All Things Personal Finance

[Cushi]

I thought I would start this topic to discuss all things personal finance, like tips on saving money, emergency funds, budgeting etc. 

 

I’ll start with a video I saw on YouTube that gave great tips.

 

 

[Cushi]

Here’s a video explaining the difference between whole and term life insurance.

 

 

[ChrisW]

I'll have to watch the videos later.  Good topic choice.  

[Cushi]

Proverbs 21:20 says:

 

20 Precious treasure and oil are found in the house of the wise,+

But the stupid man will squander* what he has.+

 

This scripture shows that if we’re planing a luxury vacation or buying anything that’s more of a luxury than a need, it wouldn’t be wise to spend all of our money or almost all of it on it. It’s wise to save some “for a rainy day.” Some personal finance professionals suggest an emergency fund of 3 to 6 months of living expenses. This is sound advice and is in line with the Bible’s advice. Having an emergency fund for emergencies will keep one from relying on credit cards for emergencies and will avoid potential credit card debt, or even bad credit.

[Cushi]

This is the main reason why I only bank with credit unions and will never give my money to a major bank again.

 

 

[Witness1970]

 

On 5/24/2023 at 12:38 AM, *Jack* said:

I thought I would start this topic to discuss all things personal finance, like tips on saving money, emergency funds, budgeting etc. 

 

I’ll start with a video I saw on YouTube that gave great tips.

 

 

For the past decade, I have had a spreadsheet set up to track my spending.  At the end of each year, I copy last year's budget into a new spreadsheet for the coming year.  I change the dates for my and my wife's Social Security checks.  Mine is on the third Wednesday of each month and my wife's is on the 4th Wednesday of each month.  I can let the computer help me as I change those dates.  Things that are set payments stay the same.  Things that are discretionary spending become miscellaneous.  Once a day, I check my bank accounts and all my credit cards.

 

On 5/24/2023 at 11:09 AM, *Jack* said:

Here’s a video explaining the difference between whole and term life insurance.

 

 

I don't remember how long ago I stopped using whole life insurance.  I have had term insurance for the last 50 years.  

 

On 5/24/2023 at 10:08 PM, *Jack* said:

This is the main reason why I only bank with credit unions and will never give my money to a major bank again.

 

 

I have a Credit Union account, but my wife wanted a local bank when we moved to North Carolina.  The interest paid on the Credit Union account is a lot more than the other bank.  The other bank pays about $0.25 cents per month on the savings (called a Growth account) and $0.01 per month on the "reserve" account used for long-term planning.  The main account is called "short-term planning" and pays no interest.  I keep a minimum amount in the short-term planning account since all my planning is long-term.  The checking account in the Credit Union with about $500.00 in it gets more interest than the Big Bank Savings account with $5,000.00 in it.

 

The reason I say all my planning is long-term is that we use credit cards to buy groceries, gas, fast food, restaurants, etc.  Paying all the credit cards is long-term planning.  We never use cash except for contributions to whoever provides the vehicle on certain days and that is a small amount each time.  

[Cushi]

17 hours ago, Witness1970 said:

 

For the past decade, I have had a spreadsheet set up to track my spending.  At the end of each year, I copy last year's budget into a new spreadsheet for the coming year.  I change the dates for my and my wife's Social Security checks.  Mine is on the third Wednesday of each month and my wife's is on the 4th Wednesday of each month.  I can let the computer help me as I change those dates.  Things that are set payments stay the same.  Things that are discretionary spending become miscellaneous.  Once a day, I check my bank accounts and all my credit cards.

 

I don't remember how long ago I stopped using whole life insurance.  I have had term insurance for the last 50 years.  

 

I have a Credit Union account, but my wife wanted a local bank when we moved to North Carolina.  The interest paid on the Credit Union account is a lot more than the other bank.  The other bank pays about $0.25 cents per month on the savings (called a Growth account) and $0.01 per month on the "reserve" account used for long-term planning.  The main account is called "short-term planning" and pays no interest.  I keep a minimum amount in the short-term planning account since all my planning is long-term.  The checking account in the Credit Union with about $500.00 in it gets more interest than the Big Bank Savings account with $5,000.00 in it.

 

The reason I say all my planning is long-term is that we use credit cards to buy groceries, gas, fast food, restaurants, etc.  Paying all the credit cards is long-term planning.  We never use cash except for contributions to whoever provides the vehicle on certain days and that is a small amount each time.  

Cool. Like you, I also have a Credit Union account. The checking account earns 4.75% on balances up to 25K, or a maximum of $1,187 or about $98 a month. I also have a savings account, which only yields 1.75%, so I keep my money in the checking account instead of the savings account for obvious reasons. 

 

I plan on doing some major remodeling on my home next spring. After that I plan on “investing” in CD accounts. I’ve gone over and over in my mind on whether or not I wanted to invest in the stock market, a 401K, Roth IRA, etc. but I REALLY have this thing about losing money. I’ve watched a ton of videos where financial gurus say the stock market typically gives you a return… but I’m not a person that takes risks when it comes to money. 

I have no debts, so the way I see it, I don’t necessarily have to invest in something that would give a greater return than CD’s because I’m able to save a substantial amount of money a month with no mortgage or other debts. So if this system lasted long enough for me to retire, I would have enough money to live off of for the rest of my life, since I’m naturally a saver. 
 

I use credit cards all month too. I would use credit cards for every purchase but my credit union requires that I make a certain number of purchases with my debit card a month to get the monthly dividend. I’ve been using credit cards for 6 years now and I haven’t paid one penny in interest because I refuse to pay some sleazy credit card company interest. I pay all my credit card bills 5 days after the statement closing date. The rule that I live by is not to spend anything on a credit card, unless I already have the money in my checking account. I just use credit cards for cash back rewards and to build my credit.
 

 

Edited May 27, 2023 by *Jack*

[Cushi]

 

[Witness1970]

On 5/27/2023 at 12:08 AM, *Jack* said:

Cool. Like you, I also have a Credit Union account. The checking account earns 4.75% on balances up to 25K, or a maximum of $1,187 or about $98 a month. I also have a savings account, which only yields 1.75%, so I keep my money in the checking account instead of the savings account for obvious reasons. 

 

I plan on doing some major remodeling on my home next spring. After that I plan on “investing” in CD accounts. I’ve gone over and over in my mind on whether or not I wanted to invest in the stock market, a 401K, Roth IRA, etc. but I REALLY have this thing about losing money. I’ve watched a ton of videos where financial gurus say the stock market typically gives you a return… but I’m not a person that takes risks when it comes to money. 

I have no debts, so the way I see it, I don’t necessarily have to invest in something that would give a greater return than CD’s because I’m able to save a substantial amount of money a month with no mortgage or other debts. So if this system lasted long enough for me to retire, I would have enough money to live off of for the rest of my life, since I’m naturally a saver. 
 

I use credit cards all month too. I would use credit cards for every purchase but my credit union requires that I make a certain number of purchases with my debit card a month to get the monthly dividend. I’ve been using credit cards for 6 years now and I haven’t paid one penny in interest because I refuse to pay some sleazy credit card company interest. I pay all my credit card bills 5 days after the statement closing date. The rule that I live by is not to spend anything on a credit card, unless I already have the money in my checking account. I just use credit cards for cash back rewards and to build my credit.
 

 

My credit Union accounts are the other way around.  My savings account pays a slightly (very slightly) higher interest than my checking account does.  No limits on the amount in the savings account.  I only use cashback credit cards myself.  One of my credit cards, which was cashback, was transferred to another company that gave travel rewards.  I never used that card again.  They canceled the card because I never used it, but my credit score is 825 anyway.

[Cushi]

7 hours ago, Witness1970 said:

My credit Union accounts are the other way around.  My savings account pays a slightly (very slightly) higher interest than my checking account does.  No limits on the amount in the savings account.  I only use cashback credit cards myself.  One of my credit cards, which was cashback, was transferred to another company that gave travel rewards.  I never used that card again.  They canceled the card because I never used it, but my credit score is 825 anyway.

I don’t know why my Credit Union has it set up that way. You’d think they would try to incentivize people to have a large sum of money in their savings account and not touch it so they can loan it out several times to people, as opposed to people constantly spending money from their checking accounts. The interest rates on the savings accounts are 1.75% on balances up to 75K and 0.25% on balances over 75K. I’m gonna set up a high yield savings account elsewhere because that’s not good enough.

 

Yeah, I only use cash back cards with no annual fee. Maybe when I start traveling more, I’ll consider a travel rewards one, but I don’t need one now.

[Hotteok]

I heard that it’s easier to make riches than in other countries due to the strength of dollars and stock market.. is that true? 

I should’ve bought apple stocks after I watched Forest Gump.🥺

 

[computerwiz]

1 hour ago, Hotteok said:

I heard that it’s easier to make riches than in other countries due to the strength of dollars and stock market.. is that true? 

I should’ve bought apple stocks after I watched Forest Gump.🥺

 

 

When you know what you're doing and don't gamble, it is.  But don't think it's so easy that you're gonna get rich.  If it was that easy, the rich wouldn't be less than 1%...

[Witness1970]

How do you define rich people?

 

ChatGPT says:

Rich people are generally defined as individuals or households who possess significant wealth and financial resources that exceed the average or median level of wealth in a given society or economy. However, the definition of being rich can vary depending on cultural, societal, and economic contexts. Some common factors used to define rich people include:

1. Financial assets: Rich people often have substantial financial assets, including cash, investments, stocks, bonds, real estate, and business interests. Their wealth allows them to maintain a comfortable lifestyle and acquire luxury goods.

2. Income: High earners with substantial annual income are often considered rich. They typically earn significantly more than the average income and have a consistent flow of wealth from various sources such as salaries, bonuses, investments, or business profits.

3. Net worth: Net worth is the total value of a person's assets (including property, investments, and savings) minus any debts or liabilities. Rich individuals usually have a high net worth, indicating their overall wealth and financial standing.

4. Lifestyle: Rich people often have the means to afford a luxurious lifestyle. They can afford expensive homes, vehicles, travel, fine dining, and other high-end experiences. Their wealth enables them to enjoy a level of comfort and indulgence beyond what most people can afford.

5. Influence and power: Rich individuals may hold influential positions in society, such as business leaders, entrepreneurs, executives, or high-ranking professionals. Their wealth and social connections may grant them access to networks, opportunities, and decision-making power.

It is important to note that the perception of wealth and richness can vary across different cultures and societies. What may be considered rich in one country or community might not be the same in another. Additionally, wealth is a relative concept, as people often compare their financial status to others within their immediate surroundings or peer group.

 

[Witness1970]

If I have enough money invested so that I can live off the interest without touching the principle (I don't), would I be considered rich, or do you call it well-off, or is it just sustenance and covering?

 

What percentage of Americans are rich?

ChatGPT says:

The definition of "rich" can vary depending on the criteria used to determine wealth. However, if we consider the top percentiles of income or wealth distribution as an indication of being "rich," we can provide some estimates based on available data.

According to the U.S. Census Bureau's 2019 American Community Survey, here are the income thresholds for various percentiles in the United States:

• Top 5%: Annual household income of approximately $248,000 or higher.
• Top 1%: Annual household income of approximately $531,000 or higher.

Based on these income thresholds, we can estimate the percentage of Americans who fall into these categories:

• Top 5%: Roughly 5% of the population.
• Top 1%: Approximately 1% of the population.

It's important to note that these estimates are based on income and do not take into account other factors like net worth or assets. Additionally, income thresholds can vary over time and may differ depending on the data source or methodology used. Therefore, it's always advisable to refer to the most recent and comprehensive studies for accurate figures.

[computerwiz]

3 hours ago, Witness1970 said:

How do you define rich people?

 

You don't have to worry about anything financially.  You can buy pretty much whatever, whenever, without taking a loan.

[Tortuga]

4 hours ago, Witness1970 said:

If I have enough money invested so that I can live off the interest without touching the principle (I don't), would I be considered rich, or do you call it well-off, or is it just sustenance and covering?

There is a difference between being rich and being financially independent. Its easy to live off the interest from your investments if you have a lifestyle that fits that income.

[coolbrz731]

On 5/28/2023 at 8:58 PM, *Jack* said:

 

When it comes to credit cards, this absolutely works.  My statement is put out on the 15th and the 26th for my various cards.  I make sure that whatever I spend, I pay back before the statement is created.  That way, I'm not in debt, I don't get charged interest, and I enjoy the rewards the cards offer.  So in a way they're paying me to use the cards.  I have reminders in my google calendar to pay certain credit cards, and I'm very disciplined on how I use them.  Being content with what you have is the principle I use.  It works out great, and they're available in case of an emergency, like a rock penetrates my oil pan on the freeway(yes, that happened).  Or someone goes to the emergency room and figures out how much their health insurance sucks when it comes to covering emergency room costs.

 

Edit to add:  If your card has an annual fee, make sure the benefits you collect are more than the annual fee.  I'm not quite there yet, but I'm close to graduating from the "credit builder" cards to the "big boy" cards.

Edited June 13, 2023 by coolbrz731

[Cushi]

On 6/12/2023 at 11:21 AM, Hotteok said:

I heard that it’s easier to make riches than in other countries due to the strength of dollars and stock market.. is that true? 

I should’ve bought apple stocks after I watched Forest Gump.🥺

 

There may be some truth to that. I don’t know enough about the stock market to say. Yeah, there’s stocks a lot of us regret not investing in like Apple and Amazon. I’m just too afraid to invest in the stock market. Especially when nowadays stock can plummet because of a tweet or a viral video… or like how the superstore Target lost 9 billion in value in one week because of its controversial “pride month” collection. 

[Witness1970]

2 hours ago, computerwiz said:

 

You don't have to worry about anything financially.  You can buy pretty much whatever, whenever, without taking a loan.

I can buy pretty much whatever, whenever, without taking out a loan, unless its a house.  I would have to sell my house before I could buy another one.

Of course a large medical bill might be a problem.

[Cushi]

47 minutes ago, coolbrz731 said:

When it comes to credit cards, this absolutely works.  My statement is put out on the 15th and the 26th for my various cards.  I make sure that whatever I spend, I pay back before the statement is created.  That way, I'm not in debt, I don't get charged interest, and I enjoy the rewards the cards offer.  So in a way they're paying me to use the cards.  I have reminders in my google calendar to pay certain credit cards, and I'm very disciplined on how I use them.  Being content with what you have is the principle I use.  It works out great, and they're available in case of an emergency, like a rock penetrates my oil pan on the freeway(yes, that happened).  Or someone goes to the emergency room and figures out how much their health insurance sucks when it comes to covering emergency room costs.

 

Edit to add:  If your card has an annual fee, make sure the benefits you collect are more than the annual fee.  I'm not quite there yet, but I'm close to graduating from the "credit builder" cards to the "big boy" cards.

I pay all my credit cards off 5 days after the statement closing date. I absolutely refuse to pay interest. I use them throughout the month and pay them down to 1% utilization before my statement closing date comes. I make sure 1% utilization gets reported to the credit bureaus because I’ve noticed that my credit score drops every single time 0% gets reported. It goes back up to what it was previously the next month 1% gets reported. 

I agree with you on annual fees. This is very important.

[coolbrz731]

32 minutes ago, *Jack* said:

I make sure 1% utilization gets reported to the credit bureaus because I’ve noticed that my credit score drops every single time 0% gets reported.

That's called the 0% penalty.  I've seen it happen on a credit forum I belong to.  People with 800+ scores get wrecked by that.

[Cushi]

14 minutes ago, coolbrz731 said:

That's called the 0% penalty.  I've seen it happen on a credit forum I belong to.  People with 800+ scores get wrecked by that.

Yup. When my score was in the 700 range I would lose up to 40 points, but now that I’m in the 800 range, I lose about 70 points. This is why it’s not good to go months without using your credit card.

[Pabo]

I don't have a credit card and never needed to have one, yet my score is still 850.

 

Don't forget, this is based here in Australia, not the USA.

 

 

[Witness1970]

On 5/27/2023 at 12:08 AM, *Jack* said:

I use credit cards all month too. I would use credit cards for every purchase but my credit union requires that I make a certain number of purchases with my debit card a month to get the monthly dividend. I’ve been using credit cards for 6 years now and I haven’t paid one penny in interest because I refuse to pay some sleazy credit card company interest. I pay all my credit card bills 5 days after the statement closing date. The rule that I live by is not to spend anything on a credit card, unless I already have the money in my checking account. I just use credit cards for cash back rewards and to build my credit.
 

My credit union does not require me to ever use my debit card, and I don't.  I have a credit card from the credit union but never use it. I don't use either card from my credit union because they are not cashback cards.  You have to order from their list and then pay for shipping and handling or some sort of fee. You could purchase movie tickets for instance, but by the time I paid their fees, it was cheaper to pre-order tickets online and then walk into the movie theater (theatre, if you're British or Canadian) with the tickets.

 

I have considered using a different credit card each month so that it won't look as if I am carrying a balance.  The reason I don't is that I have automatic payments set up that I would have to update each month.  But with a credit score of 830, I really don't worry about it.  If I paid each credit card off every month I guess my credit score would be 850, but I just like to have the money drawing interest in my account since I never pay interest on any credit card anyway.

Edited June 23, 2023 by Witness1970
Added last line to last paragraph.

[Cushi]

On 6/23/2023 at 7:26 AM, Witness1970 said:

My credit union does not require me to ever use my debit card, and I don't.  I have a credit card from the credit union but never use it. I don't use either card from my credit union because they are not cashback cards.  You have to order from their list and then pay for shipping and handling or some sort of fee. You could purchase movie tickets for instance, but by the time I paid their fees, it was cheaper to pre-order tickets online and then walk into the movie theater (theatre, if you're British or Canadian) with the tickets.

 

I have considered using a different credit card each month so that it won't look as if I am carrying a balance.  The reason I don't is that I have automatic payments set up that I would have to update each month.  But with a credit score of 830, I really don't worry about it.  If I paid each credit card off every month I guess my credit score would be 850, but I just like to have the money drawing interest in my account since I never pay interest on any credit card anyway.

My Credit Union offers credit cards with really a large credit amount and a low APR but there’s no other benefit. They don’t offer cash back, which is my main concern. And the low APR is useless to me, since I don’t pay interest. 
 

Actually your credit score may drop if you pay your card off before the statement closing date. I make sure only 1% of my available credit is reported every month after the statement closing date. I noticed every time 0% gets reported it drops significantly. Sometimes 70 points. I was able to achieve a 816 credit score using only 1% of my available credit with a credit history of only 6 years. 

Edited July 12, 2023 by *Jack*