Comments on: “Finances are so complicated”

By: Dave

Dave — Wed, 27 Jan 2010 15:13:51 +0000

Based on 2009, we split 65|35 spend to save (after taxes). The 35 got split up between 16% Retirement, 10% debt reduction (mortgage principal payments), 9% cash savings. I thought we were saving less since the retirement comes off the top, and in the monthly budget we view the entire mortgage payment as an expense, when in reality over half is going to principal. Of course 2009 was a good year for us.

By: Larry

Larry — Mon, 25 Jan 2010 02:39:13 +0000

Platypus: "Your question makes an assumption that all your readers agree on making fixed monetary donations. I don't like that assumption. I would almost always choose to donate my personal time over my family's income."

Good point. It should be also mentioned that you can donate goods like used clothes, books, etc., and if you can itemize your deductions, you can deduct the fair market value of these items.

By: ImAfuziPlatypus

ImAfuziPlatypus — Sun, 24 Jan 2010 23:35:11 +0000

One other comment. I like the don't spend more than you make concept. I think the variable in that is time. How long of a period are you measuring that rule against? For someone like Ninja who is seemingly stabalized with regards to income, it probably works on a monthly basis (sans large expenses like an engagement ring:). For a recent graduate or a new business owner, you might have to measure that rule over several years. This allows an increase in debt (hopefully for good reasons) until your income and life situations stabilize. Than you can begin measuring shorter periods until monthly or quarterly makes sense.

I just wanted to say that because if you are always concerned with net positive numbers, you might stall and get frustrated with your finances vs. lifestyle and opportunities.

The best thing for everyone is to understand what you're doing, while you're doing it. Don't worry about paying cash for your education or home, but stop financing TV's and video games!

By: ImAfuziPlatypus

ImAfuziPlatypus — Sun, 24 Jan 2010 23:23:45 +0000

Our break down is 20% save and 80% spend. We contribute the max into our 401(k) and IRA's (approx $43M/yr). As a banker I find it difficult to leave idle money earning interest that is a net loss to inflation. One of our unencumbered properties has a HELOC that provides an emergency fund if needed. Spending goes to bills, living expenses, entertainment, and additional principal payments on debt.

Your question makes an assumption that all your readers agree on making fixed monetary donations. I don't like that assumption. I would almost always choose to donate my personal time over my family's income. Also, I feel that immutable giving leads to less accountability which is one of many moral hazards not-for-profit organizations fall into.

By: ImAfuziPlatypus

ImAfuziPlatypus — Sun, 24 Jan 2010 23:14:58 +0000

Taxes are consider spending money. They represent your share of public services and consumption etc… That being said, taxes wash out of the equation because if you talk about EBIDA than taxes are an expense, if your talking about EBITDA then you have made them net out.