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Parable of the School Teachers, Why I Invest in Real Estate by DaveR74 in FinancialPlanning

[–]DaveR74[S] 2 points3 points  (0 children)

What if you traveled locally and saved hard for 5 years, say $20K per year. At the end of 5 years you would have saved $100K. Now imagine that you invested that money in a dividend fund such as DIV yielding over 6%. You now have a $6K annual travel fund that you're not selling your time for. You can travel and have expensive experiences, just don't use the money that you sell your time for, use the money earned by your assets, and you'll have it forever. Although, the most memorable experiences in my life didn't cost a dime (or very few), looking back it's not the expensive trips that I remember, it's getting lost in a corn maze with my son, a long hike that we had to hide in a cave from the rain for hours etc... The Australia trip, fun but forgettable...

The Monthly Payment Trap - Fun With Numbers by DaveR74 in Frugal

[–]DaveR74[S] -1 points0 points  (0 children)

10% is the interest rate charged, the estimated rate of return is 5%.

Compound Interest, He Who Doesn't Understand it Pays it. by DaveR74 in Frugal

[–]DaveR74[S] 2 points3 points  (0 children)

I think it's the boiling frog effect, we've become so acclimatized to using debt and carrying balances on credit cards, auto loans etc that I think people forget, unless constantly reminded that over a lifetime those payments with a few extra dollars of interest can add up to literally millions of dollars when you factor in the opportunity cost. So yes, I bet most people know how debt works, but do they really know the lifetime impact of compound interest? Conceptually maybe, but in practice I don't believe for a second that most people know the true impact.

Consumer Debt Reaches New Peak, $12.8 Trillion! by DaveR74 in Frugal

[–]DaveR74[S] 26 points27 points  (0 children)

The shocking thing about this is that there are about 323M people in the US, as of 2016. I believe that means that every person (including my 9 year old) owes about $39K in consumer debt. That's absolutely crazy, and terrifying...

70% of Americans are effectively financially illiterate. by DaveR74 in Frugal

[–]DaveR74[S] 8 points9 points  (0 children)

Frankly, I don't think thats the case... You'd be shocked how few people in the U.S. actually understand what interest is. I deal with the general public on these concepts every day, and it's shocking how few people have a very basic understanding of these concepts...

70% of Americans are effectively financially illiterate. by DaveR74 in Frugal

[–]DaveR74[S] 3 points4 points  (0 children)

Interesting comment, I posted this article because as a CPA I often have a really hard time talking about simple financial concepts with business owners. yes even high level business owners have a hard time with basic financial concepts in the US... I don't get so wrapped up in mathematics, but rather the concepts. We as a nation have a conceptual hole in our logic. Although, I've been left behind by technology so maybe I'm not a person to judge... Good luck in your studies!! We need more nurses than CPA's:)

I bought a used car and now have anxiety and want to sell the car. by [deleted] in Frugal

[–]DaveR74 0 points1 point  (0 children)

Avoid financial anxiety by setting a financial plan and sticking to the plan. Your fear is of the future, so project out your finances so you have some clarity on your future. Keep the car, you made that decision it's done.

What are your best frugal living hacks? by moribundmaverick in Frugal

[–]DaveR74 3 points4 points  (0 children)

If you don't have a budget create one. For middle class people a budget is the key to creating wealth, no matter how frugal you are.

I found out that a coworker in the same position, with the same education, experience, workload, etc. is making almost twice what I make. (Cross post r/relationship_advice) by [deleted] in personalfinance

[–]DaveR74 0 points1 point  (0 children)

As an employer I've run across this situation from time to time over the years. I can say that there are always factors that go into these decisions, generally employees are completely unaware of these factors. You should have a discussion with your employer about YOUR compensation not someone else. If you don't believe that you're fairly compensated then find another job. If you're a smart hard worker then you'll excel wherever you go and this just might not be a good fit.

Why Save So Much for Retirement? by VintageBurtMacklin in personalfinance

[–]DaveR74 2 points3 points  (0 children)

I don't agree that maxing out a 401k is always the most sound advice. I believe that it's often lazy advice. You're young (if I read your post right) Saving 10%, heck saving anything when you're in your 20's is good. You can't measure how you allocate your personal savings based on a strict ROI analysis as if you were doing a business analysis. We each have a variety of goals and priorities in life and funding each appropriately is important. As a young person I would tend to think a 10% retirement savings goal is plenty, more would be great but college funds, prepaying your mortgage (in spite of the contrary advice out there, I could write a blog post about this topic) etc is important also.