not?

I often say "don't let the tax tail wag the investing dog." I need to change that phrase a bit to "don't let the tax tail wag the mortgage dog." Getting a tax deduction on a 4% mortgage basically ...
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48 votes
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Should Emergency Funds be Used for Infrequent, but Likely, Expenses?

Which of these categories are emergency funds meant to cover? Emergency funds are for emergencies, which to me means expenses that are unanticipated and can't be covered out of "normal" cash-flow. ...
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  • 114k
48 votes
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What can I do with a property that won't sell following divorce?

To actually answer your (financial) question: What are my options in this situation? Rent out the property share the profit / remaining costs while building equity until you find a buyer. Lower ...
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  • 5,236
47 votes
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Everyone says save at least 10% of your income. What counts as "saving"?

It doesn't really make sense to worry about the details of "what counts as saving" unless you also move beyond a simplistic rule of thumb like "save 10% of your income". That said, most of the ...
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  • 23.8k

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