Mishigun:

Robyn, are you … like … a  hobbyist or something?

  Hobbyist?  Not sure what you mean.  My hobbies are golf - gardening - travel - and food (cooking and dining).   Investing is dead serious work.  We're retired - and investments are our only source of income (except for my husband's SS - I'll start getting SS this year - but I'd like to remain in the position we were in when my husband got his first SS deposit - he bought a new set of irons).   If you invest long enough - you have to explore new stuff - whether it's new products or new technology.  The investing landscape of today bears little relation to the way things were when I started 30 years ago.  Or even 5 years ago.  And if you are around 30 years from now (I probably won't be) - I'm sure things will be very different then.  So - as long as I'm capable of learning - I'll keep plugging away.  Robyn 

[quote=RobynG]I don’t know how old Bond Guy is - but one thing he has neglected is a sense of historical perspective.  Since he lives outside Philly - I’ll give a Philly example.  My husband and I moved there shortly after we got out of law school.  Worked as assistant DA’s.  Made a grand total of $19k/year between the 2 of us in 1972.  Sounds awful.  But we rented a 1 bedroom 800 sf apartment at the Dorchester (a luxury high rise on Rittenhouse Square) for $280/month.  Bond Guy - will $280/month even get you a parking space in center city these days?

  We had a car - a Mercury Cougar - bought new for a little more than $3k.  We used to drive to NJ to save money on gas (which was then about 25 cents a gallon).  A can of tuna fish was 19 cents.  At the time - my father was building and selling houses in south Jersey for about $19,000 (side to side splits with maybe 3 bedrooms - 1 bath).  My husband's family had a similar house in Montvale NJ (you NY/Jersey guys will know the area) that cost about the same amount.  When we went to Harvard Law School ('68-'71) - room tuition and board was less than $2k a year.  My father could afford to send me.  My husband's father couldn't afford to send him.  So my husband worked during the school year as a bartender - and summers on the Ford Motor Company assembly line at the Mahwah plant (he was a member of the UAW).  Between the two of us - we graduated with $500 in debt (lack of bartending gigs my husband's last year in law school).  Yada yada yada.   Flash forward.  What do all these things cost today?  And what do people earn - like a newbie DA in Philadelphia?  Obviously - prices of these things have risen more - in many cases a ton more - than peoples' earnings.  So people a generation or two younger than we are have had to run very hard just to stay in place.  What kid today could put himself through an Ivy League school by working part time? The double income family is now longer an oddity - but - in many cases - a necessity.  Children have become a luxury.  (Which is why gay customers are frequently prime customers - they tend to be DINKs.   It is an unfortunate but harsh fact of life that Obama may think you're rich if you earn $250k before taxes - but you aren't.  You are probably about the same or worse off than we were when we were earning $19/k year - particularly if you're trying to raise a family in a relatively high cost area of the country.  All I can say is I'm glad I'm not starting out now.  Robyn[/quote]   RobynG-What did i say or not say that lacks historical perspective? Or even call for such perspective within the confines of this discussion?   Yes, you can get a center city parking place for less than $280. In fact $180 will get you monthly parking at 23rd and Arch, w/i easy walking distance of the center city office canyon. Add a buck a month and you can park everyday at 18th and Market.   And just for the ofishall record I'm 24.

[quote=Indyone]

              ...yeah, BG, I AM tough.  I'm not saying that your friend is a trainwreck...far from it.  At the same time, he's made liberal use of credit and that's what has him boxed in...to reduce/eliminate his debt, he's put a serious strain on his liquidity.    What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as "not a train wreck!" Relatively speaking he's in the same financial position as 112k earner with a 112k mortgage to support. That's not out of line in anyone's book. He is far from boxed in.    We all want nice stuff and want to feel the reward of our labors, but why are we so ^%!$!%&# impatient?!!  There's no good reason your friend has ANY car payments.  I'll use a Dave Ramsey example (with apologies to those that don't like Dave) on your guy.  Why couldn't he have banked $1200/month for a year and bought a used Honda Accord or something similar for cash?  Within a 2nd year, he can buy another similar vehicle for cash.  By the end of the third year, he can take the first car and $14K cash and trade up...still with no car payment.  This cycle can be repeated until your friend is buying nice cars every 4-5 years and paying cash for them...for less than the price if his lease payments.   In my example my guy could buy any car he wanted for cash without going through your ridiculous buy a used car and bank the difference example. I didn't get that detailed.  As for leasing, plenty of people on this board lease cars paid for out their own pockets. There are many business reasons for leasing as well as some personal reasons as well. Using your math, with $1200/month being a really poor financial decision for a $450,000 wage earner, what does that say about the people here who make a fraction of that and don't buy 7 year old used Hondas? How about the $150k guy who has a $400/month lease payment? Trainwreck?   Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike?   Certainly, anyone who choses can get off the car payment wagon whenever they want to.       Kid needs a car?  My daughter is 12 years old and is saving for her first car.  In the summer, she will work for me 2-3 days a week on my file imaging project and make money for her car fund.  At 16, I will match whatever she has saved and we will buy her a car for cash.  She will be responsible for paying the insurance for that car.  My assumption is that she will be more careful if she knows that the bill gets much higher with accidents.   Good luck with that! How lucky she is that she can actually earn money as a 12 year old. Not to get side tracked, but i'm about ten years ahead of you with the ages of my kids and i disagree with your plan. But I'll keep this to cars for kids.   When my first came up for a car i bought him a 5 year old Pontiac Grand Prix with 55k on the clock. No warranty, but car faxed showed it was an off lease car with one bank owner before it went to auction about a month before we bought it. We had the car checked by our mechanic and it was in excellent condition. I paid 7k for the car, about the going rate.   Within a year the car had two major break downs- the transmission and the ECU. Total cost to repair-$4000. Then within a year the car needed a variety of minor repairs totalling about another $1000. So all up, in two years this low cost used car in excellent shape cost us about $12k. So we took the car down to the local Honda dealer and bought a new Civic LX. I bought the car because the mileage he was then driving killed any leasing opportunity.    Now kid two comes up for a car and i leased her a new Civic DX for $188 a month for 36 months. The car stayed under warranty through the entire lease period. Total cost to me-about $6800. Relativly speaking-a good deal! My daugher had a new car and we had no worries.  Kid number three comes up and I buy him my daughter's Civic from Honda for 8k. The car was problem free until last night, when it was totalled in an accident in center city Philly. On a side note my accross the street neighbor's daughter smacked my neighbor's S550 into a parked car last night. It wasn't a good night for kid driver's on our street last night. She just got her license on Friday. back on point, there is more than one way to skin a cat. leasing turned out to be the cheapest option for us.   Indy, while your plan is to buy a used car- know going in that leasing a cheap car for her might be an option to consider. Lemons and fraud abound. My neighbor just had Honda buy back his new Accord. A friend is in the same process with an Accord. Some states don't have consumer protection laws preventing the resale of these vehicles. Something BMW took great advantage of with their 20002 seven series debacle.         Want a boat?  Not until I have the cash for it.  I have no desire to be saddled to a $700/month boat payment just so I can have a boat like my neighbor has.  Leverage for a house or investment real estate with appreciation potential I understand...leverage for a toy is not the way I do things...at least not in the 20+ years since I finished school and had my epiphany.   $400K in his 401K?  How in the H- is he going to maintain his standard of living with that little put away over a 15-year career?  My standard of living is considerably cheaper (partly due to geography and partly due to choices) and I have more than that in retirement.  I don't think I have nearly enough at this point, so if I were in his shoes, I'd be very concerned, especially with the monthly nut he's got to cover.   $400k isn't unreasonable. Figure he's made about 3 million over his career. Depending on matches/contribution amounts etc. For the first five years or so, most people are light on contributions as they are trying to max out cash flow. Retirement savings is one of those bridges we'll cross later. In the middle years 5 thru ?, we move beyond survival and increase our contributions. Our guy hasn't reached the next stage yet so that's where he is. So the 400k number is OK. Also, our guy has taken money that could potentially be used to support him in retirement and invested it in other arenas. The vaca home, for example.   Private school?  Killer vacation?  These are all choices.  If you are struggling to cover your nut, they are still choices that can be passed on.  I want the best for my kid too, but if it comes down to private school and being liquidated, that choice gets much simpler.  If I am in BK, private school is gone anyway.  This guy may need to just swallow his pride and make some hard changes...the kids may have to go to public school for awhile.  The wife may have to get a job.  The boat may well have to be sold at half the original price and the deficiency might have to be renegotiated and paid off at say, $300/month.  Supper may be tuna salad sandwiches for awhile instead of eating out 4-5 nights a week.  Clothes may have to be bought at Old Navy.  This year's vacation may have to be tent camping in a state park with some canoeing and fishing on the park lake.  Life could be worse.  Once your friend cycles through a rough patch like that, I'm guessing he'll use leverage very carefully as a result.   Our guy isn't struggling. Until an unprecendented market event reduced his income he was banking 25% of his pay. I think that qualifies him to go out to dinner and take nice vacations and not live like a hermit.   40 years ago, something like 4% of the population had a mortgage.  Today, it is more like 4% DON'T have a mortgage.  Can we go back to those standards?  Probably not to that degree, but I believe for many individuals, it's certainly possible.  Did I say it was easy and/or fun?  Heck no!  I'm not saying that your friend is wrong to have a mortgage and use leverage.  What I am saying is that use of leverage comes with risk and potential consequences and to not consider the possibility that you could get squeezed by debt is at least short-sighted.  If your friend gets squeezed and liquidated while living what 95% of the population would consider the good life, he's not going to find much sympathy from the guy that's carrying a lunchbucket with a bologna sandwich and driving a 15-year old Ford Ranger while fretting about his overtime being gone and wondering how he's gonna make the next payment on that modular home he bought three years ago.  That's as diplomatic as I can put it.  I wish your friend well, but if he's serious about digging out of the hole he is in, he might want to read Dave Ramsey's "Total Money Makeover" and "The Millionaire Next Door"  (Stanley/Danko).   You keep saying my friend. My guy is totally fictional. For some of the house problems i took from my own experience.   Ok, so what you are saying is that everyone who who gets a mortgage is short sighted? After-all lightning could strike any of us? Maybe the answer is save up to buy a cheap used house. Live in a tent, bank the mortgage payments and then buy a bigger tent with the savings. Sooner or later the amount saved could be used to buy real house for cash! Yup, that'll work! Point is, we can take saving money to the ridiculous. I do know a guy who worked for years for Pratt and Whitney in Florida. He's an engineer. He lived, first with his parents until he was 35, not kicking in. And then in a van for about five years at a county park. The guy had well over a million bucks in the bank and finally bought a house in Ft Pierce FL. We found out about the money when he confided in his mother, my mother-in-law, and she told us how much money he had. Our only question- When was the last time he took a shower? After-all, water costs money.[/quote]

[quote=BondGuy]

...And just for the ofishall record I'm 24.[/quote]   Having very little experience with living life - I don't think you're in a great position to go through "life scenarios".  On my part - I think they're mostly personal choices.  I don't tell people what to do unless they ask me (unless any problems they have as a result of poor choices could affect me).    BUT - big but.  When one is young - one has something terrific going in his favor.  Time.  And the 8th wonder of the world - compound interest.  Plus - when you're young - you're not accustomed to the luxuries of life.  Living without them isn't a deprivation.  So when you're young - it's the ideal time to sock away lots of money (if you're making it).  And concentrate on the luxuries down the road.  Thirty years later - even with conservative investments - unless the world falls apart - you won't have to worry about flying first class and staying in luxury hotels.  Robyn 

bluetoon:

someone should close this thread

  Or get it back on topic.

[quote=BondGuy]

What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as “not a train wreck!” Relatively speaking he’s in the same financial position as 112k earner with a 112k mortgage to support. That’s not out of line in anyone’s book. He is far from boxed in.  
Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike?   Certainly, anyone who choses can get off the car payment wagon whenever they want to. [/quote]

I guess I fall somewhere between you and Indy, although leaning more towards Indy's perspective.

Your hypothetical broker was blessed with a thriving business and a nice income.  Even taking into account the lean early years, he was in a position where he could have lived a comfortable life and yet put himself on a path to financial independence, where a drop in income such as this year's hardly put a dent in his daily life.

Instead, like many in our business, he chose to let his expenses grow as quickly as his income.  Living like the good years would go on forever....

Instead of leasing 2 new luxury cars, he could have purchased a pair of 2 year old Lexus for cash and kept them for 3-4 years.  Far less expensive than leasing.  Maybe the first time around he might have bought it on a note, but soon enough he could have bought them for cash.

The beach house and the boat?  MAYBE you could argue the beach house was an investment, but only over the very long term.  Unless he was going to set it up to provide rental income, it's just another expensive luxury.

Take the fancy vacation every other year...and in the off years spend a week in the beach house, or go camping, or take several "long weekend" mini-vacations throughout the year.  More savings over his current lifestyle.

True - he was already banking 25% of his income...what if he had been putting away 30-40% in the good years?  He would have had a much greater cushion and also a smaller nut to cover when things did turn down.

Food for thought.

[quote=HymanRoth] [quote=BondGuy]

What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as "not a train wreck!" Relatively speaking he's in the same financial position as 112k earner with a 112k mortgage to support. That's not out of line in anyone's book. He is far from boxed in.  
Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike?   Certainly, anyone who choses can get off the car payment wagon whenever they want to. [/quote]

I guess I fall somewhere between you and Indy, although leaning more towards Indy's perspective.

Your hypothetical broker was blessed with a thriving business and a nice income.  Even taking into account the lean early years, he was in a position where he could have lived a comfortable life and yet put himself on a path to financial independence, where a drop in income such as this year's hardly put a dent in his daily life.

Instead, like many in our business, he chose to let his expenses grow as quickly as his income.  Living like the good years would go on forever....

Instead of leasing 2 new luxury cars, he could have purchased a pair of 2 year old Lexus for cash and kept them for 3-4 years.  Far less expensive than leasing.  Maybe the first time around he might have bought it on a note, but soon enough he could have bought them for cash.

The beach house and the boat?  MAYBE you could argue the beach house was an investment, but only over the very long term.  Unless he was going to set it up to provide rental income, it's just another expensive luxury.

Take the fancy vacation every other year...and in the off years spend a week in the beach house, or go camping, or take several "long weekend" mini-vacations throughout the year.  More savings over his current lifestyle.

True - he was already banking 25% of his income...what if he had been putting away 30-40% in the good years?  He would have had a much greater cushion and also a smaller nut to cover when things did turn down.

Food for thought.
[/quote]   Hyman, you are not wrong. And for that matter, neither is Indy. The question is; where do you draw the line? That being the line between thrift and spendthrift.   I think you guys are being overly cautious. One can build a house strong enough to survive a cat 5 hurricane, but then it burns down from an unattended candle. My guy has a net worth in excess of two million dollars, but gee, he needs a lot more?         

[quote=RobynG][quote=BondGuy]

...And just for the ofishall record I'm 24.[/quote]   Having very little experience with living life - I don't think you're in a great position to go through "life scenarios".  On my part - I think they're mostly personal choices.  I don't tell people what to do unless they ask me (unless any problems they have as a result of poor choices could affect me).    BUT - big but.  When one is young - one has something terrific going in his favor.  Time.  And the 8th wonder of the world - compound interest.  Plus - when you're young - you're not accustomed to the luxuries of life.  Living without them isn't a deprivation.  So when you're young - it's the ideal time to sock away lots of money (if you're making it).  And concentrate on the luxuries down the road.  Thirty years later - even with conservative investments - unless the world falls apart - you won't have to worry about flying first class and staying in luxury hotels.  Robyn [/quote]   I disagree, at age 24 i believe i've got all the answers.    

iceco1d:

What the heck is with the age 24 thing? 

  RobynG made a comment to the effect that she didn't know how old i was but that my comments lacked historical perspective. Just for fun i replied that i was 24. Interestingly, I also asked how or why my post lacked such perspective. Instead of answering my question  she bit on the 24 thing and said at that age i wasn't qualified to give life experience advice.   Jimi hendrix died when he was 27. How old do you have to be to have lived a life?   But actually, I agree with RobynG. I'm not qualified to give life experience advice. For that reason i don't. But business advice from the vantage point of 26 years in the same business? Yeah that i can do.    

BondGuy:

[quote=iceco1d]What the heck is with the age 24 thing? 

  RobynG made a comment to the effect that she didn't know how old i was but that my comments lacked historical perspective. Just for fun i replied that i was 24. Interestingly, I also asked how or why my post lacked such perspective. Instead of answering my question  she bit on the 24 thing and said at that age i wasn't qualified to give life experience advice.   Jimi hendrix died when he was 27. How old do you have to be to have lived a life?   But actually, I agree with RobynG. I'm not qualified to give life experience advice. For that reason i don't. But business advice from the vantage point of 26 years in the same business? Yeah that i can do.   [/quote]   Figured you were jerking my chain - just didn't know how hard.  Now I know.   I saw Jimi Hendrix at Woodstock.  He was a great guitar player (even according to Eric Clapton).  Don't think I'd care for him to manage my money .

Thanks Ice!

  RobynG- just havin' a little fun. Still, where did my posts lack historical perspective?

[quote=Mishigun]

Ha ha, well, for you kids and old folks alike, if you get a chance, visit the Jimi Hendrix museum in Seattle. Easy on the Purple Haze, though. For my part, maybe a little of what BG feels, I'd much rather work with people who have money, than train folks to skip lattes and fund their IRA. And I'm going to enjoy my life. Because compound interest (minus expenses) has been negative over the past years, I'm glad I went for the big house and nice lifestyle. Robyn, you've been a good girl, good for you! Now go out a stimulate this economy!

[/quote]   Compound interest has been negative in equities.  But it's been fine in fixed income.  Our IRA accounts are up 6% compounded annually for the last decade.  I know the taxable accounts (spending accounts) haven't been negative - because they've been pretty stable - and we haven't been living on day old bread.   You don't have to get me to do my part in terms of spending money.  My husband is fond of reminding me of the quote - "Traveling abroad isn't expensive.  Now traveling *with* a broad - that's expensive."  BTW - one of the silliest things I hear financial planners say is you'll spend less money after you retire.  We spend more.  Stands to reason.  If a husband and wife are both working - and don't have kids (our situation) - they don't have time to spend money until they retire.  Robyn

skbroker:

Squash

Doesn’t that effect your credit score negatively to close out an account?   Does that get reported on u4 or finra?

  It lowers your available credit, so you available credit(which is factored into your score) would decrease, but it would only decrease your credit score if you available credit was severley hampered by closing that account.   Also I closed it as opposed to the credit company and that makes a difference.   Why would it be reported on my U4 or finra? I am not claiming bankruptcy. It is simply a credit obligation(like all credit cards) it just happens to be closed from further use... Similar thing happened when my wife's Wamu card was taken over, they tried to raise her rate 10% so she opted out, and by doing that she can't use the card anymore...