stock market/financial ?'s

[QuarrelsomeIrishAmerican]

A couple of things to do before investing:
- examine your monthly cash flow. Track all your income and spending through a website like mint.com. Figure out where your money is going and whether you can save money on any of those items. Question all purchases, for example: do you need $13/month for HBO and another $24 for Netflix? Or can I save $30/month if I switch car insurance? Home owners insurance? some other tips: if you are a good driver, go with $1,000 deductibles. Use family plan for cell phones. Check with your work for discounts; I happen to save 21% a month through AT&T. Also, with 4 kids, you can check out buying bulk meat from directly from farms vs. weekly at the supermarket saving you hundreds through the year. It's best to learn how to live lean and stretch that dollar before investing.
- re-examine all your debt: payoff all credit cards, refinance your mortgage if appropriate to today's all time low rates, and see if a cash-out refi or home equity loan can help you lower the interest on any higher interest cc or student debt if you can't pay them off directly.
- now that you've examined your spending and debt, create a budget and stick to it. Build about 9 months worth of living expenses in an emergency account. I say 9 here because you have 4 kids. It's best to be extra safe here.
- in the mean time, learn and study the stock and real estate markets. Learn to invest for yourself. Most Financial Advisors will advise you to choose a fund that yields them the biggest commision and its not always in your best interest. I see this everyday so I can not be told otherwise that this isn't the majority. Not saying everyone, but be aware.

 

[PANDFAN]

i really appreciate everyone's points and bringing info to the table...thus far i found Ramsey's stuff to be easy to use and now gives me a blue print! to all of those that suggest this i truly thank you!

now some have brought up life insurance here is my question in regards to my situation:
my wife has a life insurance policy for 75k that she has had since 18...it's 40 a month...we don't have much of debt(cc-6,000 for both my wife and me combined) outside of our house but we don't have crap for savings...so i was wondering if i should have her cash her policy out for 1,000 pay on credit card debt save that 40.00 a month towards paying on her credit card...then pick up insurance? we are both physically healthy except i have high cholesterol but is heredity...would the amount a month be a hell of a lot more for insurance if we were to purchase a year from now??


THANK YOU again IrishEnvy!!!!!

 

[irishknight35]

i really appreciate everyone's points and bringing info to the table...thus far i found Ramsey's stuff to be easy to use and now gives me a blue print! to all of those that suggest this i truly thank you!

now some have brought up life insurance here is my question in regards to my situation:
my wife has a life insurance policy for 75k that she has had since 18...it's 40 a month...we don't have much of debt(cc-6,000 for both my wife and me combined) outside of our house but we don't have crap for savings...so i was wondering if i should have her cash her policy out for 1,000 pay on credit card debt save that 40.00 a month towards paying on her credit card...then pick up insurance? we are both physically healthy except i have high cholesterol but is heredity...would the amount a month be a hell of a lot more for insurance if we were to purchase a year from now??

THANK YOU again IrishEnvy!!!!!

As a licensed Fincancial Representative I would recommend in your situation to keep the Life Ins. on your wife and most definitely increase the amount of insurance (through term since money is tight) on yourself and your wife for the protection of your children. Unfortunetly we don't have a crystal ball that tells us the future. Protecting you and your family from the unexpected should come first.

I would recommend to buy what you can afford now and develop a relationship with an advisor who is going to stay in touch with you at least twice a year to review your life insurance and invesment planning.

All your perfectly timed and placed investing will be for not if something happens to you or your wife and there is no protection in place. You yourself through making an income is the greatest asset to your families building of wealth. Doesn't it make sense to protect that?

 

[ab2cmiller]

i really appreciate everyone's points and bringing info to the table...thus far i found Ramsey's stuff to be easy to use and now gives me a blue print! to all of those that suggest this i truly thank you!

now some have brought up life insurance here is my question in regards to my situation:
my wife has a life insurance policy for 75k that she has had since 18...it's 40 a month...we don't have much of debt(cc-6,000 for both my wife and me combined) outside of our house but we don't have crap for savings...so i was wondering if i should have her cash her policy out for 1,000 pay on credit card debt save that 40.00 a month towards paying on her credit card...then pick up insurance? we are both physically healthy except i have high cholesterol but is heredity...would the amount a month be a hell of a lot more for insurance if we were to purchase a year from now??


THANK YOU again IrishEnvy!!!!!

If you want to switch to Term Life then I would say yes. Replace it with a Term Life policy. You can obviously find cheaper Term Life policies and use the savings to pay down your debt or create an emergency fund.

If you like the idea of Whole Life then I would say no.

You need life insurance period. Even if you are healthy right now and think you will live to 100, the last thing you want to do is get rid of all life insurance. If you don't have any life insurance on yourself, you need to get some.

 

[BleedBlueGold]

i really appreciate everyone's points and bringing info to the table...thus far i found Ramsey's stuff to be easy to use and now gives me a blue print! to all of those that suggest this i truly thank you!

now some have brought up life insurance here is my question in regards to my situation:
my wife has a life insurance policy for 75k that she has had since 18...it's 40 a month...we don't have much of debt(cc-6,000 for both my wife and me combined) outside of our house but we don't have crap for savings...so i was wondering if i should have her cash her policy out for 1,000 pay on credit card debt save that 40.00 a month towards paying on her credit card...then pick up insurance? we are both physically healthy except i have high cholesterol but is heredity...would the amount a month be a hell of a lot more for insurance if we were to purchase a year from now??


THANK YOU again IrishEnvy!!!!!

IMO, $40/mo is way too much for only a $75k policy. Personally (and others will do it different, but this is just me), I'd get a term life policy on you and your wife for 10x your annual income. You'd have to evaluate your current situation but based on the age of your kids, a 15-20 year level term is probably adequate. When your new policies are active, I'd cancel the $75k policy and save yourself the $40. I agree to put that $1000 into the debt, but also put every single extra penny into that debt until it's paid off. $6k isn't that much debt and you could knock that out really quick and then start pumping money into your emergency fund (3-6 months of expenses). At that point you'll be debt free (except for the house), have a fully funded emergency fund, have your budget set and your life insurance policies protecting your income, and you'll be ready to start investing 15% of your gross income into a 401K and Roth IRA. Any extra money goes towards college funding and paying off the house (based on Dave's principles).

 

[RallySonsOfND]

Life insurance is definitely a must have. The amount you should have should cover your original mortgage, your credit card debt, amount spent on cars, and enough to make sure your loved ones won't have to change their current lifestyle.

 

[BleedBlueGold]

Zander Insurance Group - Term Life Insurance - Disability Insurance

 

[ab2cmiller]

Dave Ramsey would say that you should put money in your emergency fund first before paying down the debt. I would tend to agree.

Speaking for me personally I was so focused in getting out of debt, that I paid down the debt first. I got out of debt and created the emergency fund. That's the good news.

But my perspective changed during a job loss several years later. I kept asking myself, what would've happened if this would've occured while I was taking all of my resources to pay down debt. I would've been screwed. Gratefully I didn't get burned in my zeal to pay down my debt, but I'm sure there have been many that have.

 

[PANDFAN]

Dave Ramsey would say that you should put money in your emergency fund first before paying down the debt. I would tend to agree.

Speaking for me personally I was so focused in getting out of debt, that I paid down the debt first. I got out of debt and created the emergency fund. That's the good news.

But my perspective changed during a job loss several years later. I kept asking myself, what would've happened if this would've occured while I was taking all of my resources to pay down debt. I would've been screwed. Gratefully I didn't get burned in my zeal to pay down my debt, but I'm sure there have been many that have.

good point...we had 10k saved...purchased a home together and got married...and just like that...c-ya..

 

[BleedBlueGold]

Dave Ramsey would say that you should put money in your emergency fund first before paying down the debt. I would tend to agree.

Speaking for me personally I was so focused in getting out of debt, that I paid down the debt first. I got out of debt and created the emergency fund. That's the good news.

But my perspective changed during a job loss several years later. I kept asking myself, what would've happened if this would've occured while I was taking all of my resources to pay down debt. I would've been screwed. Gratefully I didn't get burned in my zeal to pay down my debt, but I'm sure there have been many that have.

Baby Step 1 - $1000 in an emergency fund
Baby Step 2 - Pay off all debt, not including the mortgage
Baby Step 3 - Build the emergency fund up to 3-6 months expenses.

So yes, since you don't have a savings account, maybe cash out your wife's policy and put that $1000 in the bank for emergencies, once you've established your own life insurance, of course. Good catch, ab2cmiller.

 

[PANDFAN]

Baby Step 1 - $1000 in an emergency fund
Baby Step 2 - Pay off all debt, not including the mortgage
Baby Step 3 - Build the emergency fund up to 3-6 months expenses.

So yes, since you don't have a savings account, maybe cash out your wife's policy and put that $1000 in the bank for emergencies. Good catch, ab2cmiller.

see this is my confusion...i need to get the 1,000 set up but it seems this 75k policy really isn't enough so i wanted to cash it in and then get the emergency fund started...then i could move to #2 but then others said keep it....here is the important piece i failed to mention...both sets of our kids have another parent..i have 2 from previous marriage and same for her so it's not like they won't have anything...the next thing is that they would all draw social security survivor benefits until the age of 18...this would allow us the time to put 1,000 in, eliminate debt and then be able to purchase life insurance...does this make sense??? also i believe i mentioned it earlier but we both have life insurance through work at no cost..we each have a years salary worth from work

 

[BleedBlueGold]

see this is my confusion...i need to get the 1,000 set up but it seems this 75k policy really isn't enough so i wanted to cash it in and then get the emergency fund started...then i could move to #2 but then others said keep it....here is the important piece i failed to mention...both sets of our kids have another parent..i have 2 from previous marriage and same for her so it's not like they won't have anything...the next thing is that they would all draw social security survivor benefits until the age of 18...this would allow us the time to put 1,000 in, eliminate debt and then be able to purchase life insurance...does this make sense??? also i believe i mentioned it earlier but we both have life insurance through work at no cost..we each have a years salary worth from work

If you get on a tight budget (just the necessities for a month or two), you'd be surprised how quickly you can come up with a grand. Also, have a garage sale or something. Get creative. If you get term life through one of Zander's preferred companies, it'll take about 6 weeks anyways. That should be plenty of time to come up with $1000. When those new policies go into effect, then cash in the ur wife's $75k policy and use it towards the CC.

I also have life insurance through my work at no cost, but I still got a separate policy on myself for 10x my income. Keep in mind that if you get fired/let go/etc that life insurance through your employer is no longer promised to you.

 

[BleedBlueGold]

You are assuming at the end that she isn't then living off her nest egg too.

For the sake of the example, yes. Who's to say she doesn't have SS, a 401K, and a Roth IRA for generating income?

And you guys against WL (maybe not "against" but critics) are missing the point....It's tax deferred (worth it just for that fact) and you can create your own tax-free income on the back end by taking out loans against the death benny.

And to be honest....most people aren't too excited about mutual funds that don't return anything or that fact that the nest egg may not be there depending on how the market performs.

It's a nice thing to have in your portfolio along with managed money. Life, Annuities, stock....it's good to be diverse.

I will agree that there are advantages with WL but it's very expensive. If you're debt free, house paid off, and already investing a bunch into your retirement, getting a WL policy is probably a good idea for the tax benefits and estate planning. But most people aren't to that stage in their life. Most Americans are riddled with debt payments and can't get ahead. Adding an expensive WL policy to their expense column is a bad idea when there's a cheaper alternative in Term Life.

Sure there are poor performing funds out there, but there also some that have avg growth of 9, 10, 11, or even 12% since their inception (older than 20 years). WL might protect you from losses better, but so does a cookie jar or envelope under your mattress.

Dave's plan includes diversification. He suggests 4 different categories of mutual funds and when you have the capital, he includes real estate.

 

[MJ12666]

PANFAND, first off I am a CPA and I have read pretty much every comment written on this post. While I do not doubt the sincerity of the individuals offering advice, none of us really knows your exact financial situation as you only have provided rough details. Now I do not suggest that you provide more (actually I would advise against it), but without knowing everything (such as salaries, monthly mortgage and debt payments, living expenses, ect.) no one can really offer meaningful advise. My suggest is simple, find out what it would cost to sit with a "fee based" financial adviser (it is also possible that based on your financial situation there may be a local non-profit organization that could offer you free advise to get you started). The adviser should be one that does not sell insurance, annuities, or any other financial products. The reason being that I would question the independence of someone who is going to advise you to buy their products.

After saving what you need to pay the fee, make the appointment, sit with the adviser, and make a plan. The cost of this service is not really material when considering how much you will make and spend over the course of your life. Any way you proceed, good luck.

 

[irishpat183]

For the sake of the example, yes. Who's to say she doesn't have SS, a 401K, and a Roth IRA for generating income?



I will agree that there are advantages with WL but it's very expensive. If you're debt free, house paid off, and already investing a bunch into your retirement, getting a WL policy is probably a good idea for the tax benefits and estate planning. But most people aren't to that stage in their life. Most Americans are riddled with debt payments and can't get ahead. Adding an expensive WL policy to their expense column is a bad idea when there's a cheaper alternative in Term Life.

Sure there are poor performing funds out there, but there also some that have avg growth of 9, 10, 11, or even 12% since their inception (older than 20 years). WL might protect you from losses better, but so does a cookie jar or envelope under your mattress.

Dave's plan includes diversification. He suggests 4 different categories of mutual funds and when you have the capital, he includes real estate.

But some of these WL products have interest rates of 10-13%. So it's not as if it's sitting in a mattress. YOu're not going to get the lion's share of the market...but you'll never lose a dime.

 

[BleedBlueGold]

But some of these WL products have interest rates of 10-13%. So it's not as if it's sitting in a mattress. YOu're not going to get the lion's share of the market...but you'll never lose a dime.

The Truth About Life Insurance - daveramsey.com

All of the $93 per month disappears in commissions and expenses for the first three years. After that, the return will average 2.6% per year for whole life, 4.2% for universal life, and 7.4% for the new-and-improved variable life policy that includes mutual funds, according to Consumer Federation of America, Kiplinger's Personal Finance and Fortune magazines. The same mutual funds outside of the policy average 12%.

Again, I agree there are advantages to WL, but it's not in the investing.

Need an example of a fund with a good track record?

https://www.americanfunds.com/funds/details/gfa/a.html

 

[Polish Leppy 22]

My buddy is a hedge fund manager. Says anything written by Jack Bogle is solid.

 

[Irish Houstonian]

Just do what Icahn's doing: sell Herbalife (HLF) puts, and use that + other funds to buy massive, deep in the money HLF calls.

Then, tie those puts to only settle in cash and expire upon your exercising of your calls -- the squeeze of all the calls nets you a gain and you cut your costs basis through the profitable puts you sold.

It's really that easy...

 

[irishpat183]

The Truth About Life Insurance - daveramsey.com



Again, I agree there are advantages to WL, but it's not in the investing.

Need an example of a fund with a good track record?

https://www.americanfunds.com/funds/details/gfa/a.html

Dave Ramsey, as nice as his system is (sometimes unrealistic) isn't the end all be all on the subject. There are 1000's of advisors that write hundreds of millions in life insurance a year and it works.


Again, show me a fund in which my principle isn't at risk? The older a client gets, the less money then need in the market. The accumulation phase is over at that point. I work mainly with retirees, so my perspective is a bit different.


I'm not saying you're wrong...just difference of opinion. Alot of my clients want nothing to do with market. Which is why they end up with me in the first place. I never bash it, but when you're talking to someone that's lost 40% of their portfolio, the last thing you want to bring up is some fund:

"Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Results shown at net asset value have all distributions reinvested. If a sales charge had been deducted, the results would have been lower. Share price and return will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Returns with sales charge for Class A shares reflect payment of the 5.75% maximum sales charge at the beginning of the stated periods. Definitions and other important legal information about these prices and returns are shown below."


^This is all I need to show my clients.

 

[BleedBlueGold]

Dave Ramsey, as nice as his system is (sometimes unrealistic) isn't the end all be all on the subject. There are 1000's of advisors that write hundreds of millions in life insurance a year and it works.


Again, show me a fund in which my principle isn't at risk? The older a client gets, the less money then need in the market. The accumulation phase is over at that point. I work mainly with retirees, so my perspective is a bit different.


I'm not saying you're wrong...just difference of opinion. Alot of my clients want nothing to do with market. Which is why they end up with me in the first place. I never bash it, but when you're talking to someone that's lost 40% of their portfolio, the last thing you want to bring up is some fund:

"Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Results shown at net asset value have all distributions reinvested. If a sales charge had been deducted, the results would have been lower. Share price and return will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Returns with sales charge for Class A shares reflect payment of the 5.75% maximum sales charge at the beginning of the stated periods. Definitions and other important legal information about these prices and returns are shown below."


^This is all I need to show my clients.

In reference to your bolded statements, this is what I said in an earlier post:

I will agree that there are advantages with WL but it's very expensive. If you're debt free, house paid off, and already investing a bunch into your retirement, getting a WL policy is probably a good idea for the tax benefits and estate planning. But most people aren't to that stage in their life. Most Americans are riddled with debt payments and can't get ahead. Adding an expensive WL policy to their expense column is a bad idea when there's a cheaper alternative in Term Life.

If you're dealing mostly with retirees, then yes, it's a different discussion. But...

1) This whole thing started with a 32 yr old person w/ a family, having debt, and no savings, and "never getting ahead." A WL policy is too expensive for someone that is just starting out. Most younger and middle-aged people can't afford enough coverage. Paying expensive premiums in a WL policy only disables their ability to get out of debt, save money, and then invest money to build serious wealth. A TL policy offers them affordable coverage, while still allowing them to "get ahead" in life.
2) I completely agreed that there are certain people who are a stage in their life where the expense of a WL policy won't break their personal finances.
Note: By the way, as a person ages, their fund manager will assess their portfolio and decrease the amount of risk. This isn't a new practice. Older people who are closing in on retirement will almost always change their portfolios. That has nothing to do with WL vs TL.

 

[irishpat183]

In reference to your bolded statements, this is what I said in an earlier post:


If you're dealing mostly with retirees, then yes, it's a different discussion. But...

1) This whole thing started with a 32 yr old person w/ a family, having debt, and no savings, and "never getting ahead." A WL policy is too expensive for someone that is just starting out. Most younger and middle-aged people can't afford enough coverage. Paying expensive premiums in a WL policy only disables their ability to get out of debt, save money, and then invest money to build serious wealth. A TL policy offers them affordable coverage, while still allowing them to "get ahead" in life.
2) I completely agreed that there are certain people who are a stage in their life where the expense of a WL policy won't break their personal finances.
Note: By the way, as a person ages, their fund manager will assess their portfolio and decrease the amount of risk. This isn't a new practice. Older people who are closing in on retirement will almost always change their portfolios. That has nothing to do with WL vs TL.

Oh, I know. But it drifted into a different discussion about WL and such.

Again, no hard feelings. I was just throwing in my two cents on the matter.

Of course. I have guys in the office that handle the managed money aspect. I dont' have a securities license...but I am insurance, RIS, and currently working on my CLU. At that point, I'll probably go RIA and grab my securities licensing.

 

[BleedBlueGold]

I always appreciate the discussion and try to be open to learning new things. Thanks for insight. I just experienced Dave's plan first-hand and became pretty passionate about the whole process.

 

[PANDFAN]

just wanted to say thanks to everyone for their input and this helped me not feel so overwhelmed!!!! in the meantime i have refinanced my home and knocking 6 years off my mortgage or i can pay a lower amount...i prefer to take the 6 years.....refinanced car saving 50.00 a month w/ same terms of loan and got a budget! not to mention it helped me lower my drinking to 2 days a week which i was a daily 3 glasses of wine guy



THANKS AGAIN IE

 

[NDFANnSouthWest]

just wanted to say thanks to everyone for their input and this helped me not feel so overwhelmed!!!! in the meantime i have refinanced my home and knocking 6 years off my mortgage or i can pay a lower amount...i prefer to take the 6 years.....refinanced car saving 50.00 a month w/ same terms of loan and got a budget! not to mention it helped me lower my drinking to 2 days a week which i was a daily 3 glasses of wine guy



THANKS AGAIN IE

One more piece of advice, watch your pennies as well as your dollars.

 

[BleedBlueGold]

Completed Baby Step 2 today (for you Dave Ramsey fans) - My wife and I are officially DEBT FREEEEE!! Very excited.

 

[PANDFAN]

Completed Baby Step 2 today (for you Dave Ramsey fans) - My wife and I are officially DEBT FREEEEE!! Very excited.

awesome!!!! now go treat yourself to some luxury items

 

[Grahambo]

Thought I'd give this a bump to reignite the financial chatter.

 

[Rack Em]

On topic, I opened a Roth IRA when I was 19. I haven't been able to fund it very well for the last few years because I'm in law school and I'm not getting paid jack shits.

Anyway, for anybody interested in this I opened my Roth through Charles Schwab and I've had nothing but great experiences with them. My mutual fund is the Schwab S&P 500 Index. It's performed very well for me over the years and I would highly recommend it to anyone.

Here's a ranking of large blend mutual funds:
Best Large Blend Mutual Funds | US News Best Funds

 

[Rack Em]

This is also worth a look. Smith Barney.....bunch of bitches.

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[BobD]

On topic, I opened a Roth IRA when I was 19. I haven't been able to fund it very well for the last few years because I'm in law school and I'm not getting paid jack shits.

Anyway, for anybody interested in this I opened my Roth through Charles Schwab and I've had nothing but great experiences with them. My mutual fund is the Schwab S&P 500 Index. It's performed very well for me over the years and I would highly recommend it to anyone.

Here's a ranking of large blend mutual funds:
Best Large Blend Mutual Funds | US News Best Funds

For some reason every time I think about Roth IRA's I have this vision in my mind that this guy is managing the account.