16 Tips From The Depression Era

Via: Buzzfeed

Some of the tips are useful, but others are just off. Everything from the sugar tip to the not throwing away clementine boxes are just odd. How about saving the money from not going out to buy coffee? Or just learning to reusing your old items more efficiently.

I'm sure if you did the research you could find some really great tips from that era in American history. After all people stretched their money during the depression not by choice but necessity. The quality of this article just seems to be lacking.

_PrinceCharming tells you what to do with a new high paying job

My income went up by over $50k, and I have no clue what the hell I'm doing. Help!

First of all, congratulations on the new job!

It's important to "pay yourself first" before you let your lifestyle adjust to your new paychecks. You are used to living off much less, so it won't kill you to keep your expenses low. Try to put off any large purchases for as long as you can. At this moment, you have the opportunity to become one of those people you have been reading about in this community and elsewhere - "I'm 30 years old with $bazillion in retirement and a sweet emergency fund, oh yeah, and no debt!". All you have to do is pretend that you are still making $38k per year for a little while.

Step 0: (calling this step 0 because hopefully you don't have to do it at all....) If you have any high interest consumer debt such as credit cards, go ahead and knock that out ASAP, and never fall for that trap again.

Step 1: Go to your HR Department, and tell them you want to max out your 401k the moment you are eligible ($17,500 per year, or $673 pre tax per paycheck). This is especially important if you are getting any kind of employer match.

Step 2: Open a Roth IRA and plan on maxing it out for 2013 ($5500). Set up automatic withdrawls from your bank account for $211 per paycheck).

Step 3: If you have a Health Savings account, max that out, if you don't know what I'm talking about, skip to step 4.

Step 4: Continue living exactly the way you have been living and bank whatever is left over into a savings account set aside for emergencies. Grow your emergency fund until you have 6 months worth of living expenses set aside. It will take several months or a year to get to this point.

Step 5: Once your emergency fund is established, take all the money you were contributing to it, and knock out your student loans ASAP. $270 a month means you probably only have about $30k in loans, so this will take about a year and a half to pay off.

Step 6: Skip a month. Take the money you otherwise would have put in your emergency fund or towards your student loans ($2.5k or so after steps 1 and 2) and blow it however you want to. Take a vacation, give it to charity or buy something totally unecessary that you have always wanted. The point is that you have earned it and you gotta have some fun every now and then.

Step 7: Back to reality. Set your long term savings goals. House, car, family, etc. But it's important to keep your savings rates up and continue to live within your means. Set a budget and stick to it.

America's grade for financial literacy: F

Which shouldn't come as a surprise to anyone how can look objectively at the way the general public handles their money.

We are a nation of illiterates. Financial illiterates, that is.

Despite a proliferation of games and apps, and efforts by many schools to teach the subject, financial literacy declined between 2009 and 2012, according to a survey - Via: Today.com

The FINRA Investor Education Foundation (FINRA Foundation) asked a series of questions to test peoples financial capability in an online survey. A majority of respondents, 61 percent, were unable to answer three of the five questions correctly. In 2009, that number was just 58 percent.

Test your Financial Literacy via Usfinancialcapability.org

The State-by-State Financial Capability Survey, which surveyed more than 25,000 respondents, was developed in consultation with the U.S. Department of the Treasury, other federal agencies and the President's Advisory Council on Financial Capability.

Mr Money Mustache

Mr. Money Mustache, who retired at 30. He and his wife simply socked away more than half the money they made from middle-income jobs until they had an ample nest egg. Then they retired and had a son. Today they live a good and happy life on about $25,000 a year.

Here is a sample of what he did to get there.
OK, fine. Here’s how to cut your life costs in half. Start by getting rid of your Debt Emergency if you have one. Live close to work. Move to another city if you enjoy adventure. Don’t borrow money for cars, and don’t buy stupid ones. Ride a bike wherever you can. Cancel your TV service. Stop wasting money on groceries. Give your kids the opportunity to achieve greatness without being pampered. Lose the overpriced cell phones. Learn to appreciate the life-boosting joy of using your own body to get things done. Learn to mock convenience. Practice optimism.

That should do it – about half of your expenses, gone in one paragraph. Keep going, as many readers do, and you can save closer to 75% of what you make – especially for those with above average incomes.

The main idea is to minimize your out flow of assets, and how our lack of a stricter budget is what is keeping us from a earlier retirement.

If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever. Don’t worry about the details – just do the saving for now, and watch as your lifestyle transforms and your worries about safety melt away. This blog is not so much a financial nuts-and-bolts blog as it is a story about lifestyle and attitude transformation. And believe it or not, your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.

Excerpts taken from Mr Money Mustache Blog

Retirement Security Across Generations

Via: The Pew Charitable Trusts

A new study from The Pew Charitable Trusts, Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?, examines the savings behavior of five age groups before the Great Recession. The research also explores how wealth losses during the recession affected each group’s retirement security by calculating replacement rates, or how much annual preretirement income households will have available to spend after retirement. It finds that early boomers (born 1946-1955) may be the last group on track to retire with enough savings to maintain their financial security through their golden years.

For the most part, generations in America have followed a similar storyline: kids grow up to earn more and become more financially secure than their parents and grandparents before them.

But that story ended with those born between 1965 and 1981, known as Generation X. - Business Insider

"Late boomers and Generation-Xers lost significant amounts of wealth during the Great Recession, eroding their already low levels of assets," said Erin Currier, who directs Pew’s economic mobility project. "As policymakers focus on Americans’ retirement security, particular consideration should be paid to how younger generations of workers can make up for these losses and prepare for the future."


Full Report(PDF)

This report explores how the Great Recession affected the wealth and retirement security of baby boomers relative to younger and older age groups.

It also explores the retirement security of each group by calculating replacement rates, or the extent to which retirees can use their accumulated wealth and savings to replace preretirement income.

This research reveals that younger age groups face the greatest prospect of downward mobility in their golden years.