Ask Lemmy

It comes down to if you rent.

If you have a fixed mortgage, shit gets easier fast. If you rent, any wage increases is often offset by rent increases.

Less people are able to save, because they never get out of those "tough first years" of a mortgage

Live below my means, invest the rest.

I don't dress or act like people in my pay range. My house is small and in a quiet neighborhood and cost less than my salary. Car is older but paid off and I know all the quirks and have the toolbox in the back to fix it. It is probably one of the top 5 most reliable cars in history. My work dress shoes are 10 years old and my around the house shoes were new in 2019.

I spend my money where I spend my time. So I have a nice phone, a very nice monitor and mechanical keyboard, and a good computer. And all with the right to repair philosophy. Same for my wife and kids. And also good running shoes, good exercise equipment.

The plan is to get to a point where I can just not work at all and maintain my lifestyle. Three percent rule and all that. And also help launch my kids.

Something about a 25 year roof and a Japanese shit box car in my fortress of solitude.

FWIW I grew up really really really poor like you wouldn't believe so I'm okay with this.

What’s your relationship or philosophy with money?

A life-changing shift to my approach has been to worry about absolute amounts rather than percentages. Saving $10 on a $20 item feels great but ultimately is the same thing as saving $10 on a $500 item (which feels like nothing).

I grew up lower middle class: never had to worry about not having a roof over my head, but there were times we were somewhat food insecure, and spending money on leisure/entertainment or anything unnecessary for survival was a foreign concept until I got to high school and some my parents' career moves paid off and put us in upper middle class. It took them a good 10+ years before they could relax a little bit and feel secure with their money, though, and that was as much driven by the fact that their kids were adults who had moved out.

So life has been about deciding which of my parents' frugal attitudes and approaches to money to keep and which to discard.

Things I decided not to adopt:

• I slowly learned to stop caring as much about wasted food. Food is just cheaper now compared to when I was growing up (even if the last 5 years has shown an uptick), and as a society we have more issues with obesity than hunger, so cleaning off a plate seems like it doesn't actually do that much good.
• My time is worth something to me. I will gladly pay the few dollars here and there for convenience.
• I'm glad I ignored my parents advice to buy a home as soon as I could and build equity or whatever. I rented and it worked out great for me, giving me the flexibility to make changes at different stages of my life.

Things I kept:

• Life is uncertain. Always be prepared with whatever you can accumulate for financial resilience: cash, other property, lines of credit, marketable job skills, literal insurance policies, etc. Don't underestimate the importance of personal relationships, whether it's "credit" from friends and family who can help you out of a bind, colleagues who can refer work to you, bosses who will fight for your career, etc.
• Develop your career. Education and credentials are important early on, and up-to-date skills and a good understanding of the landscape in your field (both in the type of job and the type of industry you work in), plus solid relationships with people, can help you know when switching jobs is right for you.

Things I had to learn on my own:

• Life is unfair. Many types of unfairness are systematic. So why not position yourself to where the unfairness works in your favor, if available?
• Higher income makes it easier to survive mistakes on the spending side. To flip around Ben Franklin's quote, a penny earned is a penny saved.
• Know yourself and your own laziness. Set up automatic functions wherever possible: automatic bill pay, automatic savings, automatic investments, etc. Steer away from any strategy that requires active management, and towards strategies that tend towards a set it and forget it philosophy.

I've also made a shitload of mistakes, some of them pretty costly, especially back in my 20's:

• Paid probably thousands in credit card interest in my early 20's chasing lifestyle bullshit.
• Paid thousands in unnecessary car loan interest in my mid 20's by getting suckered by a dealer.
• Paid hundreds, maybe thousands, in late fees and interest from forgetting deadlines to pay shit I actually already had the money on hand for.

I'm rich now, most of it from luck (especially timing), much of it from personal relationships (good family, good marriage, good friends), some of it from actual effort (good grades from a good law school), and some of it from conscious decisions to steer towards my strengths and away from my weaknesses (lazy but smart, prototypical "gifted" slacker with undiagnosed ADHD).

It took a while to get here, though, and I was financially insecure well into my 30's. Sorta figured shit out then, and then married someone who complements me pretty well on these things, and covers my blind spots.

For the extra brave ones: how much savings do you have, and what are you planning to do with them?

I have some savings, and it's an emergency fund. It's representing 1-2 months of typical spending, that could be stretched to 3-4 months if I needed to stop the frivolous spending. But I have credit beyond that, and less liquid assets I'd be able to tap into if I were facing a longer term issue.

But I'm not saving for any particular thing other than retirement. If things accumulate and grow, great. I'll make a judgment call on when to retire based on how I feel and how much I have and what I want to do. I anticipate my wife and I will probably want to retire in our early 60's, based on our anticipated career trajectories and the ages of our children.

I have $15k liquid savings and another $50k I could pull from my Roth IRA in a dire emergency. It's not as much as I'd like, but I'd be ok if I lost my job. I live in a HCOL area so it doesn't last as long as you'd think.

I make a good wage, but I work my ass off for it. I credit my financial success largely to luck, my work ethic, and the great state of California. 10 years ago I was making $20k a year, now it's close to $200k. The main difference was I moved to California. No college degree, blue collar job. Skilled labor. I took jobs with companies that would train me, took promotions, and job hopped a lot.

I pay a ton of taxes and I'm happy to. I'm giving back to the community that enabled my success. If anything, I should be paying more taxes. I do donate about $80 a month to various causes, mostly carbon capture to eliminate my personal carbon footprint, because the environment is very important to me and I like to feel I'm not part of the problem.

I still have $20k in debt, on credit cards but at a promo 2% interest. I hope to pay it off in 2 years.

My philosophy with money is honesty not very healthy in some respects. I've been chasing dollars for years, to the complete atrophy of my social life. I've been pouring money into my retirement and have about $300k saved up in 401ks and IRAs. I also send a ton of money to my parents who are still stuck in the poor Southern state I grew up in.

In my next phase of my career I hope to transition to a job that will keep the same wage but give me a better work/life balance. I work 60 hours a week, add commute time and it's 75 hours a week.

I'm also fucking sick of working with all dudes. The trades are overwhelmingly male. I can go weeks without even talking to a woman.

I'm in my mid 30s. I came to California homeless in a beat up '92 coupe with $30 in my pocket. I'm the poster child for pulling yourself up by your bootstraps, so listen to me when I say I would not be where I am without the support of a pro-worker government and a huge dose of luck. Taxes are good. Unions are good. Worker protections are good. Even with all that, I am an outlier. We (the fortunate) need to do more to help others.

I have $15.

Not just that I can spend. Not "until sometime in the future." Just $15.

I have a decent amount of money in a 401K that I can't touch, and some stocks I bought during a time when I fell into a bunch of money, but an unexpected $1000 would not be possible. I'm a 42 year old married man with 5 kids and a full time job at a small college.

I should be doing better than this.

Im doing pretty well. Living in Germany, educated parents. Did okay in school, never studied much though. Went to university, got my Masters in Mathematics (needed to study a lot for that, but its my passion anyway). Started working at an IT company in the same city.

3 years later, I have around 50k in savings now. We live in a small apartment, are in the middle of buying a house.

Capitalism is really fckd up, especially in the US. I try not to take advantage of it too much, up my monthly donations with every raise, vote left-ish, dont support big corporations.

I think the biggest factor for success is luck for being born under the right circumstances. Thats like 99%, the rest is having some self control.

Since I left college and started out into the "adult world", I've always spent less than I made, the rest going to savings or investments toward retirement. I accomplish this by "paying myself first". If I have already saved the money as my first priority, I can't spend it on things like rent or groceries. So my financial choices are forced to be more conservative by design.

Example: I forget what the max limit to IRAs were at the time (say $5k/yr) but for my first job I set up auto contributions each month and mentally took a $5k/yr salary "cut" for that job. Every time I got a raise, I made sure that at least a portion of that raise went to increasing my savings rate and attempted to avoid lifestyle creep.

Thanks to my savings, I've been able to handle some emergencies in cash vs having to utilize debt to cover the expenses. It really is a snowball. I started out small, now my savings is significant compared to my income.

I attribute a lot of my "pay yourself first" approach to reading The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich early on.

I'm digging myself out of a $13k credit card debt hole. I burned through my savings when a job that I had ended on my unexpectedly, and because it was contract work I wouldn't qualify for benefits. They kept me around as a sub, promising me a full time position if I just stuck around long enough and I was foolish enough to believe them.

I'm self employed now and making do with the best I can, but I'm planning on ending my dream as a musician/ teacher and moving home. I don't know who would want my skills, but I know they are specialized and strong. I just gotta see what kind of work would value them.

I've got $0.85 in savings, because I put my rent and car payment money in my savings account each month until I need to pay those bills. I did at one point have $1000 saved up as a rainy day fun, but then it rained for a whole year (financially speaking). Now I don't even have credit cards to fall back on, as those have been maxed out and gone to collections. I'm looking for a job in an industry I left because it was driving me to alcoholism (software), but that job market sucks a little more than the service industry, so I'm not optimistic.

Oh yeah and I'd be homeless if I didn't have family who were willing and able to loan me rent money.

I have always strived to keep between 1-2 month’s worth of expenses in savings at all times. That small buffer has allowed me to ride out almost everything without going into debt, then when I am in debt I pay it off as quick as possible.

The worst thing you can do is get on a payment plan, as that normalizes having debt and you end up paying thousands in interest. All interest is, is you giving your money to someone else. I like to keep my money, so if I have to live off of ramen and hot dogs for a couple months, so be it.

I am one broken leg away from being homeless and losing everything, and it's been like that my entire working life. I've never been able to make enough to actually save. Currently I have -100 in the bank and some debt I'm trying to pay off on top of that. My rent is literally half my income.

A 200k expense won't destroy me or lock me out of my house or completely destroy my retirement. No inheritance, went to college, and knew buying a house early was key, saved about 25% income for 3 years to put 45k down on house.

All my jobs have been paycheck-to-paycheck until about 3 years ago. My last job allowed me to save up $24k, but then I lost my job. Now I'm down to $7k and getting worried.

I can lose my job for a year and be ok. I'd probably cut back on some expenses, but it would probably be ok.

I fall between the government won't give me SSI because I'm not disabled enough in there fucking eyes. And being disabled and can't work.

So financially I'm fucked and nothing I can do about it.

Even if I had said It would only be iirc around 800 a month.

It's part of Amerikkka hidden eugenic programs. (Not verified but living with a disability it sure fuckin feels like it)

I am not American, but Austrian. I earn way more money than I spend each month, causing my bank balance to rise over time; I am not going to say exactly how much I have, but €1000 (which is about the same as $1000) is no problem for me to afford when I need it.

While it's better than the alternative, it still doesn't make me very happy because this only helps fulfill the bottom two levels of Maslow's hierarchy of needs. I wish I could easily earn less money, but have more free time to travel and pursue hobbies, but the system of wage labor is not flexible enough to cover the needs of someone like me.

I'm doing well but i wish i could afford my hobbies.

The last year has been rough on my savings. The retirement savings are untouched but the general savings have been emptied by a combination of travelling for family weddings and a downturn at work. I'm not worried but I do need to make a change.

I’m doing well at the moment. The problem is that no matter how well I do, eventually something destroys my savings and eventually there’s a layoff at my company.

Even if I’m doing well at the moment, I’m still a couple paychecks from not doing well, and am no where near on track to eventually be able to retire

I have five digits of savings for the first time since my kids were born, but I also have college expenses for them, and at least that much in deferred house maintenance

I credit Apple, of all things. I always chose credit cards to minimize interest and fees, so this is the first time I’ve had one with significant cash back. Now I pay essentially everything with Apple credit card, pay off at the end of the month, get a surprising amount of cash back, directly into the high yield savings account. While of course my job is the reason I’m doing well, I credit this for turning things around to actually let me put money aside, to boost my savings

I was born at an unfortunate time. By the time I could afford a house the housing market was already very bad. I'm just glad I'm able to buy a house but it is very expensive (we bought at the end of 2021)

I live in Canada so we can't lock in our mortgage for more than 5 years. I just went with the variable rate because in the long term it's generally better. However the interest rates skyrocketed. I was able to pay my mortgage still but I was pretty much house poor.

Now the rates are finally dropping so I feel a lot less pressure. With our current budget we should be able to afford one kid comfortably. I'm not sure about a second.

I'm very fortunate and grateful though. Most people my generation cannot even afford a house. It's just insane that despite my great job it's still so hard for us I can't imagine what others are going through.

We aren't broke. I have some retirement saved but I had to stop putting money in due to our mortgage. I also have an emergency funds account with enough money to sustain us ~6 months if I were to lose my job.

Having a high paying job is unsurprisingly the main reason for my financial success. Otherwise I'd say joining some personal finance clubs helped a bunch. I have my savings diversified and invested so I'm at least not losing money to inflation. But my investments will never make me rich either.

One critique I have for myself is maybe we overspent on the house but at the same time I love our neighborhood and I love our house and we have no plans on ever moving so I'm not too upset by it.

I dislike money. I worked hard to have enough that it’s not on my mind. I don’t need to think about the cost of eating out or buying food, or pursuing hobbies. But I also don’t really spend much. I don’t make big purchases very often and when I do I still over-analyze them.

If I had a lot more money I could retire, but I still have half my life to live. I hope to retire in 16 years. I have a job that pays well, with good job security, and minimal stress. I get 38 hours of leave time per month and I live in California.

I have cash savings earning enough per month in interest to pay my cell phone and home internet bills entirely. But I don’t really have any other discretionary monthly subscriptions. My savings will probably be used on a new kitchen and bathroom eventually.

Im doing well. Started off in my mid twenties reading books on finance and investing. Lived in a drug house where I rented out a room and had a dead end job. Got an education, decent job, and invested aggressively for the next 20 years. Im planning on retiring in my mid 50's if everything goes to plan. 🤞

I was right on the edge of being able to pay rent on time, for the first time in six months.

Then a family member arrived in town and has been staying with me. His other option is staying on the street or in a shelter, both options of which make his health issues worse. This has disrupted my sleep and psychological rest, resulting in me being able to work less.

Also, I got rear ended while stopped at a red light last week, giving me a concussion. This has also reduced the amount I can work.

I’m extremely worried about my financial status. I cannot cover the expenses I have, let alone any unexpected new expenses.

I’m squarely on the road to being homeless, unless a miracle happens.

Ever read Miller's Death of a Salesman? well it's almost like that, but without any insurance.

I can currently cover a $1000 expense, but if something else happens that costs that much I'll have to use my credit card, and if a third thing happens I'm fucked.

My relationship with money isn't good ("not wise" might be a better term), and now that I know my parents as an adult, I understand that both of them are terrible with money. Do I blame them? I try not to, but sometimes that's hard when I see how they continue to make poor $$ choices. My mom constantly made over 6 figures for a good portion of her later life, but now can't work, and she has nothing but social security to live off of. Through the years she's used up all her retirement and savings a few times on things like saving houses she eventually loses anyway.

My dad just dropped the news that he owes 80k to the IRS because he's been pulling from his retirement for years now to sustain his lifestyle in a high-cost area.

Myself? I didn't really get my shit together financially until I was in my mid 30s. Mostly my fault, though there were a few things that happened outside of my control that forced me to "start over" financially. That's life.

My relationship with money now is respectful. I take the time and care to slowly work my way through understanding what to do and how to do it. I only have one credit card and it's a low amount, so it can't get wildly out of control but it's there if I need it.

Right now I've got around 1.5k in savings (not including my 401/Roth). My plan is to save up to 10k for an emergency fund and then start to invest what I save up after that.

I listen to a lot of Caleb Hammer on YouTube. It helps, haha.

Not saying the exact number, but well enough that I could go and buy an X5 right now. I'd rather spend any excess money on charities over materialistic status symbols though, and I've donated a lot of money to research charities in particular.

Went from living paycheck to paycheck to having a full $1k in my account right now after dumping my ex and moving out. I always thought that having two incomes combined would be better than just my own, but never realized how massive a drain my ex was compared to just taking care of myself.

That being said, I'm able to live cheaply because I use public transit, cook all my own meals, and I don't eat that much. I think for most adults in the U.S., especially those who need a car for transit, the honest truth is that their wages just barely cover all their necessary living expenses.

Better than ever. But I hate my job with a deep and burning passion, and I'm pretty deeply burnt out. So I'm not sure what to do. I'm worried that I won't be able to find anything that pays as well.

My wife and I are comfortable. Both of our parents have worked in banking and taught us budgeting beyond what school taught us.

Keeping a steady well paying job is key. Sadly, there are so many people who no fault of their own can't get well paying jobs or live in areas where well paying jobs are rare.

I can't cover an unexpected 1k. Thats my entire bank account. Every month my paycheck is eaten by bills and obligations and every other month my rent raises while my salary stays the same. I have 1 dollar in my savings, but a 401k with 5k in it. I also have kids and a wife that stays at home to watch them. May not be the best financially but I can't actually afford daycare to begin with.

I've certainly been worse of, but not I'm not.. Great. ButI have a roof over my head and me and the cat are fed. I can enjoy a video game here and there. However, I don't have $1,000. Not for lack of trying, but things happen (moved, sick cat, broken car, the usual). I personally like to have at least one month of rent, but that doesn't always happen.

Sometimes it just works out that everything I need takes everything I have.

I read that half of Americans couldn’t cover an unexpected $1,000 expense.

Without borrowing or selling property, yeah. Not a lot of people have that much liquid cash laying around.

But I wouldn't assume that this would be some kind of economic devastation. Our whole system revolves around easy credit.

If the unexpected expense is something that can be paid for on a credit card, that 20% interest isn't exactly ideal but for many people it can be a simple task of buying now and paying it off over 2 or 3 months. For them, $1000 isn't a lifestyle changing expense.

For others, $1000 might be devastating. It might be the difference between making rent or not, and ultimately lead to eviction and maybe even homelessness.

So liquidity is a different question from financial health or resilience, even if they're somewhat correlated. There are other metrics out there more directly measuring financial stability or vulnerability.