Personal Finance

[Orb]

This is such an overlooked aspect of life, like Jesus christ NO ONE in my family has even mentioned this to me, I was at a library today and stumbled upon a finance book and I was like woah mastering this can change everything.

 

So I'm feeling inspired to learn personal finances.

 

A big lesson on being an entrepreneur is that the first business you will ever build is you! Your own personal business involves learning how to handle your own finances, how to put food in your belly, etc. Then you can build another business. 

 

Feel free to share anything related to this subject.

[Blessed2]

Have you read Rich Dad, Poor Dad?

[Orb]

5 hours ago, Blessed2 said:

Have you read Rich Dad, Poor Dad?

Ive heard about that book a lot, I haven't read it though.

[Mandy]

Building your cushion/emergency fund is the most important piece starting out. Shoot for around 6 months of living expenses saved. That account is not your spending money, it's your emergency fund. The balance needs to stay high. If it goes down, your priority is to get it back to what it was. Use the snowball method to pay of debts as fast as you can, make it a game. I had to pay a lot for a car unexpectedly last year and almost everything I make that I can put on it goes on it. Once that is paid off, then I have an extra $470 a month to work with and I've already saved thousands in interest. 

 

Know that interest is more costly than you might believe or want to think. Do the math and figure out what you're paying if the loan doesn't show you up front like many websites now do thankfully.  It's APR, (annual percentage rate)so you don't just pay 7% of whatever your loan, you pay 7% every single year. If you're buying an asset, you can use loans for leverage in many cases, but if you're buying a vehicle, or paying interest on credit card debt, not so much. 

[Phil]

One of the best finance strategies I’ve experienced is in real estate and utilizing county & state first time home buyers programs and then parlaying the proceeds into more profitable investments.

 

As a first time home buyer, bought a 50k house (long time ago)… out of pocket down payment & closing costs was about 5% / 3k (first time homebuyer). 

From county & state programs I received 45k in reimbursements for work down to the house (was deemed a ‘hud’ house / needed a lot of work) which I did myself except for cement work which cost about 10k.

In a few years I sold the house for about 80k. Paid off 50k mortgage, netted 30k from the sale in addition to the 45k of reimbursements from the state & county programs. 

 

Then (the parlaying aspect) I rolled that net of about 75k into a new construction house of around 200k. Then rented that house out and bought another house. Then saved the rent money up alongside income and used it as a down payment for another rental house. Did the same thing over & over with rent money as down payments for a while for years with more & more rentals, airbnb / vrbo and that initial 3k outlay is now over a million dollars in cash & equity. 

 

With you working in real estate I thought that one might be worthwhile to hear. You wouldn’t even have to pay a realtor. 

[Joseph Maynor]

One of the worst mentalities a person can have is to have money problems but don't know the value of a dollar -- in other words because they're so used to being given a handout or taking money they didn't earn, they are frivolous with spending or even gambling money away.  It's like -- you ain't rich dude!  This is a recipe for financial disaster in life.  This type of person sucks really bad at finances, which is an area of development work.  The 3 practical areas of self-help are: Relationships, Finances, Health.  It's not how much money you make or lose, but how much you keep and to put that money to work.  Live off the interest not the principal.  This is how you become mature and developed in the area of Finances.  You need income, saving (frugality), and good investing.  Also don't lend people money where it's not really a loan but a gift disguised as a loan -- it's a gift because you ain't gonna get paid back anytime soon if ever!  F*ck that!  Being good with money is a set of skills that create reasonable boundaries and enforced principles.

Edited October 8, 2023 by Joseph Maynor

[Devin]

If you're wanting to be an entrepreneur; the book "The E-myth Revisited", E is for entrepreneur, it may seem a little irrelevant to you at this point but it's not, especially if you're taking life planning advice.

 

It's about instead of creating a job for you, which is what Robert T. Kiyosaki teaches even though he claims it to be passive income it's not, the guy's a fraud he makes his money of his teachings, I haven't read his book but have heard enough from the slime ball. But, most business owners are more job workers than business owners, which does the opposite of what's intended of freedom.

 

I suggest the stock market, learning how to not just be frugal but enjoy it really allows you to risk more and not just financially, stock trading is more an emotion thing, so if you have no fear of losing a lot you'll gain more actually, but don't be reckless, tiptoe into it and be prudent, I suggest investing in companies you personally align with, like don't invest in companies you despise, although ethics aren't perfect anywhere the least ethical companies do worse in the long run, it's like a disease in the company trickling down to the lowest employee, everyone having a bad attitude etc. Several trading companies do free trades, that'd be a good place to start and just do small trades to get your feet wet.

 

A little further in the weeds, "business" people that make A LOT of money, make it via relationships, they build great business relationships, entrepreneurs think gates, jobs, musk, bezos made their money from their idea but those were smaller parts of the equation and those are rarer instances to begin with. Don't fall for the cut throat narrative, avoid others that do, watch for them, but cut throat is the opposite of how the ultra wealthy get ultra wealthy. Not telling you this so you can be the next bezos but it applies to modest ambitions as well, it makes life so much better.

 

People like to say life is harder now a days, like reminisce the old days, we are living in the easiest time in history, and I would say that If either of us were even broke and on the street, I think that's were the frugality comes in knowing you can always completely get back up no matter how far you could possibly fall. The problem with people is using the old world ideologies in terms of how to live, "get a job, keep up with the joneses, belong to the church of capitalism/materialism,..", at this point that mindset should be considered retarded. I don't mean the job part alone by the way, you can have a great life with a job but you can't do that and then be envious of the rich.

Edited October 8, 2023 by Devin

[Blessed2]

On 9/6/2023 at 1:34 AM, Orb said:

This is such an overlooked aspect of life, like Jesus christ NO ONE in my family has even mentioned this to me, I was at a library today and stumbled upon a finance book and I was like woah mastering this can change everything.

 

Yeah, cause basically no-one is taught it in school. That's not the point of education.

 

Basically, I see that there are two ways to "be rich". One is to own assets, or make money work for you. A simple example of this is to buy real-estate with loans, and make the one renting it to pay the loan. You do pretty much nothing but own; money works for money.

 

The second one is banking, or shadow banking. This is like exiting the entire matrix of money. This is wealth beyond the basic understanding of wealth. You create money from thin air.

 

There is also a third one. Meditation/dreamboard/alignment. Thought it's not really about being rich.

[Reborn]

I'll save you some time. Get a good job, invest at least 10% of your income into some stable index fund such as S&P 500. Invest into gold and silver. Invest into yourself and your skills in general. Don't invest into speculations such as crypto. Don't take on any debt unless you're using it to buy property and you're confident you can pay it off.

 

As for a business, yeah you can get into real estate renting, although I do consider it to be a bit parasitic, since in my opinion, renting is a bad financial choice for most people, unless they're going to vacation - so Airbnb is fine in my book, but do as you wish. But in general, I'd rather start my business around something I'm skillfull, talented and educated on, after I acumulate enough capital and connections.

[Alexander]

@Reborn I started business around what market needs.I become skillful working in same branch and decided to start alone.Since now because of meds I can't work on height anymore I need to develop new skills to start a business.

Rule is to save up to 6 months of your earnings before start investing.Investing in stocks is like a lottery,where I live it's not that popular, people like to invest in real estates.

I keep developing new skills rather than thinking LoA will take care of me.

[Reborn]

@Alexander Investing into S&P 500 is not really a lottery, because as long as the American economy will continue to rise, stocks in there will keep rising as well. If the American economy crashes, then the economy of the whole world will crash, so there really is no better alternative. Or is the alternative to not invest at all, or into some worse, speculative things? I don't think so

 

Money on your bank account will slowly be eaten by inflation as well, so we gotta keep that in mind. They are also, in their very nature, illusory, since they are pretty much created out of thin air using debt

[Alexander]

@Reborn I want to keep investing in new business like opening a gym , opening a coffee shop etc.This business might fail but like I said nobody here invest in stocks.I live in a poor European country not in US.Also investing in real estate and than renting seems like valuable option.

[Reborn]

@Alexander You can invest into literaly anything from literaly anywhere in the world, there are also apps for that type of thing.

 

I have next to zero business experience so far, so I don't have much to say about that. Yeah, try those out if you think you'll make it

[Phil]

The value of a dollar is relative to the value of what it might be traded for, and other (foreign) currencies. Inflation (interest rates), adjusts the dollars foreign relativity.
 

The time value of a dollar is the potential relative to what it’s invested in rather than traded for. 
 

Investing is fundamentally based on risk tolerance, suitability, and time horizon. The application of any one of these, without the other two, unknowingly, is legally unethical. Knowingly, in most cases, constitutes fraud. 
 

Approximately 35% of Americans rent vs buying a house based preference as opposed to economic affordability. 
 

Investing in the market is not similar to the lottery. Some hedge funds push the limit of that statement, but even hedge funds can be hedged. While there are no guarantees, with the exception of those made by a third-party and never in terms of capital gain, the lottery is based on randomness, and the market is based on pattern. 
 

When inflation is up, the real value of the S&P 500 may go down, but real estate can be a hedge against inflation. When inflation is down, the real value of the S&P 500 may go up, while real estate returns might not be as strong.