Financial advice/things men should know

[treeddeep]

I've always been amazed at the great advice I've come across here in the past and find myself coming back and searching for threads. Will prob be looking for engagement ring advice in the next few months.

Just now have been able to max out 401k and contribute 5,500 for the last two years and hope to continue that for the next 25-30 years. I'm planning to buy a house in the next 3 years and would ideally like to put down 20% if possible. I have about 10k in a savings account I want to earmark for that and then contribute 8 or 900 a month to the house fund. Where would you suggest I put this money to grow and potentially seen decent returns in 3 years? Thinking a vanguard VTSMX? Is putting 20% down an absolute must and PMI not as bad as I've heard?

What financial advice have you gotten or wish you had gotten years ago? 30 y/r old male btw. Currently rent.

 

[missouridawg]

I've always been amazed at the great advice I've come across here in the past and find myself coming back and searching for threads. Will prob be looking for engagement ring advice in the next few months.

Just now have been able to max out 401k and contribute 5,500 for the last two years and hope to continue that for the next 25-30 years. I'm planning to buy a house in the next 3 years and would ideally like to put down 20% if possible. I have about 10k in a savings account I want to earmark for that and then contribute 8 or 900 a month to the house fund. Where would you suggest I put this money to grow and potentially seen decent returns in 3 years? Thinking a vanguard VTSMX? Is putting 20% down an absolute must and PMI not as bad as I've heard?

What financial advice have you gotten or wish you had gotten years ago? 30 y/r old male btw. Currently rent.

Dont ever pay PMI. It's a racket.

 

[tatedog]

If you can get rid of PMI and put 20% down without putting a stress on yourself financially then do it. If I recall correctly PMI goes away once you have 20% equity even if it's not in down payment form, although I could be wrong on this. Just be realistic that the cash on hand you'll need to close is closer to 30% of price though. If you want to go the no PMI route on a 200k house for example, I would want to have about 60k on hand for down payment, closing, and reserves. Your adversity or acceptance to risk will play a large part in this.

 

[Msubulldogfan1]

What in the world do you people do to have 60k laying around.

 

[tatedog]

It's far from a necessity to have 60k lying around to buy a house, but from what he told us he seems pretty cautious financially. Most buyers can probably get the same 200k house with 10k lying around, but living off the seat of their pants. Not sure I'd put a house fund into an index though.

 

[MSUCE99]

I would not park funds in the stock market for a <3 year timeline. I think you'd be better off parking that money in a Capital One 360 money market account @ 1% interest or at Ally Bank online at 1.05%.

What happens if you save up in VTSMX, then the stock market crashes and you lose 30-40% of the value of your holdings right when you want to purchase your house?

Short term, I would keep it in an FDIC insured bank or money market account or possibly in CD's if you can find a good rate and know you won't be buying before the CD matures.

 

[tatedog]

This is good advice. Don't gamble with your house fund.

 

[Lakedawg]

Usually it comes from selling your current house.

 

[MSUCE99]

To reply to your last paragraph, I am 40 years old and the advice I wish I had taken was to save 50% of my income.

Avoid the lifestyle inflation that comes naturally whenever you get a raise or your neighbors get something shiny that you want too.

Realize that every dollar you spend today is one less dollar you have working FOR you to earn you MORE dollars later.

If you save 50% of your income, you don't HAVE to work til retirement age.

If I had it to do over, I would live on a college student budget as long as humanly possible, even while working a career job and earning a decent paycheck.

 

[MSUCE99]

One more post and then I'll shut up. If you are house shopping, keep in mind that a larger house costs more not only when you purchase, but all throughout its life. Costs more to furnish, redecorate, heat and cool, re-roof, costs more to replace the a/c when that goes out, etc.

Don't overbuy your house. Don't underestimate it's expenses.

 

[boatsandhoes]

If you can/plan to buy one house, then pay extra against principal. the only downside is once money is tied up in your home it is hard to get it out, but if you really needed it you could always take a loan against it later. If the mtg is 1,000 then pretend it's 1,400 or whatever you can afford. Don't escrow, but save for property tax on your on.

Don't buy new vehicles. buy ones in excellent condition with mild mileage (15-20k miles). let someone else take the massive depreciation hit on the new purchase. try to be content with whatever you have...meaning drive it until the wheels fall off. Some advice there I wish I had taken there. I'm keeping the ones I have now until I die...el oh el.

 

[treeddeep]

I would not park funds in the stock market for a <3 year timeline. I think you'd be better off parking that money in a Capital One 360 money market account @ 1% interest or at Ally Bank online at 1.05%.

What happens if you save up in VTSMX, then the stock market crashes and you lose 30-40% of the value of your holdings right when you want to purchase your house?

Short term, I would keep it in an FDIC insured bank or money market account or possibly in CD's if you can find a good rate and know you won't be buying before the CD matures.

Thanks for the advice. If the market took a hit, I'd probably just wait until it came back to touch the money. But, if the stock market took a hit, it would probably mean the housing market would blow up with great buys everywhere. I think I like the risk of possibly earning 6-9% over 1%. Might not be a good idea though...

 

[jdbulldog]

Great advice for sure. Be aggressive with the 401k and conservative with the house fund. Perhaps your future fiancé will be in a position to help with the house fund. Whatever you do...do not try to keep up with your friends in what they drive or what they live in. More than likely they are stressed with debt to their ears. Two other things to remember about investing: 10% ten times=100% and the golden rule. Translation: Do not get greedy and them that have the gold rule. Many times when the common investor is advised to buy, the stock is at a peak and the ones with the gold got in earlier and are about to get out. Dollar cost average with investments. Over a long period of time you will benefit.

 

[Mayor of Little London]

Putting at least 20% down is the smart play. IF you are unable to, follow up with the bank when your LTV is down to 80%. The bank/ mortgage company will not do this for you in most cases. If you continue to pay it you are just throwing money away for sure at that point. The bank will not refund it if you do this after the fact so make the request months ahead of time so you don't pay any premiums you aren't required to.

 

[dawgoneyall]

Sue 39.

 

[tatedog]

Thanks for the advice. If the market took a hit, I'd probably just wait until it came back to touch the money. But, if the stock market took a hit, it would probably mean the housing market would blow up with great buys everywhere. I think I like the risk of possibly earning 6-9% over 1%. Might not be a good idea though...

Personal finance is 95% discipline and behavior and 10% math.

 

[Xusuromohses]

Unless you are planning to stay in a house for the rest of your life, buy based on location, and buy when the market is down. To actually execute this takes balls. I've done it once in my life and for 3 years I thought I had made a huge mistake, but the eventual payoff was great.

That said, I'm not sure I'd buy anything right now. I don't know the prices where you are, but home values are up in general - I think. I'd have to get out and do a little research before I considered buying anything at the moment.

You may consider buying up some smaller, cheaper properties, in areas that they gentrify soon, and renting them out as you can cashflow them.

Other than that.....stay out of expensive restaurants. Take fewer vacations. If you can make your weekly 'out' meal be at the place that only costs $30 rather than $60, you're ahead of most Americans.

 

[msubrave]

Buy low, sell high. Spend less than you make. That's all I've got but it seems to work.

 

[MSUCE99]

If you want to beat the money game in personal finance, start reading financial independence/ early retirement blogs like Mr Money Moustache and jlcollinsnh. A good podcast I've started listening to is ChooseFI. They are all about investing piles of cash by cutting spending and lifehacks.

Read the following post again and again until it all makes sense to you. This is the SINGLE biggest piece of advice that I wish I'd been given: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

 

[greenbean.sixpack]

15-year mortgage, don't borrow money on something unless it makes you money (houses and cars make you money, motorcycles, boats and other type toys do not).

 

[TrueMaroonGrind]

To reply to your last paragraph, I am 40 years old and the advice I wish I had taken was to save 50% of my income.

Avoid the lifestyle inflation that comes naturally whenever you get a raise or your neighbors get something shiny that you want too.

Realize that every dollar you spend today is one less dollar you have working FOR you to earn you MORE dollars later.

If you save 50% of your income, you don't HAVE to work til retirement age.

If I had it to do over, I would live on a college student budget as long as humanly possible, even while working a career job and earning a decent paycheck.

Idealy sure. But in reality not many people can achieve this. Most of us in our 20s and 30s are in student loan debt. I'll be happy getting my loans paid off and saving 20% every month into retirement funds.

 

[Bulldogg31]

Before you do anything I'd read Rich Dad, Poor Dad, then start listening to the Bigger Pockets podcasts. You will see money and investment differently.

I wish I'd done it in my 20's.

 

[TheBigEDawg]

Don't listen to the mortgage brokers and real estate agents, buy less house than you can afford. If your house is your biggest investment, you're doing it wrong.

 

[TrueMaroonGrind]

One more post and then I'll shut up. If you are house shopping, keep in mind that a larger house costs more not only when you purchase, but all throughout its life. Costs more to furnish, redecorate, heat and cool, re-roof, costs more to replace the a/c when that goes out, etc.

Don't overbuy your house. Don't underestimate it's expenses.

Great advice. I have learned firsthand how expensive houses can be. My house is small and only has one A/C unit. We had to replace everything last year and I'm glad we don't have a two unit house because we would still be paying it off otherwise.

 

[ezsoil]

Don't listen to the mortgage brokers and real estate agents, buy less house than you can afford. If your house is your biggest investment, you're doing it wrong.

Ding ding ding...we have a winner....a house is NOT an invetsment.....it's a place to live. You NEVER own your house...as you in essence, rent it from the local taxing authority. You simply have a financial interest if the market value increases and you sell... the tax lien always has primary position over any other lien.

 

[KurtRambis4]

Buy some land,

a metal building, and then spec it out yourself.

You can get the same square footage, for 1/2 the price. Of course this is assuming you can turn a wrench, and you don't let your wife tell you what to do.

 

[TaleofTwoDogs]

At lot of moving parts involved in buying a house. From finding the right location, the right builder, the realtor, the inspector, and the title company. Depending on your career path, if it is strong and heading upward I would buy the largest house that I could afford. Put down 20% and get a 30 year mortgage but amortize at a 15 year pace. If times are hard, you can fall back on the lower 30 year payment and in good times pay the extra principle at a 15 year pace.
But remember that a 30 yr carries a little bit higher interest rate but your accelerated pay down will be the offset. Finance is all about discipline and timing.

 

[ezsoil]

Before you do anything I'd read Rich Dad, Poor Dad, then start listening to the Bigger Pockets podcasts. You will see money and investment differently.

I wish I'd done it in my 20's.

+1

i was fortunate to convince the wife at age 28 to bank all raises from that point forward and to live below our means. In return, we planned on retiring at 50... we missed that goal by two years but it has been great...

 

[bulldogcountry1]

15 year mortgage
Never ever buy a boat or an RV

 

[Ishmael]

Read bogleheads.org for awhile.

As others have said, don't think of your house as an investment because you have to live somewhere.

 

[Bulldog from Birth]

(1) Save at least 10-15% of your income into retirement accounts. Make sure you are on pace to meet your desired retirement account balance by somewhere age 60-65. No guarantee at that point if you'll be able to keep working physically or if your employer won't run you off because you make more than a 25 year old. I'd recommend making sure you have a blend of both pre-tax (traditional IRA/401k) and post-tax (Roth IRA/Roth 401k). Sounds like you are doing this now. Wise man. Compound interest is the key to building wealth.

(2) Pretty quickly be at the point where you can have 3-6 months of living expenses in the bank. My target is at least 6 months assuming I cut back everywhere possible if the job disappeared. I'd assume I'd keep paying mortgage/rent, life insurance, home/car insurance, car notes, cell phone, and things you just can't get by without feasibly. But I assume food would go to a bare minimum, shut off the cable, no eating out, no travel, etc. So this isn't 6 months of your current budget but on your emergency budget. There is simply no price tag that can be placed on the security and peace of mind that brings to a household.

 

[LTblows]

If you can invest in Seattle real estate, do it. It's going up over 10%/yr, and you can finance your investment. It's only going down if WW3 happens or if Amazon cooks its books.

 

[tatedog]

15 year mortgage
Never ever buy a boat or an RV

Signed
Rick Harrison

 

[Dawgbite]

As far as the ring, regardless of where you buy it, put it in a Van Atkins ring box if she is from Ms. Best financial advice I could give you, save 15% of your gross income, pre tax is all the better. If your employer has any kind of retirement match, max it out. Buy less house than you can afford and pay for it in 15 years or less. Try living off cash for awhile, especially the bigger purchases. Even if you borrow money to buy a used car, get it in cash and buy with cash. You will have an entirely different view turning loose of ole Ben Franklin than you do swiping a card or signing your name. You are young but get a frame of reference about you financial life, I drive a 10 year old truck, wife asked the other day when I was going to get a new one. My answer was that every year I drive this truck is about 3 months sooner that I can retire.

 

[fedxdog]

Save all you want, BUT if your fiance isn't invested in your financial future as much as you, things won't go like you'd have hoped! After I retired from flying, my wife told me that 2 years before I retired that she had started spending like I was retired. What a keeper!

 

[TheStateUofMS]

IF YOU NEED THAT MONEY FOR A HOUSE IN 3YRS DO NOT PUT IT IN THAT

I've always been amazed at the great advice I've come across here in the past and find myself coming back and searching for threads. Will prob be looking for engagement ring advice in the next few months.

Just now have been able to max out 401k and contribute 5,500 for the last two years and hope to continue that for the next 25-30 years. I'm planning to buy a house in the next 3 years and would ideally like to put down 20% if possible. I have about 10k in a savings account I want to earmark for that and then contribute 8 or 900 a month to the house fund. Where would you suggest I put this money to grow and potentially seen decent returns in 3 years? Thinking a vanguard VTSMX? Is putting 20% down an absolute must and PMI not as bad as I've heard?

What financial advice have you gotten or wish you had gotten years ago? 30 y/r old male btw. Currently rent.

You do not want to put that in a 100% equity fund. Imagine that dropping 50% in 3 years if another major recession happens. Money you NEED a few years out, needs to be incredibly safe.

I would say put it in a short term bond fund.

 

[ShrubDog]

Bitcoin and Ethereum

 

[BlueRidgeMtns]

I had 60k in the bank once... then I got married.

 

[hdogg]

Around 1998 I was in the same boat. I started putting money into the market, expecting it to grow, then to use it to buy a house.
Then the market tanked in 2001 and hadn't fully recovered by the time I was ready to buy a house. So I made a much smaller down-payment.
I'm sure anyone who was going to "invest for buying a house" and was ready in 2007/8 would have the same experience.
So based on my experience, just put it into savings. Many people believe that we are overdue for a correction/recession.

And I fully agree w/ the posts about not over-buying a huge house. Start reasonable, build equity and buy a bigger house w/ that equity in 10 years.

Good luck!

 

[Dawgbite]

The second best of financial advice I ever received was to take half your money and bury it in a mayonnaise jar in the back yard. Take the other half to the dog track and bet it all on the dog that takes a dump right before entering the starting gate.