Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We always have a business going -- first it was consulting, then freelance writing, now long term rentals. You can write off a ton of expenses if you own a business.

Real estate has worked for us. We have 5 rentals now, no mortgages. Worked hard to get here, but we're late 50s and the passive income will be pretty sweet in retirement.

Long-time business owner here. The bolded is mostly nonsense. To write something off, you first have to spend the money to purchase it. In other words, you spend $1 to get back $0.30 later - that's not exactly a fast track to getting rich.

And that $1 has to be spent on business expenses. It's not like you can just start deducting all your personal expenses through your business. There are some exceptions, like getting the Section 179 deduction when you buy a large SUV. But, really, the reasons businesses can be lucrative are that you own 100% of the upside, can leverage employees, and businesses are taxed favorably (QBI deduction, etc.).

DP but it’s not nonsense for the fields the PP mentioned, which are ones where work can be done from home. If you do that, you can deduct the prorated amount of your mortgage payment and utilities based on the size of your home office, equipment you use for your work (like laptop and cell), and miles you drive for work (most relevant for the rentals). You are paying for those things anyway but now they reduce your taxable income.

There are strict rules on taking the home office deduction that most people do not follow and it’s ripe for audit. Most tax advisers discourage it.

I have been on a new personal finance journey for the past 1.5 years.

I really like YNAB. Just today I finished reading the book Meet the Frugalwoods - they’re way more extreme than I’ll ever be able to be but it was good to remind myself to get out of the consumerism mindset.

For example - a lot of my friends are updating their kitchens rn. I had one of their contractors come over & he said if I didn’t want to change the floor plan I could only make modest updates. If I wanted an amazing kitchen I’d have to knock down walls with a total cost of appx. $120K. We are just not going to do it at that price and I had a little pity party for myself but I’m moving on! I have a kitchen that functions.

Anonymous wrote:We did not buy a second home and we worked hard to pay off our mortgage.

We sold our primary home, used the equity to pay off our secondary home, and now we have zero debt.

Anonymous wrote:Lots of good advice, but OP said they are over spenders not savers. Honestly it your spending is out of control, just buy less or cheaper stuff. So when you buy coffee, buy a smaller cup. When you need clothes, buy less items. Delay haircuts. Mow your own lawn. When your pet dies, don't buy another. If you have subscriptions that you dont use cancel them. It adds up. Soon you will have more money to save.

Because OP said “We have young kids, UMC income and had a hard time saving and not blowing it on who random things.”, I feel like your excellent advice is lost on them. I do love that idea to just buy a smaller drink. I feel like that is within reach for a lot of people - one less drink at happy hour, 2 more weeks between haircuts, wait 6 more months before upgrading a phone. It really does add up, but it’s like telling someone who struggles with their weight to just eat carrot sticks instead of chips.

I think the key for OP is to automatically move money where they can’t see it.

I joke I made all of my money and bought my houses when I was in my 20s, and how that set me up for life. It's not really true but all those years of compound interest really do add up. Not to mention I was working 100-hour weeks as a management consultant something I could NEVER do in my 40s

Anonymous wrote:

Anonymous wrote:We ended up buying a second home to force ourselves to save money.

This is one of the funniest things I’ve seen on DCUM ever hahaha

I actually think it is quite smart of OP. If you can't trust yourself to be disciplined about liquid cash, make it illiquid. It's like a diet. You have to choose the one you can stick with even if it is not the ideal.

I keep all my accounts on Fidelity and organize it into different housekeeping accounts (taxes, bills, etc.) and one of these is called Nest. I have a spreadsheet that calculates an amount to put to the side (in Nest) every month to retire by age 58. I've backed into the total I am working toward by estimating the amount of principal I would need to live off the earnings assuming a 6% annual return and that we continue to live the way we do. The goal amount at age 58 is the shortfall after 401(k), pension, HSA, Roth, etc. are accounted for. Once a month (and usually more often), I check to see whether it is where it should be. If it isn't, I move over some cash into Nest. I'm not locked into what is in the Nest account since it is just a brokerage account but it heightens my awareness of what I am working toward so I would chide myself if I had to borrow from the Nest account to pay bills or taxes. I do the same thing with my kids' 529 accounts. For what it's worth, I don't know that I actually want to retire at age 58 but that is my partnership's force-out age so I want to have security to do what I want by then.

When both our kids were born we opened 529s with fidelity for them. Got a fidelity cash back credit card and had the cash back go directly to the 529s. Used the credit card for everything we could and paid it off every month. Both kids had about $50k in (free) 529 money.

Anonymous wrote:We ended up buying a second home to force ourselves to save money.

This is one of the funniest things I’ve seen on DCUM ever hahaha

Lots of good advice, but OP said they are over spenders not savers. Honestly it your spending is out of control, just buy less or cheaper stuff. So when you buy coffee, buy a smaller cup. When you need clothes, buy less items. Delay haircuts. Mow your own lawn. When your pet dies, don't buy another. If you have subscriptions that you dont use cancel them. It adds up. Soon you will have more money to save.

Anonymous wrote:We spend less than we make. A lot less. The end.

Now if only everyone learned to do that!

Anonymous wrote:I taught and lived at a boarding school for a few years in my twenties. I ended up with a nice nest egg from having no expenses at all since I had free room and board and no utilities to pay.

What did you teach? Did you live in the dorms?

There is nothing unique about a reliable path to financial security. Simply save more than you spend. The more you do that the greater and faster the results. Simple, but it requires self-control and delayed gratification, both made easier if you focus on the long-term outcome you are aiming for and not on short-term indulgence.

Beyond merely saving money, invest it prudently and consistently, so that it grows faster than inflation erodes the value of your savings and investments. That means investing in unexciting and uncomplicated low cost, broadly diversified ETFs and mutual funds, not investing in real estate or individual equities. Anecdotes about big scores in rental property or in glamorous stocks aside, you'll almost always do better in the long run with a relatively simple and balanced ETF/mutual fund portfolio.

Not unique, but we saved my take home salary and 15% of DH’s at the start of our marriage, including maxing out our 401k like options. It gave us a nice nest egg and gave us more choices when life’s slings and arrows came.

We have always maxed what we were allowed in 401k/IRA type vehicles and now that we are nearing retirement we have enough saved.

If you start saving from the beginning, you end up setting lower spending rates.

I posted earlier with many things, but also adding:

-At my first full-time job, I started soon after graduation, but that calendar year I contributed the full calendar year amount to my retirement (which was possible as I was living with my parents at the time, and then DH in a low-cost place)

-Had kid at 30, despite being married several years, to get some time in first for my career work longer hours pre-kid etc

-Started 529 for kid before kid was born, in my name then transferred it over (though, despite calculators, and Roth IRA options available now, am still not certain re 529 amounts, what college options will be by then etc)

-While I used to use a traditional managed account at a reputable brokerage for a time, I do not and instead use a low-cost brokerage for those accounts. See Bogleheads for information on straightforward index fund strategies. I believe it is important to avoid what can be a 1%+ fee whether in an up or down market, that is huge. And few people even professionals can consistently beat the markets amongst other things.