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- credit card debt is an emergency and optimizing any other money stuff while you carry it is like rearranging your sock drawer while your house is on fire - s

- credit card debt is an emergency and optimizing any other money stuff while you carry it is like rearranging your sock drawer while your house is on fire - save 25x your annual spending and never work again - start by saving at least something (even 1%) and save 50% of all future raises - long commutes are for fools. So are new cars--buy used. - spend on things that you value. I've given myself a tech budget for years because good tools matter to me - host a dinner party instead of eating out (most of the time) - If you have a gamblers mindset to investing, carve out a small portion (10%?) of your money and use it for risky investing. I call mine the 'casino fund'. Track your returns. - read voraciously about finance and early retirement. You only need about 20 books or so to gain a background that is easily more valuable than your college degree. This is a good start: https://www.reddit.com/r/financialindependence/wiki/books https://www.reddit.com/r/financialindependence/wiki/books

k2xl 9y ago
Agree generally with these points except for the buying used cars. Buying new, inexpensive cars are a much better investment if you plan on owning them for a long time. Used cars don't last as long, and they carry more risk. The amount of money spent on repairs can be unpredictable.
- baccredited 9y ago
  I don't disagree. But... the average American owes over 30,000 in car debt. Just be smart. http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-and-for-longer-on-their-auto-loans.html http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-... I favor buying used cars under 3 years old that still have like 75K or more of manufacturer warranty in place.
- theandrewbailey 9y ago
  I've heard cars sold by rental car companies are like new, but cost about half as much.
  - noxxten 9y ago
    Rental cars are hit or miss. You either end up with the one that didn't get much use outside the average business trip... Or the car that was abused. My last car was an ex-rental car, and it deteriorated very quickly after I signed the loan for it. Be careful.
  - maccard 9y ago
    Having driven many rental cars, I'd never buy one...
  - thirdsun 9y ago
    The problem with rental cars is that everyone treats them as if it isn't theirs. I'd be careful about buying something nobody feels responsible for.
- runamok 9y ago
  That used to be true but if you get a used car that has records of regular oil changes and maintenance there is a high probability it will be fine. Most cars are designed to last 200k or more miles these days. Think of it this way, is the depreciation between a new and lightly used car enough that you can afford a major maintenance event like engine or transmission repair? If so used is fine. The type of used car matters too though. Think Toyota Corolla and not bmw 3 series...
  - kamaal 9y ago
    A new inexpensive Honda or Toyota will still win over an older one. Frankly speaking you will spend only marginally higher for the new car. And yes the thing about frequent repairs could happen with the older car.
    - runamok 9y ago
      Corolla starts at $18,500 vs. here are the prices for older models: https://www.cargurus.com/Cars/price-trends/Toyota-Corolla-d295 https://www.cargurus.com/Cars/price-trends/Toyota-Corolla-d2... Those look like very significant savings to me. And what does "Win" mean? As far as safety goes I agree a 2017 corolla is demonstrably better than a 2000 one. A 2010 Corolla will save you $10000 over a 2017 one. My core premise is most new cars are of much better quality than those from 20+ years ago when it made sense to buy new because that 36k warranty and 60k power train warranty was critical. These days most cars will not fail that early unless it is on petty cosmetic things. My wife had a 1999 Corolla that made it > 300000 miles on it. IIRC all she did was oil changes and occasional maintenance like brakes. The biggest repair I was involved with was when the starter motor wire shorted to the chassis and burned up the wiring harness. That would have been an expensive repair to do "right" by pulling the entire harness but I instead replaced the wires with burned insulation one by one with correct gauge soldered and shrink wrapped and as far as I know is still alive and well with a relative. I think the repair cost me a few $100 but that car had no major work done over its life span AFAIK. There's my anecdata...
- AnimalMuppet 9y ago
  It's not just money. A car that's in the shop is a car that you can't use. So you have to make alternate arrangements while it's in the shop, plus figuring out how you're going to get it to the shop. A cheap but unreliable car is a false economy. Also, do regular maintenance. Change the oil (or have it changed). Change the transmission fluid. Change the timing belt. A good car can last a decade or two with good maintenance.
- thatwebdude 9y ago
  "Smart Cars" (As they were once marketed before actual Smart Cars) and "Used Cars" are not the same to me. Buying something 1 or 2 years old at 75% of the price with less than 20k miles just feels new to me. But maybe I've trained myself for that.
  - dragonwriter 9y ago
    By “Smart Cars” do you mean something like certified pre-owned cars?
    - thatwebdude 9y ago
      Yes, exactly. The marketing local used to be "certified pre-owned" = "smart cars". The terms were used interchangeably, usually by differing brands.
tompazourek 9y ago
Could you please elaborate a bit on the second point (25x spending)? How does that work out? I'm a bit skeptical about this. At 25, people have much lower expenses than when they have a family and kids, mortgage, etc. Also you're living longer than to 50, so I assume there's some investing involved. Thanks
- k2xl 9y ago
  It's a typical financial independence "rule" Once you've accumulated enough cash, if you begin to withdraw around 4% per year and invest the rest, it is unlikely you will run out of money. The 25x rule relatively decent estimation.
- baccredited 9y ago
  http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
- xapata 9y ago
  It's based on the assumption that the stock market will offer annualized returns of 6% to 8% and inflation will be between 2% and 4%. With 25x your annual spending as invested capital you can expect to keep the same real spending power in perpetuity (real, not nominal). I'm more nervous, so I'm aiming for 40x annual spending. The stock market growth of the last 100 years might have been an anomaly. Healthcare costs may cause my annual spending to increase as I age.
  - thatwebdude 9y ago
    Agreed, compound interest is something most people find hard to visualize. I understand your aim for annual spending, and that's totally within means for you (whatever you're comfortable with). With the right goals, numbers, and savings you can live mostly off of interest, and that will get you furthest in retirement. In my experience, seeing and hearing of people's general retirement goals and savings; they simply don't have enough to not feel it when they're done. A mindset like the OP or yours makes that stage in life much more enjoyable and worry-free.
sametmax 9y ago
Lot of things money related. Yes having a confortable life is a nice goal and achievement. But there are many others things I would do in parallel otherwise you'll get unhappy and stuck in your mindset.
- jazzyk 9y ago
  The OP was asking for financial advice, specifically.
- deleted 9y ago
  [deleted]
- valbaca 9y ago
  Ask HN: What personal FINANCE advice would you give your 25yo self ?
noxxten 9y ago
On your second point, I'm assuming those savings should be invested, correct? Enough to earn at minimum a 4% ROI?
- tbihl 9y ago
  The underlying assumption to the 4% rule is that you get the average 7% growth of the US stock market. This allows for 4% withdrawal and 3% to keep up with inflation, which historically would have worked at almost all points in the US market. Firecalc [1] lets you look at how your assumptions would fare in all sequences of years of US stock data (percentage of outcomes where you would've been fine/bankrupt.) [1] http://www.firecalc.com/ http://www.firecalc.com/
AndrewKemendo 9y ago
What exactly is the outcome here? Lets say I do all of this, what's my life supposed to look like? I mean these are all good advice points if you want to increase the zeroes in your bank incrementally, but they are also the same tips that lead to a mundane, average, uninspiring life.
- antoniuschan99 9y ago
  Looks like he's advocating Freedom. Up to the person to live whatever life they want to live.
  - AndrewKemendo 9y ago
    That's so vague that it doesn't mean anything.
    - runamok 9y ago
      As in once you have enough money to live in the returns you don't need to work, you can have much more flexibility in how you and where you spend your time. Contrast that with a person living paycheck to paycheck who is one flu or broken arm or car accident away from disaster. The op asked for financial advice not how to be fulfilled.
      - AndrewKemendo 9y ago
        The op asked for financial advice not how to be fulfilled. They are inextricably linked, so you can't give financial advice without understanding the motivations and desires of the individual. The OP left that out because he probably doesn't realize that your finance situation should work for your motivations. Having financial goals without life goals is a great way to make sure you're not broke but no meaningful life.
        runamok 9y ago
        I kind of see your point but not sure I agree. A fulfilled life can be so many things to so many people. It can be about fitness/sports, or knowledge/learning, children, marriage, family, friendships, religion, travel, material things, music, career, social good, art, inventions, etc. Some of those things are linked to money and some aren't. Financial health can help enable some of these things but a bad financial situation can completely hamstring you too. I do agree that a good financial situation does not always make you happy or even less stressed. Not that long ago I had more or less zero savings due to some early setbacks, recession, etc. I don't know if I ever will think I have enough until I could pay for my parents' failing health costs, help my nephew pay for college and various other things. I suspect this is true for many. Before I was just hoping to not have to eat cat food when I'm old. Now I want to do more for my family and my wife's family and also not eat cat food when I am old. I will also say knowing I can survive without a job for a year or more gives me comfort when I am stressed or not engaged.
kzisme 9y ago
How does one even start investing? Aside from a 401k what sort of things should people be looking into? Would your casino funds be something that (you) actively manage?
- castratikron 9y ago
  It depends on your goals. If you're completely new to investing, check out the book "Investing for Dummies". That's how I started. Investing is really not too difficult to understand. For most people it's more of a time game than anything.

k2xl 9y ago

Agree generally with these points except for the buying used cars. Buying new, inexpensive cars are a much better investment if you plan on owning them for a long time. Used cars don't last as long, and they carry more risk. The amount of money spent on repairs can be unpredictable.

baccredited 9y ago
I don't disagree. But... the average American owes over 30,000 in car debt. Just be smart. http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-and-for-longer-on-their-auto-loans.html http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-... I favor buying used cars under 3 years old that still have like 75K or more of manufacturer warranty in place.
theandrewbailey 9y ago
I've heard cars sold by rental car companies are like new, but cost about half as much.
- noxxten 9y ago
  Rental cars are hit or miss. You either end up with the one that didn't get much use outside the average business trip... Or the car that was abused. My last car was an ex-rental car, and it deteriorated very quickly after I signed the loan for it. Be careful.
- maccard 9y ago
  Having driven many rental cars, I'd never buy one...
- thirdsun 9y ago
  The problem with rental cars is that everyone treats them as if it isn't theirs. I'd be careful about buying something nobody feels responsible for.
runamok 9y ago
That used to be true but if you get a used car that has records of regular oil changes and maintenance there is a high probability it will be fine. Most cars are designed to last 200k or more miles these days. Think of it this way, is the depreciation between a new and lightly used car enough that you can afford a major maintenance event like engine or transmission repair? If so used is fine. The type of used car matters too though. Think Toyota Corolla and not bmw 3 series...
- kamaal 9y ago
  A new inexpensive Honda or Toyota will still win over an older one. Frankly speaking you will spend only marginally higher for the new car. And yes the thing about frequent repairs could happen with the older car.
  - runamok 9y ago
    Corolla starts at $18,500 vs. here are the prices for older models: https://www.cargurus.com/Cars/price-trends/Toyota-Corolla-d295 https://www.cargurus.com/Cars/price-trends/Toyota-Corolla-d2... Those look like very significant savings to me. And what does "Win" mean? As far as safety goes I agree a 2017 corolla is demonstrably better than a 2000 one. A 2010 Corolla will save you $10000 over a 2017 one. My core premise is most new cars are of much better quality than those from 20+ years ago when it made sense to buy new because that 36k warranty and 60k power train warranty was critical. These days most cars will not fail that early unless it is on petty cosmetic things. My wife had a 1999 Corolla that made it > 300000 miles on it. IIRC all she did was oil changes and occasional maintenance like brakes. The biggest repair I was involved with was when the starter motor wire shorted to the chassis and burned up the wiring harness. That would have been an expensive repair to do "right" by pulling the entire harness but I instead replaced the wires with burned insulation one by one with correct gauge soldered and shrink wrapped and as far as I know is still alive and well with a relative. I think the repair cost me a few $100 but that car had no major work done over its life span AFAIK. There's my anecdata...
AnimalMuppet 9y ago
It's not just money. A car that's in the shop is a car that you can't use. So you have to make alternate arrangements while it's in the shop, plus figuring out how you're going to get it to the shop. A cheap but unreliable car is a false economy. Also, do regular maintenance. Change the oil (or have it changed). Change the transmission fluid. Change the timing belt. A good car can last a decade or two with good maintenance.
thatwebdude 9y ago
"Smart Cars" (As they were once marketed before actual Smart Cars) and "Used Cars" are not the same to me. Buying something 1 or 2 years old at 75% of the price with less than 20k miles just feels new to me. But maybe I've trained myself for that.
- dragonwriter 9y ago
  By “Smart Cars” do you mean something like certified pre-owned cars?
  - thatwebdude 9y ago
    Yes, exactly. The marketing local used to be "certified pre-owned" = "smart cars". The terms were used interchangeably, usually by differing brands.

tompazourek 9y ago

Could you please elaborate a bit on the second point (25x spending)? How does that work out? I'm a bit skeptical about this. At 25, people have much lower expenses than when they have a family and kids, mortgage, etc. Also you're living longer than to 50, so I assume there's some investing involved. Thanks

k2xl 9y ago
It's a typical financial independence "rule" Once you've accumulated enough cash, if you begin to withdraw around 4% per year and invest the rest, it is unlikely you will run out of money. The 25x rule relatively decent estimation.
baccredited 9y ago
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
xapata 9y ago
It's based on the assumption that the stock market will offer annualized returns of 6% to 8% and inflation will be between 2% and 4%. With 25x your annual spending as invested capital you can expect to keep the same real spending power in perpetuity (real, not nominal). I'm more nervous, so I'm aiming for 40x annual spending. The stock market growth of the last 100 years might have been an anomaly. Healthcare costs may cause my annual spending to increase as I age.
- thatwebdude 9y ago
  Agreed, compound interest is something most people find hard to visualize. I understand your aim for annual spending, and that's totally within means for you (whatever you're comfortable with). With the right goals, numbers, and savings you can live mostly off of interest, and that will get you furthest in retirement. In my experience, seeing and hearing of people's general retirement goals and savings; they simply don't have enough to not feel it when they're done. A mindset like the OP or yours makes that stage in life much more enjoyable and worry-free.

sametmax 9y ago

Lot of things money related. Yes having a confortable life is a nice goal and achievement. But there are many others things I would do in parallel otherwise you'll get unhappy and stuck in your mindset.

jazzyk 9y ago
The OP was asking for financial advice, specifically.
deleted 9y ago
[deleted]
valbaca 9y ago
Ask HN: What personal FINANCE advice would you give your 25yo self ?

noxxten 9y ago

On your second point, I'm assuming those savings should be invested, correct? Enough to earn at minimum a 4% ROI?

tbihl 9y ago
The underlying assumption to the 4% rule is that you get the average 7% growth of the US stock market. This allows for 4% withdrawal and 3% to keep up with inflation, which historically would have worked at almost all points in the US market. Firecalc [1] lets you look at how your assumptions would fare in all sequences of years of US stock data (percentage of outcomes where you would've been fine/bankrupt.) [1] http://www.firecalc.com/ http://www.firecalc.com/

AndrewKemendo 9y ago

What exactly is the outcome here? Lets say I do all of this, what's my life supposed to look like? I mean these are all good advice points if you want to increase the zeroes in your bank incrementally, but they are also the same tips that lead to a mundane, average, uninspiring life.

antoniuschan99 9y ago
Looks like he's advocating Freedom. Up to the person to live whatever life they want to live.
- AndrewKemendo 9y ago
  That's so vague that it doesn't mean anything.
  - runamok 9y ago
    As in once you have enough money to live in the returns you don't need to work, you can have much more flexibility in how you and where you spend your time. Contrast that with a person living paycheck to paycheck who is one flu or broken arm or car accident away from disaster. The op asked for financial advice not how to be fulfilled.
    - AndrewKemendo 9y ago
      The op asked for financial advice not how to be fulfilled. They are inextricably linked, so you can't give financial advice without understanding the motivations and desires of the individual. The OP left that out because he probably doesn't realize that your finance situation should work for your motivations. Having financial goals without life goals is a great way to make sure you're not broke but no meaningful life.
      - runamok 9y ago
        I kind of see your point but not sure I agree. A fulfilled life can be so many things to so many people. It can be about fitness/sports, or knowledge/learning, children, marriage, family, friendships, religion, travel, material things, music, career, social good, art, inventions, etc. Some of those things are linked to money and some aren't. Financial health can help enable some of these things but a bad financial situation can completely hamstring you too. I do agree that a good financial situation does not always make you happy or even less stressed. Not that long ago I had more or less zero savings due to some early setbacks, recession, etc. I don't know if I ever will think I have enough until I could pay for my parents' failing health costs, help my nephew pay for college and various other things. I suspect this is true for many. Before I was just hoping to not have to eat cat food when I'm old. Now I want to do more for my family and my wife's family and also not eat cat food when I am old. I will also say knowing I can survive without a job for a year or more gives me comfort when I am stressed or not engaged.

kzisme 9y ago

How does one even start investing? Aside from a 401k what sort of things should people be looking into? Would your casino funds be something that (you) actively manage?

castratikron 9y ago
It depends on your goals. If you're completely new to investing, check out the book "Investing for Dummies". That's how I started. Investing is really not too difficult to understand. For most people it's more of a time game than anything.