greyrat says:

ADDITIONAL ITEMS:

10. Moonlight as a bank robber to achive items 4, 5 and 7.
11. If item 10 is not within your means and you have children, save them up and eat them.

Sorry, but Scott’s an asshole on this one. Does he think I wouldn’t be doing all that if I could? Maybe he’ll send me a grand or two a month to fund my 401K, IRA and the money market account.

gnomic says:

1. If you got nuthin’ exactly who are you going to will it to?
2. IF you can pay off your credit cards, you probably don’t need them
3. Does your family really need any more incentive to kill you?
4. starve now or starve later? Hard decision!
5. If you aren’t Irish, can this one be skipped?
6. You probably don’t want to live in the house you can afford. Neithed does anyone else - which is why you can afford it.
7. ITs doubtful that any money markey account will accept six months of your expences - they want your money, not your bills.
8. “Any money left over” HA Good one.
9. Does a bartender count as “a fee-based financial planner” if he gives tips on the ponies?

gnomic says:

Actually, Scott is wrong on #4.

Lets say you you like mac and cheese every night and can put a max of $10K in your 401K.
Your employer will match 50% of the first $5,000 and you pay 25% in taxes.

1. Put in $1 - you give up the maximum match of $2500. Your return on investment (ROI) is -$2500/$1 or -2500% (you lose)
Put in $5K - You gain $2500 match + save 1250 in taxes. Your ROI is $3750/$5000 or 74%
Put in $10K - you gain $2500 + save 2500 in taxes. your ROI is $5000/$10000 = 50%

Optimizing your ROI, its best to match your employers contribution. You can then put any other money you might save into other investments, such as a Roth IRA or tax free bond, that allows you to manage your tax rate once you start withdrawing from your investments.

Don’t believe me? Check out Motley Fool’s advice on the subject. Its still best to save as much as you can as early as possible, pay as little fees as possible, and avoid paying taxes when you can. Don’t put all your money in one place, be it stocks, your home, or the matress.

But unless you know how all this works - a bit of professional advice can save you a lot of money.

My best investment - bar none - was hiring an accountant to do my taxes. My second best was ebay at $39 pre-split. MY education is probably 3rd. And I’m not rich. I started over in the mid 90’s with the change in my pocket and don’t make anywhere close to 6 figures even today.

You don’t have to be rich to make money. Just avoid debt unless it makes you money in the long run. Education, house and cheap car good. Plasma screen TV home theater using debt bad.

For some better advice - go read Die Broke.

Leland says:

It does seem to be a little pie in the sky.

gnomic says:

BTW, #4 is wrong, and #% is questionable. You should alway optimize to your employers match. Here’s why. Lets say your employer will match 50% of the first $5000 ($2500) and you can contribute up to $10K to your 401K.

Consider these 3 scenerios: you contribute $1, $5000, or $10000

1. You contribute $1, employeer contributes $1, you leave $2499 on the table. ROI: -2498% ((-2500 + 2) / 1)
2. You contribute $5000, employeer contributes $2500, you make $2500 instantly. ROI: 50% (2500/5000).
3. You contribute $10000, employeer contributes $2500, you make $2500 instantly. ROI: 25% (2500/10000).
If you have more to invenst, you can choose which investment to put it in. It might be best to put it in an IRA, a roth IRA, or a tax deferred bond or (generally best) pay off any debt that has a higher interest rate that you can make in the market, after taxes.

Want to know more? se MotleyFool.com and read Die Broke.

My best investment was my accountant, who has saved me more money that I will ever pay her, not to mention keeping my sanity and protectingme from evil IRS audits.

gnomic says:

BTW, Don’t follow suggestion number 4! Its wrong!

Lets say your employer matched 50% of the first $5,000 you contribute and you can contribute up to $10,000.
1. You contribute $1, your employer contributes $0.50, and you leave $2498.50 on the table. ROI: ($2499.50)/$1.00 = -2500%
2. You contribute $5000, your employer contributes $2500, and you leave $0 on the table. ROI: 2500/5000 = 50%. This does not count the tax avoidance on $5000 of income, or about $1200 tax savings, making your actual ROI (2500+1200)/5000, or 74% ROI!
3.You contribute $10000, your employer contributes $2500, and you leave $0 on the table. ROI: 2500/10000 = 25%. This does not count the tax avoidance on $10000 of income, or about $2500 tax savings, making your actual ROI (2500+2500)/10000, or 50% ROI!

Your best ROI comes when you match your employer investment. Obviously, if you can put more away, you should, but you might put it in other investments such as an IRA or Roth IRA based on the advice of a financial specialist. IF you can’t afford one, read Motley Fool and the book Die Broke.

BTW, one of my best investments was hiring a real accountant to do my taxes. Its saved me thousands And no, I’m not rich. I make far less than 6 figures. In fact, in 1996, I had the change in my pocket and and a $10K hospital bill. Today, I’ve got a decent retirement fund built up, an MBA, a house, and I’m debt-free except for the house and car. It can be done, but you have to understand how money works and live on what you can afford.

That said, its gettin’ harder every day.

wraps says:

what if yur stoner, and you have no idea what you just said about 401ks and investments and stock market blah blah blah uhhhhhhhhhhhh can i have a drink of yur fabuloso (Gatorade)

levi says:

Fully funding your 401K via payroll deduction is the way to overcome
the biggest impediment to financial growth — inertia. Through
thick and thin, in good times and all but the most catastrophic bad,
the money flows into dollar cost averaged investments, and 30 years
later you wake up a millionaire. Scott’s advice to the vast, great
unwashed majority is golden.