"SHOW ME THE MONEY" VIEWS on HOW to make MONEY GR

[Bretsky]

A youthful and bright poster inquired in Tank's Blog Thread about strategies to best make money work after college. Rather than use up the Blog Thread for this, with as many intelligent posters in different professions that we have in here, I thought it might be a good idea to start up a thread on this. So I'm going to Copy and Paste a few posts from the Blog Thread in here and hopefully get some views in here. Maybe we can help each other accumulate wealth.


HERE IS THE ORIGINAL POST I'LL USE FOR THE BEGINNING BASIS FOR THE THREAD; I'LL ALSO COPY A COUPLE POSTS IN HERE AS WELL

"""So, you guys are all good with money it seems.

What is the best way to make money in terms of investment? buying property? flipping houses in addition to your job? stock market? ira? mutual funds?

How can I pay the least taxes upon graduation? Say you make 50,000 out of college, what is a good percentage of that to save immediately? """

[Bretsky]

FROM FOSCO


Depends on a few things - expected retirement age and your risk aversion. I'll assume you'll be 22 when you finish up and expect to work until your 60 (if you make $50K coming out of school, you probably won't want to work 'til 65). So you've got about 40 years of work to save for retirement. Use this to determine your expected net earnings and then pull out your finance book to reverse estimate the growth over time.

Regarding where to invest - depends on the amount of time you have available. Buying property will be the largest investment of your life and you'll need some cash and earnings potential to pull it off. Buying/selling (flipping) houses can be a strategy but has time and risk associated.

We had a guy from Charles Schwab come talk to our company @ a conference a month ago - he just kept preaching diversification. Max out whatever the company matches to your 401k and put away the max in a Roth IRA (pre-tax baby). If your comfortable investing, you can pick your own stocks but there are tons of great mutual funds (no load, no spiff for the firm) that you can set your diversification (large cap, mid cap, growth, international, etc.). Here's a pretty standard way to keep your investments health for the long term:

Conservative
You seek current income and stability, and are less concerned about growth.
Fixed-income investments: 50%. Cash: 30%. Stocks: 20%.


Moderately Conservative
You seek current income and stability with modest potential for increased investment value.
Fixed-income investments: 50%. Cash: 10%. Stocks: 40%.


Moderate
You’re a long-term investor seeking steady growth potential without the need for current income.
Stocks: 60%. Bond funds: 35%. Cash: 5%.


Moderately Aggressive
You’re a long-term investor seeking good growth potential.
Stocks: 80%. Bond funds: 15%. Cash: 5%.
This portfolio could be volatile.

Aggressive
You’re a long-term investor seeking high growth potential.
Stocks: 95%. Cash: 5%.
This portfolio may have substantial year-to-year value fluctuation.

Regarding 'how much to save' - as much as you can. A dollar today is worth more than a dollar tomorrow. Lock in your student loans if you just graduated (by 7/1) as interest rates are risking. And pay off any credit card debt before you begin investing. Cheers-

[Bretsky]

BRETSKY'S THOUGHTS COPIED AND PASTED

WHAT A GREAT QUESTION from somebody getting ready to get out of college.

Most individuals your age are pissing money away rather than thinking how to save it. And it's not that I'm a geezer at 37, but I think it's great that you are thinking about this as early as you are.

First off, I'll preface my views by saying that I work for a large bank and do nothing but Home Loans. As my 5 year old daughter says when she introduces me to her pre-school friends, "My dad helps people buy houses". And with all the programs our bank has, and the fact that I'm fair with people I'd say I'm one of the best at what I do.

So I'd have more inside information regarding real estate investing as opposed to the stock market....but I have personal experience and interest in both.

That being said, I started investing money in mutual funds at age 22 and in the stock market at age 25 (and I saw the best and worst since I'm VERY risk averse and look mostly at tech stocks). I've also been in a 401K from the day a company allowed me to be in one.

I'll offer some general thoughts and a step by step process as general views and anybody can comment as they see fit.

Coming out of college, I'd pound the table for you doing two things, and they go hand in hand. These two things IMO serves as your foundation for the "future". Once that foundation is set, then you branch off in riskier things such as Real Estate, Stocks, Flippings...etc...as you see fit.

401K
ROTH IRA

1. Get in a 401K plan ASAP and contribute at least what a company will match money to. For instance, a past company I worked for would put up to 5% into my 401K account if I contributed 10% of earnings. So I contributed 10% so for every$100 I earned $15 was put into my 401K account. My current bank contributes up to 3% of earnings if I put 6% in. So I contribute 6%. So for every $100 I make, I put $6 in my 401K account, but since that $6 is not taxed since it's put in a 401K I'd estimate I only lose $4 off that $100 on my actual paycheck if I dindn't have a 401K. And I set aside $6 and the company give me $3 for $9 in future savings plus the interest it will appreciate over the years.

2. Personally, my second biggest mistake in investing was not starting up a ROTH IRA when I was 22. I bought a Hot Red Ford Probe and had it paid off within 12 months. I spent a lot of money on booze and fun. But I was not setting aside enough money cause I was just living the good life.

Even if you only can afford to contribute $1000 a year, get that ROTH IRA started early. This is different from a Traditional IRA or 401K in that you put money in the ROTH after it's been taxes. BUT, and a very important BUT for youngyans, the accrued interest that money makes over time in that ROTH IRA is NOT taxed when you take it out at Retirement. So if you invest 100G over the next 40 Years and the value of that ROTH IRA is 250G and you wait til retirement age to cash it in, you get the 250G. That's a powerful investment.

Retailguy, or any, if I'm slightly off on anything in here, please correct me. But I think most will agree that to set up your future base you invest in your 401K if the company contributes and a ROTH IRA for to set your foundation for your future.

The second part of your question deserves another post so I'll give that a wing as well

[Bretsky]

"""Partial wrote:

How can I pay the least taxes upon graduation? Say you make 50,000 out of college, what is a good percentage of that to save immediately? ""

The answer to this question is short and simple IMO. Be sure you have good credit, and buy a house.

Many years ago people had to have a lot of money down to buy houses. Rules have loosened if you have good credit. Honestly rules have changed for everyone, but I hate seeing young buyers with challenged credit get rakes over the coals by high risk brokers with outrageous interest rates and fees.

If you don't have good credit then spend a year renting and build your credit score up to where you do have good credit and can get approved with a reputable bank that will treat you fairly.

If you are not self employed or a business owner, home ownership is one of the most effective ways to keep the money you pay into Uncle Sam low while watching the equity of something you own go up.

[Bretsky]

Once you are comfortable with your foundation, then it's time to "consider" more risk averse investments so you can retire both "early" and "comfortably". I look at the 401K and ROTH IRA and ways to help you retire comfortably.

Mutual Funds, Stocks, Flipping Property....if effective all nice ways to try to get richer sooner rather than later.

Stocks- Honestly this depends on your comfort level and understanding with the types of stocks you invest in. But do a lot of due diligence and UNDERSTAND what the market is if you are going to do this yourself via the net.

Starting in the mid to late 90's I began heavily investing in technology. Owned stocks such as Cisco, AOL, Yahoo, Applied Materials, Broadcom, DELL etc............keep in mind I wasn't nearly early enough on any of these to be one of the rich guys you read about as these were all well developled companies when I bought them with the exception of a few.

I had a slightly below average understanding of the stocks I owned, and an average understanding of the stock market..........but I thought this was flippin easy because when I started investing we were in the Internet Craze.
Problem was I believed I was going to get rich off these and didn't understand when to sell.

I invested about 20G and watched that multiply by over 4x and bragged to my wife that my goal was to make 25% a year on the annual investments. Even had an early age targeted for retirement and arrogantly showed my wife that the balance on our stocks was more than our mortgage balance. And it worked for a couple years. And then it all crashed. And over and over and over I told myself "it can't go lower". And it did....much lower.

In the end, I only made a very small profit on that investment because truth be told, I didn't know nearly enough about what I was doing to handle online long term investing.

Mutual funds, to me are clearly safer; stocks..which are still my personal interest....can great reward or greatly disappoint. But be sure you know what you are doing if you are doing it on your own.

[Bretsky]

HOUSE FLIPPING

I'm right in the middle on that one. When I started doing home loans the home market was much stronger and I witnessed several success stories. Now that the home market is softer lately it seems I have witnessed several failures.

These TV shows...Carlton Sheets...etc...all make it sound SO easy on the infomercials. But truth be told, it's not nearly as easy as it sounds to find that home and then secure financing when the goal is to flip a house.

I'd preface by saying IF you are a handyman and find a possible deal and can fix it up yourself and sell is yourself...it can be very profitable. But most don't have those skills.

I've honestly been keeping my eye out for homes to flip or buy and rent out as well. Eventually I will give one a shot, but I'm really proceeding conservatively given the soft real estate market and growing number of realtors who are getting into flipping.

I may end up trying to first buy a duplex and rent it out. If you can find a property, do some minor fixings, and have two rentors paying a bit more than your mortgage on a property that will appreciate, it makes sense. But the numbers HAVE to make sense.

I'd proceed with a lot of caution on this idea.

[HarveyWallbangers]

This is riveting. More! More! More!

[Bretsky]

This is riveting. More! More! More!

What are your views Harv ? I know a lot in here know a hell of a lot more than me about most of this stuff. I've always thought smart people learn from other peoples mistakes. Well, I'm normally the dumb f'cker who always has to learn from my own mistake.

[HarveyWallbangers]

What are your views Harv ? I know a lot in here know a hell of a lot more than me about most of this stuff. I've always thought smart people learn from other peoples mistakes. Well, I'm normally the dumb f'cker who always has to learn from my own mistake.

I don't know crap about all of this stuff, so I find this helpful. My wife wears the financial pants in the house. I learned one thing in my late 20s. Investing in anything just about beats not investing at all. We have some 401Ks, some IRAs, and I also have some Mutual Life funds.

[Bretsky]

What are your views Harv ? I know a lot in here know a hell of a lot more than me about most of this stuff. I've always thought smart people learn from other peoples mistakes. Well, I'm normally the dumb f'cker who always has to learn from my own mistake.

I don't know crap about all of this stuff, so I find this helpful. My wife wears the financial pants in the house. I learned one thing in my late 20s. Investing in anything just about beats not investing at all. We have some 401Ks, some IRAs, and I also have some Mutual Life funds.


Sounds like you guys are doing all the right things Harv. I've always felt, that after clearing any high interest CC debt out, best things to do are first set your future up with the 401K's and IRA's and Equity in Home.

Then some will choose to dabble in higher risk things. I'm a dabbler so I hope I can get some ideas in here.

I'm the guy that will watch an Infomercial and wonder..........hey.......I can do that if the next Joe can.

B

[Partial]

I appreciate it Bretsky, lets get some more opinions too! The more the merrier!!

[MadtownPacker]

Great thread Bretsky, I too find all this info very interesting. Here in CA houses are not selling and the prices are starting to drop but they where so overpriced that they are still unreasonable. i got sonme deal set up at work where they match $2 for every $1 of mine I put away. What the hell is that called?

[Bretsky]

Great thread Bretsky, I too find all this info very interesting. Here in CA houses are not selling and the prices are starting to drop but they where so overpriced that they are still unreasonable. i got sonme deal set up at work where they match $2 for every $1 of mine I put away. What the hell is that called?

I would think that is your 401K retirement plan. But normally companies match $1 for every $2 you put in up to a certain % of your earnings, which is still outstanding. If your company is matching more than that they are probably very fiscally healthy and it's even better. Then they take that money and invest it in mutual funds and normally you have some say in how to diversify the investments.

That should get your foundation set up well so if we make it to retirement we can comfortably retire. Who the hell wants to work in their 60's anyway ?

Real estate sounds insane there. Certain markets, like CA that have appreciated at such a high % for so long, are drastically slowing down.

If only I did loans in California.

In Wisconsin if I close $1,000,000 of loans per month where I live that's pretty decent and I make a decent living.

In California that's 1-2 loans a month.

In Jefferson County, where I reside, the average loan closing is around 130,000.

Cheers,
Bretsky

[Bretsky]

I appreciate it Bretsky, lets get some more opinions too! The more the merrier!!

I look forward to more comments from some of the CPA/accounting guys.

B

[Patler]

Where do I start? At one time or another I have benn involved in and with so many different investments. I'll breakup my remarks in "topics" in different replies.

Sideline businesses

I looked for weekend and night things that would be highly lucrative for the hours spent.

My first venutres into business were sidelines to make money above and beyond what I earned in hourly wages while in college. The first was salvaging recyclable materials out of buildings that were being torn down. This works well in small towns where owners will let you in free to pull out what ever you can. I was given a window of 3 or 4 days, usually, to take out whatever I could. Hacksaws, chainsaws and sledge hammers were my tools! Brutally hard work, but paid well for the hours spent. You need a buyer, but I hauled tons and tons of cast iron radiators, copper plumbing, etc to salvage yards.

Now there is a great market for recycled wood floors, woodwork,etc. But KNOW YOUR BUYER before you start. I never stored the stuff, just hauled it from the site to the guy who bought it from me.

My point in telling this story is that there are a lot of sort of odd ball things you can do in your spare time that can be quite lucrative. If the investment of money is small, and what is needed mostly is your time, TAKE A CHANCE! What is there to lose?

[Partial]

So here's a scenario,

if you have a 401k in one company, that move to another, what happens then? Do you still get to keep your old 401k?

[MJZiggy]

You could, but it's probably easier to roll the old 401K into the new company plan.

Shamrock, there is such a market for reclaimed and salvage materials right now--I bet you made a killing doing that.

I am no financial genius, but I can tell you that I've read a couple books on the topic and they recommend that you do the 401K stuff and while you're doing it, start making substantial payments to your credit card debt and once the credit cards are paid off, take the money that you were paying to them and add it to your car payment and once your car payment is paid off, add the money that you were paying on the car payment to the money you were paying on the credit cards and put the whole amount to your mortgage. Supposedly you eventually run out of things to pay off and then you have your whole income to yourself minus taxes.

[MadtownPacker]

I would think that is your 401K retirement plan. But normally companies match $1 for every $2 you put in up to a certain % of your earnings, which is still outstanding. If your company is matching more than that they are probably very fiscally healthy and it's even better. Then they take that money and invest it in mutual funds and normally you have some say in how to diversify the investments.That must be it then, I signed up cuz they said it cant lose $. I do think I had to agree to a % but they do everything as far as selection of investments. Wish I was a smart con like you.

[MadtownPacker]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

[Patler]

Flipping Houses

I did this as a young man, without realizing that I was doing it. It wasn't called "flipping" back then! The first few houses we lived in were "fixer uppers". I had time and some skills, so I looked for real good deals on sort of run down houses in good neighborhoods. The first was bought from a couple we knew in their 80s. Owned it about 15 months and sold it for twice what I paid for it. After duducting the costs of materials, I made around 25%. Of course, what the final price was back in those days wouldn't even buy a new car today!

I found it easiest to do a "flip" in the house I lived in. I was always there and could work even a half-hour if I had the time. If you have to "go to" your flip, you need blocks of hours to accomplish anything. My costs were less, because I lived in the investment property while renovating. Only one mortgage.

The key to this is KNOW YOUR REAL ESTATE MARKET. Don't renovate a house to be the most expensive one in the neighborhood, it will be hard to sell. You are better off taking on the neighborhood eye-sore and making it into a slightly better than average one for the neighborhood. Shop lumberyard closeouts, opened boxes, etc. for your materials. You can save an amazing amount of money this way. Renovate to conservative styles, that won't offend any buyer. Remember, its not your tastes that count, its making the property look nice to as many potential buyers as possible.

[Patler]

Shamrock, there is such a market for reclaimed and salvage materials right now--I bet you made a killing doing that.


I did OK, but my venture into that are was over 35 years ago. I took out mostly recyclable metals. It almost brings tears to my eyes when I think of the hardwood floors and woodwork that were bulldozed in a couple of the buildings I was in. One commercial building had marble floors that are now in a dump somewhere!

[MJZiggy]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.

[MJZiggy]

Shamrock, there is such a market for reclaimed and salvage materials right now--I bet you made a killing doing that.


I did OK, but my venture into that are was over 35 years ago. I took out mostly recyclable metals. It almost brings tears to my eyes when I think of the hardwood floors and woodwork that were bulldozed in a couple of the buildings I was in. One commercial building had marble floors that are now in a dump somewhere!

Good Lord don't tell me stuff like that!! I spent months trying to find decent reclaimed flooring when we remodeled last year. It was more expensive than new and I finally gave up and put bamboo down.

[MadtownPacker]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.
Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

[Patler]

Retirement plans

Wow, if I only knew at 22 what I know now!

As others have said, 401k, 401k, 401k! Especially if your employer matches. The match is a "guaranteed" return on your investment, plus you get the earnings on both portions, providing you stay long enough to "vest". Starting in your 20s, even with a reaonsable contribution that is not the maximum, you will do oh so very well!

I worked only for about 12 years at a place that had a 401k. That started a little over 20 years ago, and ended about 10 years ago. Initially I contributed less than the max, for a time I maxed out, but with a large family and some unforeseen things had to cut back some the last few years. For half the time the company matched 50 cents on the dollar. For the rest of the time, there was no match. When I left, the 401k was rolled over into an IRA. Looking back on the cash I contributed, the current value is worth about 6 times what cash I put in. Since my contributions were pre-tax, the net effect on my take-home pay was even less. For every dollar in take home pay that I shorted myself, I probably have about 8 dollars in the account today. Just think if these stretched out for another 20 years?

Compounding interest is so huge on the investments you will make in your 20s. Put whatever you can into it, no matter how small it seems to you today. You will thank yourself 35 years from now.

[Patler]

Investing

Stocks, bonds, mutual funds, etc. I've done good, I've done bad. DOn't even consider these until you have maxed out your 401k or other company matching program you might have. Returns on those are much better for what you put into them.

The hardest thing that an individual has to cope with in investing is keeping emotions out of it. Make a decision, and DON"T LOOK BACK, except to learn from what you did. If you sold and made money, don't regret that it went even higher after you sold. If you wait too long to sell, don't dwell on it. No one buys at the absolute bottom and sells at the absolute peak. The key is make money when you can and minimize losses when possible.

To be honest, I think most people need the advice of a professional in this area, unless you have lots of time to put into it. I don't mean that you should do everything they tell you, but let them sift through the chaff and make suggestions for you to consider. They can be a check on your emotions, too. Alternatively, become an expert on a few companies or in a few areas. But know the companies, where they've been and where they are headed.

Whatever you do, diversify. Thats why mutual funds can be good, because they provide some natural diversification, even within a fund. Even more so if you buy funds empahsizing different market segments.

[MJZiggy]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.
Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

Let me see if I can get this right. It's based on how much money you owe against the credit limits of all your accounts. I'm guessing the worry is that if you take out a mortgage with having only $2K on credit cards, but have $40K available to you, you could go out and amass all sorts of debt and default on your loan. Can any of the numbers people tell me if that's why?

[MadtownPacker]

Thanks for the great advice Rock. Ive only been doing it for 2 years and after 4 years you are "vested" which means its all yours to keep right?.

[Patler]

Shamrock, there is such a market for reclaimed and salvage materials right now--I bet you made a killing doing that.


I did OK, but my venture into that are was over 35 years ago. I took out mostly recyclable metals. It almost brings tears to my eyes when I think of the hardwood floors and woodwork that were bulldozed in a couple of the buildings I was in. One commercial building had marble floors that are now in a dump somewhere!

Good Lord don't tell me stuff like that!! I spent months trying to find decent reclaimed flooring when we remodeled last year. It was more expensive than new and I finally gave up and put bamboo down.

I read an article about a company that wants to "mine" older landfills just because of all the stuff in them.

[Bretsky]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.
Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

I have several clients who have did the credit card at 0% flipping for some time. If you do it right this it should not seriously damage your credit score.

Your credit scores are based on a number of things, a few of which include payments made on time and delinquent payments (by far the most important factor), any current liens or judgements, revolving debt balances, and the number of times your credit is pulled by companies. Having a few unused credit cards should not hurt you much unless you are carrying balances and not making payments on time.

Remember each time you sign up for a no interest rate CC that company has to pull your credit, and if you do that too much, it will damage your credit. If you are doing this with one or two cards (resulting in 1-2 credit checks per year), this won't have a lot of adverse impact from the credit pulls.

But if people are doing this, and then running up these cards and never paying any principal off, this will have a long term bad effect because their debt loads are constantly going the wrong way.

But the #1 factor in building credit is making your payments on time. Every time you make a payment to a CC company, even a minimal payment, if it's on time they report this to the credit bureau and that helps your score. Likewise, if your bill is 2G and you don't have much money and neglect to send in a minimum payment, they will report you being late and that will have a very bad effect on your score.

As a banker, the first details I look at on a credit report (after the scores) are how many late payments people have made in their lifespan. People with perfect credit can usually get approved for much higher payments on a loan than they normally want or can afford.

[MJZiggy]

Thanks B!! :D

[Patler]

Thanks for the great advice Rock. Ive only been doing it for 2 years and after 4 years you are "vested" which means its all yours to keep right?.

If you are 100% vested after four years. Things may be different now, but some that I knew about before had staged vesting, where after a few years you vested in 25% of the company contributions, a few years later it was 50%, etc. The company I was at it took 10 years to vest 100% in their contributions. I think some of that has changed since many companies no longer offer traditional pension plans anymore. Vesting periods in 401ks have become shorter.

[Bretsky]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.
Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

Let me see if I can get this right. It's based on how much money you owe against the credit limits of all your accounts. I'm guessing the worry is that if you take out a mortgage with having only $2K on credit cards, but have $40K available to you, you could go out and amass all sorts of debt and default on your loan. Can any of the numbers people tell me if that's why?


If you are maxed out on all of your credit limits then the current debt ratios are high, which has an adverse effect on credit.

I don't think individuals are penalized at all credit wise if they have access to 40G but only have balances of 2500. In reality the reason they have so much available is because their credit is good.

[Bretsky]

Thanks for the great advice Rock. Ive only been doing it for 2 years and after 4 years you are "vested" which means its all yours to keep right?.

If you are 100% vested after four years. Things may be different now, but some that I knew about before had staged vesting, where after a few years you vested in 25% of the company contributions, a few years later it was 50%, etc. The company I was at it took 10 years to vest 100% in their contributions. I think some of that has changed since many companies no longer offer traditional pension plans anymore. Vesting periods in 401ks have become shorter.


In WI most companies have a 5 year vesting period from what I see. If Mad has 4 years that would mean after 4 years all company contrubitions as well as his own are his. And most likely, if it's 4, then each year you work there you are 25% more vested.

[MadtownPacker]

If you are 100% vested after four years. Things may be different now, but some that I knew about before had staged vesting, where after a few years you vested in 25% of the company contributions, a few years later it was 50%, etc. The company I was at it took 10 years to vest 100% in their contributions. I think some of that has changed since many companies no longer offer traditional pension plans anymore. Vesting periods in 401ks have become shorter.

Yeah its 100% after 4 years. After reading all this stuff Im thinking I might have a sweet deal cuz after 6 years they match $4 for every $1 of mine. After like 10 years it is $6 for every $1.

[Patler]

I don't think individuals are penalized at all credit wise if they have access to 40G but only have balances of 2500. In reality the reason they have so much available is because their credit is good.

Far be it from me to argue with a banker, but I will!

I don't think that is entirely correct. Its not a serious penalty, but your credit score can be decreased for high outstanding available credit lines. I was real curious when the annual free reports came out last year, so I called and talked to a couple. One of the things I found out was that if you have a lot of unused credit cards, such that you could, if you were of a mind to do it, go out and charge $50,000 tomorrow using 25 different cards, you will lose some score points because of it.

The solution is simple. You call some of the unused card companies, and formally cancel the card. You can even request them to report that to the credit agencies.

It's kind of a Catch 22, though, because it also is not good if you have no available credit, or so I was told. It's good to have some, but not too much!

[Patler]

Yeah its 100% after 4 years. After reading all this stuff Im thinking I might have a sweet deal cuz after 6 years they match $4 for every $1 of mine. After like 10 years it is $6 for every $1.

That is pretty impressive. You make 400% on your money the year you invest it! What is the maximum that you are allowed to contribute that they will match? Whatever it is, do it!!!!

[Fosco33]

If you are 100% vested after four years. Things may be different now, but some that I knew about before had staged vesting, where after a few years you vested in 25% of the company contributions, a few years later it was 50%, etc. The company I was at it took 10 years to vest 100% in their contributions. I think some of that has changed since many companies no longer offer traditional pension plans anymore. Vesting periods in 401ks have become shorter.

Yeah its 100% after 4 years. After reading all this stuff Im thinking I might have a sweet deal cuz after 6 years they match $4 for every $1 of mine. After like 10 years it is $6 for every $1.

I guess I'm lucky. My company matches 100% of the first 3% you put in and 50% on the next 2% and it's fully vested - immediately. I then have plan setup with my financial company that pours the money into diversified accounts automatically. Very little work required on my end.

[Bretsky]

I don't think individuals are penalized at all credit wise if they have access to 40G but only have balances of 2500. In reality the reason they have so much available is because their credit is good.

Far be it from me to argue with a banker, but I will!

I don't think that is entirely correct. Its not a serious penalty, but your credit score can be decreased for high outstanding available credit lines. I was real curious when the annual free reports came out last year, so I called and talked to a couple. One of the things I found out was that if you have a lot of unused credit cards, such that you could, if you were of a mind to do it, go out and charge $50,000 tomorrow using 25 different cards, you will lose some score points because of it.

The solution is simple. You call some of the unused card companies, and formally cancel the card. You can even request them to report that to the credit agencies.

It's kind of a Catch 22, though, because it also is not good if you have no available credit, or so I was told. It's good to have some, but not too much!

I can buy this, but rather than penalized "at all" I will preface by saying penalized "minimally".

I've witnessed scores dip hard after the fact when people who had a lot of revolving credit available used it.

And I have seen the message "too many revolving accounts" on credit reports so you are right in that it has some impact.

But to take things a bit further, most of the time when I see "too many revolving accounts" it is on a credit report with a person who has great credit.

And in the notes on each credit report, it lists reasons (normally four) of why you don't have a "perfect" score. And if there are no great reasons why somebody's score is 825 instead of 850 that seems to be the message it spits out on the credit report every time.

That being said, being responsible and making payments on time is most of what defines your credit.

[Bretsky]

Yeah its 100% after 4 years. After reading all this stuff Im thinking I might have a sweet deal cuz after 6 years they match $4 for every $1 of mine. After like 10 years it is $6 for every $1.

That is pretty impressive. You make 400% on your money the year you invest it! What is the maximum that you are allowed to contribute that they will match? Whatever it is, do it!!!!


I'd agree that you have an amzing plan; that sounds too good to be true in Wisconsin. If you stay at that company forever you are pretty much going to retire wealthy.

[MadtownPacker]

That is pretty impressive. You make 400% on your money the year you invest it! What is the maximum that you are allowed to contribute that they will match? Whatever it is, do it!!!!
Damn, I didnt know if I was getting ganked or not. Ive never had any of this stuff. I dont know about the max but I think I will following your advice.

[Patler]

That being said, being responsible and making payments on time is most of what defines your credit.

You darn bankers are all the same, you expect us to pay back the money you give us! :mrgreen:

[Partial]

this is a really good topic!! I am thinking immediately after college I will sacrifice as much money as I can and invest into 401k and IRA. I figure I will probably rent for awhile before I get settled. Would it be a better idea to take out a mortgage and buy a duplex, fix it up, and rent one unit while living in the other, and then rent them both out once I get settled with a family?

[Bretsky]

this is a really good topic!! I am thinking immediately after college I will sacrifice as much money as I can and invest into 401k and IRA. I figure I will probably rent for awhile before I get settled. Would it be a better idea to take out a mortgage and buy a duplex, fix it up, and rent one unit while living in the other, and then rent them both out once I get settled with a family?

TO ME that is absolutely the smartest way to go. That being said, it's easier done while single. I wanted to do this right when we were married but da wife kaboshed it.

The only complication is you need 5% down when buying a duplex so you have to save up a bit. Where with a single family home there are loads of on money down programs.

So you buy the duplex, and when you get married then you buy a home if your chick doesn't want to live in one.

You find another renter, and already have equity in a property plus you then have two renters paying down your mortgage. The key is finding a duplex at the right price that you like. Keep in mind that years down the road you will want both rents be be greater than the mortgage payment. Many I know use a simple formula that I'd agree with. On a duplex for 120G, you want about 1200 of rent coming in. Problem is with how houses have appreciated it's very hard to find a duplex where that forumula works anymore, and if it does the property is often in a tougher part of the neighborhood.

Also, it's far better to spend the time to find a good renter than rush to get a place rented. Many landlords are finding ways to pull credit on applicant rentors and look up their information on a website for criminal history. If you go this route you need to really do your due diligence on any renter you are considering.

BE SURE that IRA you start up is a "Roth" IRA. And many employers require you to work a full year before being able to get into the 401K. You can get the Roth IRA started either way.

[GrnBay007]

For the ROTH IRAs is there a maximum you can put in per year? Also what's the minimum you can put in? Anyone know?



-

[Scott Campbell]

For the ROTH IRAs is there a maximum you can put in per year? Also what's the minimum you can put in? Anyone know?



-

$4000 per person. $8000 per couple - $5000/person/year if you're over 50. It's phased out from $95,000 for singles, $150,000 - $160,000 for couples. So if you make under $95K, you can make the maximum $4000 contribution.

The only minimum you need to worry about is an amount that would be adversly affected by any management fees that the institution (Fidelity, E*TRADE, etc.) charges for maintaining the account. In other words, if you contribute $25 a year, and they charge you $25 a year to maintain the account, the Roth would make no sense.

My suggestion is to find a way to contribute the max every year.

[Scott Campbell]

Whatever you do, diversify. Thats why mutual funds can be good, because they provide some natural diversification, even within a fund. Even more so if you buy funds empahsizing different market segments.

I've always defied conventional wisdom in this area. I've never felt like I had enough time to adequately research and follow more than 4 stocks at time. So I've never diversified in the traditional sense. I've had a high beta (variability), but my severe downturns have always been more than made up for by the run ups.

The Roth is great place to trade stocks, as you won't be paying short term or long term capital gains on any of the money you make. It's a real shot in the arm to your investment returns.

[Scott Campbell]

Flipping Houses


There's a variation on this that can help you quickly build equity in your home. Build it yourself. Work as the general contractor and take on a couple of the easier trades (tile, paint, landscaping, etc.) to build sweat equity. Many community colleges offer courses for owner/builders. You can sell the house after you live in it for 2 years, and any money that you net from appreciation or sweat equity is tax free up to $500K. Many people who do this well own their home free and clear after the 4th house.

[Bretsky]

I will admit I'm curious as to some of retailguy's views as well as the other accounting wiz's.

Geez, we need to recruit a couple stock brokers to come in here. Lots of great points in here so far.

And 007, if you haven't yet, start up a d@m Roth IRA.


Cheers,
B

[GrnBay007]

Yes, I need to do that B. But I do have a 401k, deferred comp and also a State retirement plan.



-

[Bretsky]

Yes, I need to do that B. But I do have a 401k, deferred comp and also a State retirement plan.



-


You are doing fine then; geez all that extra money; the strip clubs in Iowa must be treating you well :wink:

[Anti-Polar Bear]

Yes, I need to do that B. But I do have a 401k, deferred comp and also a State retirement plan.



-

Life must be good when the EX is playing the mortgage and excessively high child supports.

I learned in Dennis Rodman's book that NBA players could pay up to $75,000/mth in child support for a single child. I mean, WTF does a child need $75,000 for? Frailty, thy name is woman!

[Bretsky]

Yes, I need to do that B. But I do have a 401k, deferred comp and also a State retirement plan.



-

Life must be good when the EX is playing the mortgage and excessively high child supports.


Stop trying to pick a fight; but a great idea. If you get child support take it and invest it in a Roth IRA so the ex can be sure you retire early.


Cheers,
B

[Scott Campbell]

I will admit I'm curious as to some of retailguy's views as well as the other accounting wiz's.

Geez, we need to recruit a couple stock brokers to come in here. Lots of great points in here so far.

And 007, if you haven't yet, start up a d@m Roth IRA.


Cheers,
B

In my opinion, knowing how is only half the equation. You still have to be disciplined and execute on the plan once you know what to do. I know lots of accountants that are horrible money managers.

Here is where many people fail. They live beyond their means. They carry debt on things besides their house. They mortgage their future wealth to buy "stuff" now.

You have to be generating excess cash flow to get that money invested. So you can do one of two things (or a combination I guess). You can either make more money, or you can spend less money. Most people are already maximizing their income, or close to maximizing their income. So for the majority that leaves one option for generating excess cash flow needed for investment - spend less.

While I'm not a financial professional, I do work on my understanding of personal finance with about the same amount of effort as I put into following the Packers.

[Scott Campbell]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

[GrnBay007]

Life must be good when the EX is playing the mortgage and excessively high child supports.

I learned in Dennis Rodman's book that NBA players could pay up to $75,000/mth in child support for a single child. I mean, WTF does a child need $75,000 for? Frailty, thy name is woman!

Poor Dennis Rodman.....another of your boyfriends, if I remember correctly.

sorry doper, you are wrong. I pay my mortgage.



-

[GrnBay007]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Having a job? :D


-

[Scott Campbell]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Having a job? :D


-

lol

Nope.

[Fosco33]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Not buying a car (especially a new one) if at all possible. Common thing for new grads but very $$$. I went w/o one for almost 2 years and then had to bite the bullet.

[Fosco33]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.
Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

I have several clients who have did the credit card at 0% flipping for some time. If you do it right this it should not seriously damage your credit score.

Your credit scores are based on a number of things, a few of which include payments made on time and delinquent payments (by far the most important factor), any current liens or judgements, revolving debt balances, and the number of times your credit is pulled by companies. Having a few unused credit cards should not hurt you much unless you are carrying balances and not making payments on time.

Remember each time you sign up for a no interest rate CC that company has to pull your credit, and if you do that too much, it will damage your credit. If you are doing this with one or two cards (resulting in 1-2 credit checks per year), this won't have a lot of adverse impact from the credit pulls.

But if people are doing this, and then running up these cards and never paying any principal off, this will have a long term bad effect because their debt loads are constantly going the wrong way.

But the #1 factor in building credit is making your payments on time. Every time you make a payment to a CC company, even a minimal payment, if it's on time they report this to the credit bureau and that helps your score. Likewise, if your bill is 2G and you don't have much money and neglect to send in a minimum payment, they will report you being late and that will have a very bad effect on your score.

As a banker, the first details I look at on a credit report (after the scores) are how many late payments people have made in their lifespan. People with perfect credit can usually get approved for much higher payments on a loan than they normally want or can afford.


:?:

About every month, my credit card company automatically raises my limit although I'd never use it. Previously, I asked them to lower the max b/c I read that before a loan it looks better to use more credit. What is the appropriate response? Should I continue letting the company float me a higher credit limit or not?

[the_idle_threat]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Not buying a car (especially a new one) if at all possible. Common thing for new grads but very $$$. I went w/o one for almost 2 years and then had to bite the bullet.

The most critical? Avoid the credit card trap. But holding off on the new car is a great suggestion as well.

[Fosco33]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Not buying a car (especially a new one) if at all possible. Common thing for new grads but very $$$. I went w/o one for almost 2 years and then had to bite the bullet.

The most critical? Avoid the credit card trap. But holding off on the new car is a great suggestion as well.

Totally agree on the CC issues. I'm wondering what Scott's question was referring to b/c we discussed paying off credit cards a few times on the first page (myself, B, MJ - I think).

Well, Scott???

[the_idle_threat]

I'm really getting at avoiding the big balances in the first place. It's all too common nowadays for a twentysomething to ring up big balances on credit with the expectation that current and future wages will pay them off quickly. Then, instead of putting money away in a 401(k) or a Roth IRA (two excellent suggestions that have been mentioned early and often), the person is paying that money to creditors each month trying to get back to even. I wish I could say this without doing so from experience. :oops:

The big takeaway is really living within current means---not future expected means. By staying mostly out of debt (low-interest student loans and mortgage excluded) and saving each month, a person retains the most financial flexibility.

This is the most important thing that I can think of, aside from the painfully obvious, like holding down a job in the first place, and not getting fired, etc.

[Scott Campbell]

This thread was directed at Partial's original question, and I find it interesting that nobody has yet brought up the most critical financial success factor (IMO) for someone his age.

Any guesses?

Not buying a car (especially a new one) if at all possible. Common thing for new grads but very $$$. I went w/o one for almost 2 years and then had to bite the bullet.

The most critical? Avoid the credit card trap. But holding off on the new car is a great suggestion as well.

Totally agree on the CC issues. I'm wondering what Scott's question was referring to b/c we discussed paying off credit cards a few times on the first page (myself, B, MJ - I think).

Well, Scott???

For someone Partials age, I believe it's choosing the right spouse. It's extremely difficult to be putting money away if your wife (or husband) is sabatoging your cash flow. If you marry a spender, you are far more likely to live beyond your means.

It's been a 5 or 6 years since I read the book, but this concept is detailed in The Millionaire Next Door.

[Partial]

My uncle recommends I read that book. I should take his advice.

[Scott Campbell]

BE SURE that IRA you start up is a "Roth" IRA. And many employers require you to work a full year before being able to get into the 401K. You can get the Roth IRA started either way.

While this is solid advice for anyone in their 20's and 30's, the Roth is not quite the slam dunk no brainer for older workers. Because the money put into the account is "after taxes", it takes time to out pace the return on a traditional pretax IRA. Older workers may not have enough time for that to occur. You also have to factor how much taxable income you will have in retirement.

[Scott Campbell]

My uncle recommends I read that book. I should take his advice.

It's an entertaining read - I think I finished it in a couple of nights. But there are other books that will help you lay the foundation for your "Master Plan". The book that crystalized for me what I had to do was "Wealth Without Risk" by Charles Givens. I read it in the late 80's shortly after college, so much of the specific investment and tax advice is dated. The insurance info is timeless. I would credit that book for much of my own success.

[Partial]

so, what does one do if they have student loans? Things appear to have taken a turn for the worst and it looks like I may leave school 20,000 in debt. What is an action plan on those when trying to invest your salary into IRA/401k etc.

I'm a good student so I think i'll be alright when the time comes to get a job, and my field from my school averages around 50k after graduation

[Scott Campbell]

so, what does one do if they have student loans? Things appear to have taken a turn for the worst and it looks like I may leave school 20,000 in debt. What is an action plan on those when trying to invest your salary into IRA/401k etc.

I'm a good student so I think i'll be alright when the time comes to get a job, and my field from my school averages around 50k after graduation

The conventional wisdom is to pay yourself first. In other words, don't put off starting your Roth or 401K contributions in order to pay down your student loan debt faster. This is especially true because your student loan interest rate is typically subsidized (low). It might be different if you had $20K in credit card debt at 18% interest.

[Partial]

Do a lot of people my age get into a lot of CC debt? That has never really been an issue for me. I have two credit cards, one from my bank and another for emergencies with a higher limit that I have never used. Is this damaging my credit rating having two? I have always paid the one on time, and the other I have never used.

[Fosco33]

My uncle recommends I read that book. I should take his advice.

It's an entertaining read - I think I finished it in a couple of nights. But there are other books that will help you lay the foundation for your "Master Plan". The book that crystalized for me what I had to do was "Wealth Without Risk" by Charles Givens. I read it in the late 80's shortly after college, so much of the specific investment and tax advice is dated. The insurance info is timeless. I would credit that book for much of my own success.

I've read Millionaire Next Door and would also suggest "Rich Dad Poor Dad" by Robert T. Kiyosaki.

[Scott Campbell]

Do a lot of people my age get into a lot of CC debt? That has never really been an issue for me. I have two credit cards, one from my bank and another for emergencies with a higher limit that I have never used. Is this damaging my credit rating having two? I have always paid the one on time, and the other I have never used.

There are people of all ages that have problems with credit card debt. College students with credit card problems are a relatively new phenomenon primarily because the credit card companies began targeting that market in the last 10 years.

If you are paying your balance in full each month, you do not have a problem, and are probably helping your credit score.

[Partial]

whats a good field to go into in terms of money for a long period of time? My understand is that engineers get laid off around 50 due to A. overqualifying themselves, B. younger, smarter prospects for significantly cheaper available

[Fosco33]

whats a good field to go into in terms of money for a long period of time? My understand is that engineers get laid off around 50 due to A. overqualifying themselves, B. younger, smarter prospects for significantly cheaper available

I'd highly suggest finding something that interests you first and let the money follow suit. There's nothing to gain in making tons of cash if you hate your life (consider that you'll spend probably 50-60 hrs/wk). Also remember that you'll probably change jobs/careers 4-6 X's in your life - so you probably don't know what you'll be yet :wink:

As far as good long-term industries, engineers do pretty well (most of my college roomies were EE, CE or ME) but you need to have that specific degree. Looks like the US is quickly moving towards a more service based economy so I'd say look for something in healthcare or technology - IMO.

[Fosco33]

:?:

About every month, my credit card company automatically raises my limit although I'd never use it. Previously, I asked them to lower the max b/c I read that before a loan it looks better to use more credit. What is the appropriate response? Should I continue letting the company float me a higher credit limit or not?

Bumpy Bump

[Scott Campbell]

whats a good field to go into in terms of money for a long period of time? My understand is that engineers get laid off around 50 due to A. overqualifying themselves, B. younger, smarter prospects for significantly cheaper available

Sales. Good sales people are grossly overpaid. The problem with sales is that 95% of the sales jobs out there are truly awful, so you have to target the 5% that are decent. Technical sales people (engineers) can do extremely well.

I wouldn't get too hung up on the long term. Business models evolve, so you'll have to also. And it's somewhat futile to try and predict now what the hot market segment will be in 20 or 30 years. Darwin is your friend. Adapt, or you'll become stale and underemployed. That diploma should not mark the end of you investing in your skill set. Ideally you'll find work that continuously enhances your skill set. It's your skill set that will determine your value in the employment marketplace, not your job. Jobs come and go.

Make the effort to become a great communicator, as that skill translates across all jobs and all industries. It is of little value to be brilliant if you can't communicate it to anyone else. I'm amazed at the lack of business writing skills in today’s workplace. It's absolutely horrific. Though you rarely see that poor writing coming out of the executive suite, and that is no coincidence. Speaking skills are equally important, and if you are an engineer that cleans up well and can be trotted out in front of customers, you'll be even more valuable.

IMO

[Scott Campbell]

:?:

About every month, my credit card company automatically raises my limit although I'd never use it. Previously, I asked them to lower the max b/c I read that before a loan it looks better to use more credit. What is the appropriate response? Should I continue letting the company float me a higher credit limit or not?

Bumpy Bump

B is probably way better equipped to handle this one, but I'll take a stab at it.

If it's not so high as to screw up your ratios, you should be fine. I take it your concern is about your credit rating as it relates to getting a home loan. In that case the best thing you could do would be to pull your own credit report and review it for errors. Make sure any errors are corrected. At that point you could take it to a loan officer and have him look for any ratios that are out of whack. You could probably get pre-approved for a loan, and the loan officer could probably let you know if any of your credit lines were hurting your ability to secure a larger mortgage.

[MJZiggy]

whats a good field to go into in terms of money for a long period of time? My understand is that engineers get laid off around 50 due to A. overqualifying themselves, B. younger, smarter prospects for significantly cheaper available

Sales. Good sales people are grossly overpaid. The problem with sales is that 95% of the sales jobs out there are truly awful, so you have to target the 5% that are decent. Technical sales people (engineers) can do extremely well.

I wouldn't get too hung up on the long term. Business models evolve, so you'll have to also. And it's somewhat futile to try and predict now what the hot market segment will be in 20 or 30 years. Darwin is your friend. Adapt, or you'll become stale and underemployed. That diploma should not mark the end of you investing in your skill set. Ideally you'll find work that continuously enhances your skill set. It's your skill set that will determine your value in the employment marketplace, not your job. Jobs come and go.

Make the effort to become a great communicator, as that skill translates across all jobs and all industries. It is of little value to be brilliant if you can't communicate it to anyone else. I'm amazed at the lack of business writing skills in today’s workplace. It's absolutely horrific. Though you rarely see that poor writing coming out of the executive suite, and that is no coincidence. Speaking skills are equally important, and if you are an engineer that cleans up well and can be trotted out in front of customers, you'll be even more valuable.

IMO

Nice advice. I'd like to add to it that you should also be concerned with doing something you love to do every day because whatever career path you choose you'll be doing it every day. You may think to yourself that career changes are possible and they are, but too many people get worn down doing a job they hate and it's decades before they ever get ithe guts to step off that ledge of security and quit to do something they like better. I've known people who were miserable, grumpy people for a long time and then one day quit their jobs and got into something new and were different people after that. There's an old bit of advice (true or not, I don't know) that says, "do what you love and the money will come."

[Bretsky]

:?:

About every month, my credit card company automatically raises my limit although I'd never use it. Previously, I asked them to lower the max b/c I read that before a loan it looks better to use more credit. What is the appropriate response? Should I continue letting the company float me a higher credit limit or not?

Bumpy Bump

B is probably way better equipped to handle this one, but I'll take a stab at it.

If it's not so high as to screw up your ratios, you should be fine. I take it your concern is about your credit rating as it relates to getting a home loan. In that case the best thing you could do would be to pull your own credit report and review it for errors. Make sure any errors are corrected. At that point you could take it to a loan officer and have him look for any ratios that are out of whack. You could probably get pre-approved for a loan, and the loan officer could probably let you know if any of your credit lines were hurting your ability to secure a larger mortgage.


Fosco,

A good question and one that there is no exact yes or no answer for. Your credit score is evaluated by a number of factors.

When one reads credit reports no matter how good the credit scores are, the report lists four reasons why each person doesn't have "better" credit. I've seen the adverse message of "too much revolving credit". That being said, when I see that message it's normally on a person with very good credit.....which is why the CC's keep floating him more money to use.

My view is as long as the credit isn't extremely excessive it won't hurt you much. My credit is in the high 700's and I have around 30G avaliable to me via credit cards (which I pay off monthly so I don't use that) and about 30G of unused credit via a Home Equity Loan.

Much more important, and the factor that significantly hurts individuals credit in relation to credit limits, is too many revolving accounts with balances. Those guys that have two big payment car loans, a boat loan, a Trailer Loan, and an extra 5 Credit Cards with high balances...........etc. Also, if you have recently run up balances as of late on the above, that hurts scores even more and it's easy to see when a person is going underwater far before it happens.

So regarding the offers, use common sense. I wouldn't let the revolving balance limits get excessive if you will never use them, but excessive may be different from me versus the guys in here making the big buckswanas.

In all probability, you are receiving these offers because you already have a good credit standing. That being said, as you approach the area when you are considering a home loan, contact an expert and have him pull and review your credit report for you. A quality bank/loan officer should be able to help you with that....and of course if you reside in the midwest I'm always happy to help out as well. Any pre-approval I do for clients is free, and even if I don't do a formal pre-approval I'm able to pull credit and review it with clients with a signed authorization form and a few bits of information I gather.

I'd love to do some home loans for people in here; maybe sometime down the road as my idea has been shot down a few times.


Cheers,
B

[pacfan]

I have nothing to add, but admiration.

amazing posts, guys

[Bretsky]

so, what does one do if they have student loans? Things appear to have taken a turn for the worst and it looks like I may leave school 20,000 in debt. What is an action plan on those when trying to invest your salary into IRA/401k etc.

I'm a good student so I think i'll be alright when the time comes to get a job, and my field from my school averages around 50k after graduation


Partial,

It's very normal for students to come out of college with well over 20G in student loans. Heck, I've seen six digits and still was able to finance a first home for them. Most of these loans are at a low interest rate and normally if they are several separate loans they can be consolidated into one at a low rate. I wouldn't get worked over paying these off before getting involved in your ROTH/401K. Just secure a low balance and low payment (this so you are more approvable for home loans).

[Bretsky]

Do a lot of people my age get into a lot of CC debt? That has never really been an issue for me. I have two credit cards, one from my bank and another for emergencies with a higher limit that I have never used. Is this damaging my credit rating having two? I have always paid the one on time, and the other I have never used.

Yes, many are very irresponsible. It is probably not damaging your credit having too. In fact, I'll give another take on this.

Regarding the two credit cards, for your credit rating I'd actually like you to be using both of those credit cards each month. Take that card you never use and charge gas or a small purchase once a month and pay it if full.

Remember every time you make a payment on time you get a positive remark to the credit burea and your score. If you don't have an auto loan, then IMO it's more important to use two CC's going forward to you have two positive trades (payments/marks) reported each month.

B

[MadtownPacker]

I have been making everyday purchase on a CC for things like groceries, gas, auto insurance, even DirectTV o a 0% CC. It has made my FICO blow up. I dont think using it hurts at all just not overloading. Doing this looks like Im spending hundreds a month on a CC but then paying it the same month.

Hows loaner view this Bretsky?

[Bretsky]

I have been making everyday purchase on a CC for things like groceries, gas, auto insurance, even DirectTV o a 0% CC. It has made my FICO blow up. I dont think using it hurts at all just not overloading. Doing this looks like Im spending hundreds a month on a CC but then paying it the same month.

Hows loaner view this Bretsky?

Mad,

When you said it's made your FICO blow up what do you mean ? It's elevated your score or brought it down ? My family uses 3 CC's each month and pays them every month in full.

[MadtownPacker]

Mad,

When you said it's made your FICO blow up what do you mean ? It's elevated your score or brought it down ? My family uses 3 CC's each month and pays them every month in full.

Elevated, cmon man, yo aint that old!

[Bretsky]

Mad,

When you said it's made your FICO blow up what do you mean ? It's elevated your score or brought it down ? My family uses 3 CC's each month and pays them every month in full.

Elevated, cmon man, yo aint that old!


Makes sense; I've heard random musings from many that for your FICO you have to carry a balance and it hurts you if you charge monthly and pay it off monthly. I've always felt that was crap. It's all about getting as many positive marks on your credit from on time payments and avoiding the negative marks for late payments. Before ya know it you'll prolly be getting pre-approved for 1MIL home in California Mad.

B

[The Leaper]

The best way to build wealth for retirement?

DO NOT HAVE KIDS BEFORE THE AGE OF 30!

Among my friends and acquaintences that are roughly my age, it is glaringly obvious that couples who have children before the age of 25 find it far more difficult to get ahead than those who wait to have children. Most of the friends I have who do not have children yet bring in a combined six digit income and are reasonably well off. Most of the friends I have who started a family early usually are behind the eight ball just keeping up with regular expenses...let alone saving up for retirement.

The amount of money that a couple can make in 3-5 years after marriage without the constraints of children can pay down a lot of debt and build up a solid savings that will earn interest over 20+ years.

The $10 investment in birth control each month is probably the best investment any couple can make until they secure their financial position. Otherwise, it will be an uphill battle no matter what.

[Bretsky]

The best way to build wealth for retirement?

DO NOT HAVE KIDS BEFORE THE AGE OF 30!

Among my friends and acquaintences that are roughly my age, it is glaringly obvious that couples who have children before the age of 25 find it far more difficult to get ahead than those who wait to have children. Most of the friends I have who do not have children yet bring in a combined six digit income and are reasonably well off. Most of the friends I have who started a family early usually are behind the eight ball just keeping up with regular expenses...let alone saving up for retirement.

The amount of money that a couple can make in 3-5 years after marriage without the constraints of children can pay down a lot of debt and build up a solid savings that will earn interest over 20+ years.

The $10 investment in birth control each month is probably the best investment any couple can make until they secure their financial position. Otherwise, it will be an uphill battle no matter what.

I'd concur that it's a great fiscal idea if you can. I had the general rule to be married about 5 years be4 kids. Call me an anal planner, but I wanted to save some bucks and make sure we weren't a statistic before having kids.

Problem many fall into, especially with 2 income spouses and no kids, is they free spend w/o a conscience. We did a lot of that, but I still threw a bunch of money into tech stocks, and then watched them go threw the roof and then back down to the floor. :sad: :sad:

[Bretsky]

Speaking of stocks, any hot tips or innovative technology out there people have heard of ? Right after I graduated college the NET came out; I remember thinking that I doubt if I'll ever get into that. Wife and I actually thought about throwing a few grand at Yahoo and AOL at the start, but didn't.

It's my goal, in my lifetime, to catch the best innovative technology that is exploding, like the NET, in the early stages and invest some money. Something life changing. California Residents probaby have the best info on this.

I've been watching XM radio and thought that might be in, but I'm not convinced. Here was an interesting article on the Cell Phone/Digital Camera growth; if I invest there I might make some change, but not the type I'm looking for.

By Jon Markman
Picture this: A world without film cameras.

It's a little hard to believe, but it's entirely likely that children under the age of 2 will grow up without ever seeing a film-based single-lens reflex camera, the kind that make delicious whirring noises and don't have instant-delete buttons. Everywhere you look, they are being phased out and shut down as people have switched en masse to digital cameras and camera phones.

Just last week, the industry's largest manufacturer, Canon (CAJ, news, msgs), announced that it would halt development of new film cameras and devote all its resources to digital cameras. A couple of months ago, supersized peers Konica, Minolta and Nikon said much the same. As a result, faster than you can say "cheese!", the sexy, solid, mechanical film camera of our youth is going the way of the typewriter, the rotary phone and the phonograph. And in its wake, a new market of vast proportions is shaping up.

Investors have to pay attention when changes of such long-term magnitude occur. It's not like you haven't noticed that digital cameras are so cheap it's no big deal to buy a $50 model for a child's birthday. But you may not realize it's still early enough in the product cycle to make a lot of money as an investor.

Posing with Mao
It's sort of like buying into the PC industry in the early 1990s, when Dell Computer (DELL, news, msgs) was still a pup, and Intel (INTC, news, msgs) and Microsoft (MSFT, news, msgs) were large but not gigantic. If you think about it, PCs were already well established as a product in 1992, but Dell shares were going for $1 split adjusted, Intel went for $2 and Microsoft for $2.50. All are up nearly 10 times or more since then, as the industry has gone from being peripheral to central in the home and workplace. (Microsoft is the publisher of MSN Money.)

It may not seem as if there's anything so essential about a digital camera, but they have become ubiquitous. When I traveled in China recently, they were at least as widely brandished as cell phones, and perhaps more so. Regardless whether a native tourist was a wealthy party member or a rube from the sticks, he had a camera at the ready to snap photos of anything that moved -- or not. It actually makes sense, as they may not have had anyone to call while standing in line in Tiananmen Square for two hours to see the petrified body of Chairman Mao, but they sure as heck wanted to record the moment for the folks back home.

Digital cameras, like cell phones, have become so commoditized a product that the big money is not being made in the shares of manufacturers like Canon and Eastman Kodak (EK, news, msgs), but rather in the shares of companies that reliably supply patent-protected semiconductors and software. This is getting to be a volume business -- just like mobile phones, but with fewer competitors. There are just two top U.S. providers -- OmniVision (OVTI, news, msgs) and Micron Technology (MU, news, msgs) -- and both are a lot more attractive today than they were a month ago, before the broad market sell-off.

Betting on camera phones
OmniVision slid almost 30% in a week and a half in the middle of May, and has since recovered a bit. Which is pretty amusing, in a twisted way, since over that time its business prospects actually improved. OmniVision's main product is an image-sensing device called the CameraChip. The formal name for the baseline technology is "complementary metal oxide semiconductor," or CMOS. But all you really need to know is that it's a piece of metal and glass that puts a lot of high-performance camera functionality in a tiny package. OmniVision sells these to a long list of customers, who put them in everything from low-cost plastic cell phones, video games and surveillance systems to chic titanium-body cameras. Sign up to receive Jon Markman’s weekly SuperModels newsletter.
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Omnivision will report earnings for its fiscal fourth quarter on June 15, and I think it will come in slightly above consensus, at 39 cents a share on $126 million in revenue. Shares should get a lift when the company updates its earnings guidance for the second half of the year and explains how the surprising strength of sales growth has led to much more robust cash flow than skeptics believed possible. It's already sitting on $5.72 a share in cash. Subtract out that cash and the stock trades at the low, low price-to-earnings multiple of 15 times 2007 estimates. That's about 25% lower than comparable high-tech manufacturers, most of whom are not facing OmniVision's great prospects. There are new competitive threats from the likes of Samsung and Toshiba (TOSBF, news, msgs) Toshiba overseas, and Micron here, but that's still too steep a discount.

OmniVision is making great strides in the automotive and security arenas with low-cost image sensors as well, but its bread and butter in new sales come from all the advertising you've seen by carriers like Verizon Communications (VZ, news, msgs) to encourage consumers to upgrade call-only phones into ones that take pictures or show videos. There's also been a successful push to encourage folks with low-resolution camera phones to upgrade to 1-megapixel models with enhanced quality, such as the Motorola RAZR and Samsung Blade. And next on the horizon will be a holiday promotion to hype people into wanting 2-megapixel camera phones that easily take the place of a conventional digital camera -- a product for which OmniVision is the leading low-cost provider.

More than a memory play
The biggest impediment to OmniVision's growth is Micron, which is the industry's 800-pound gorilla with about 35% of the market. Long known primarily as the leading maker of random access memory, or RAM, for personal computers, Micron a few years ago branched out into more profitable products such as image sensors. By the middle of next year, Micron will have four new fabrication plants making both image sensors and flash memory. As the mix tilts toward image sensors, Micron's gross margins will get a huge boost, as RAM chips bring margins into the mid-teens while image sensors garner upwards of 40%. Although an increase in product would appear on the surface to threaten the profitability of the industry, it is only expected to meet demand from all the cameras, mobile handsets, cars, video consoles and security devices that are creepily keeping an eye on us. Micron does not just make cheap sensors. It recently rolled out the world's smallest 8-megapixel image sensor, a very high-quality device that is expected to revolutionize the business due to its low cost.

Micron will also benefit from the rollout of the new Windows Vista operating system by Microsoft later this year and next, as the sophisticated software is expected to lead consumers to buy a lot more memory: 1 to 2 gigabytes of RAM is expected to become a standard, up from 512 megabytes, or about a fourfold increase. If you believe, as I do, that Micron can earn as much as $1.40 in 2007 from all these efforts, it is going for a forward price-earnings multiple of just 12, which is laughable for a company growing in excess of 20%. Multiply that number by a more reasonable P/E, such as 20, and you get a potential price of $26, or about 60% higher than the current quote.

Excuse me if I say it would be a snap to profit from these two companies. You don't need to pick one. Take them both, and shoot for the sky


http://articles.moneycentral.msn.com/Investing/SuperModels/DigitalCameraPlays.aspx

[Partial]

Well Bretsky, judging from my knowledge of consumer electronics and what is about to pick up, if you're looking for a solid stock that will make some money and always be solid, now would be a good time to buy some Intel. They've been down in the dumps for awhile now and their roadmap for the future is looking a whole lot better than AMD (the competition) and it certainly seems like they're back in full-force.

Canon would be a good company as well because they have a huge investment in SED technology, which uses nanotubes to create an extreme thin video display that is very high contrast and brightness with all the benefits of a classic cathode ray tube in an extremely thin (much thinner than anything out now) package. It is also to be manufactured very cheap because of how they make the carbon nanotubes. They expect this to be HUGE by 2010 and be the way we all watch tv. Canon and Toshiba funded this multi-billion dollar poject if I recall.

Microsoft has a new operating system coming out at the start of 2007. That, paired with office should sell quite a bit.

Apple is a company with a rising reputation with tremendous growth.

My dad was talking about a bunch of biotechnology companies emerging in the next few years. He's big on the investing and that might be something to look into.

That's all i've got. Doubt it's helpful, but its a nice reminder of new, cool products coming out!!

[Bretsky]

Well Bretsky, judging from my knowledge of consumer electronics and what is about to pick up, if you're looking for a solid stock that will make some money and always be solid, now would be a good time to buy some Intel. They've been down in the dumps for awhile now and their roadmap for the future is looking a whole lot better than AMD (the competition) and it certainly seems like they're back in full-force.

Canon would be a good company as well because they have a huge investment in SED technology, which uses nanotubes to create an extreme thin video display that is very high contrast and brightness with all the benefits of a classic cathode ray tube in an extremely thin (much thinner than anything out now) package. It is also to be manufactured very cheap because of how they make the carbon nanotubes. They expect this to be HUGE by 2010 and be the way we all watch tv. Canon and Toshiba funded this multi-billion dollar poject if I recall.

Microsoft has a new operating system coming out at the start of 2007. That, paired with office should sell quite a bit.

Apple is a company with a rising reputation with tremendous growth.

My dad was talking about a bunch of biotechnology companies emerging in the next few years. He's big on the investing and that might be something to look into.

That's all i've got. Doubt it's helpful, but its a nice reminder of new, cool products coming out!!


I'll check out Cannon; is the SED technology new ?

I too think Intel is going to come back, but it's been a dead horse for 2 plus years now. Edward Jones, one of the most conservative investment companies, has been recommending it along with EMC, another dog, that I already own. Short term Intel might be alright, but I'm looking for home runs........high risk.....high reward.....and Intel and Apple are too big.

If your dad hits on the right biotech company, he can get some huge gains fast. I've been looking into companies that specialize with obesity since that's growing. Next time you email/speak with your day ask him for a few of his favorites; researching stocks and trying to strike it big is a lot of fun for me at least. I've hit some home runs on picks that went way up and then down; just didn't sell at right time so didn't make what I should have.

[Partial]

SED is brand new, yes. It is "nano-technology" since it uses carbon nanotubes. My understanding is its much cheaper to produce then current technology, just the R&D was ridiculous on it.

[Bretsky]

SED is brand new, yes. It is "nano-technology" since it uses carbon nanotubes. My understanding is its much cheaper to produce then current technology, just the R&D was ridiculous on it.


Thanks for the info; I'll have to look into this, and hopefully find out what other companies will benefit from SED the most.

[Partial]

Here's a link to some information on it directly from Canon. http://www.canon.com/technology/display/

I would definitely say that article is very conservative in the ramifications of this. It's never wise to put all your eggs in one basket, but canon and toshiba poured a ton of money into this and it is definitely looking like a technology that is going to catch on. I've been following the development of this for awhile, since back in the day when DLP first came around. HDTV is not user friendly at all right, and I expect that when they ships, it will compete with DLP/LCD on price, and probably beat plasma. After a year or two, it will be much cheaper once they get the R&D revenue paid off. This is going to be huge, it is coming out at the perfect time, and will all this hype of the next-gen dvd players and game consoles, this thing is going to explode.

The colors are going to be more vibrant by a mile then anything that is out today, it will be brighter, use less energy, it has a 1ms latency which is faster than then plasma, lcd and dlp (clearer image), and if they decide to go with an external power supply and tuner (which I think they will), I don't think its unreasonable to expect less than 2cm thick tv's that are very light yet sturdy. Essentially, they can make this as thin as they want.

[Scott Campbell]

Here's a link to some information on it directly from Canon. http://www.canon.com/technology/display/

I would definitely say that article is very conservative in the ramifications of this. It's never wise to put all your eggs in one basket, but canon and toshiba poured a ton of money into this and it is definitely looking like a technology that is going to catch on. I've been following the development of this for awhile, since back in the day when DLP first came around. HDTV is not user friendly at all right, and I expect that when they ships, it will compete with DLP/LCD on price, and probably beat plasma. After a year or two, it will be much cheaper once they get the R&D revenue paid off. This is going to be huge, it is coming out at the perfect time, and will all this hype of the next-gen dvd players and game consoles, this thing is going to explode.

The colors are going to be more vibrant by a mile then anything that is out today, it will be brighter, use less energy, it has a 1ms latency which is faster than then plasma, lcd and dlp (clearer image), and if they decide to go with an external power supply and tuner (which I think they will), I don't think its unreasonable to expect less than 2cm thick tv's that are very light yet sturdy. Essentially, they can make this as thin as they want.

Why go with an external power supply?

[Partial]

Why go with an external power supply?

Thinner, a few high-end really thin LCD computer monitors are going that way, for example the apple cinema displays, some NEC ones.

[Scott Campbell]

Why go with an external power supply?

Thinner, a few high-end really thin LCD computer monitors are going that way, for example the apple cinema displays, some NEC ones.

So they have a power brick like a laptop?

[Scott Campbell]

Why go with an external power supply?

Thinner, a few high-end really thin LCD computer monitors are going that way, for example the apple cinema displays, some NEC ones.

So they have a power brick like a laptop?

[Scott Campbell]

Well Bretsky, judging from my knowledge of consumer electronics and what is about to pick up, if you're looking for a solid stock that will make some money and always be solid, now would be a good time to buy some Intel. They've been down in the dumps for awhile now and their roadmap for the future is looking a whole lot better than AMD (the competition) and it certainly seems like they're back in full-force.

Canon would be a good company as well because they have a huge investment in SED technology, which uses nanotubes to create an extreme thin video display that is very high contrast and brightness with all the benefits of a classic cathode ray tube in an extremely thin (much thinner than anything out now) package. It is also to be manufactured very cheap because of how they make the carbon nanotubes. They expect this to be HUGE by 2010 and be the way we all watch tv. Canon and Toshiba funded this multi-billion dollar poject if I recall.

Microsoft has a new operating system coming out at the start of 2007. That, paired with office should sell quite a bit.

Apple is a company with a rising reputation with tremendous growth.

My dad was talking about a bunch of biotechnology companies emerging in the next few years. He's big on the investing and that might be something to look into.

That's all i've got. Doubt it's helpful, but its a nice reminder of new, cool products coming out!!


I'll check out Cannon; is the SED technology new ?

I too think Intel is going to come back, but it's been a dead horse for 2 plus years now. Edward Jones, one of the most conservative investment companies, has been recommending it along with EMC, another dog, that I already own. Short term Intel might be alright, but I'm looking for home runs........high risk.....high reward.....and Intel and Apple are too big.

If your dad hits on the right biotech company, he can get some huge gains fast. I've been looking into companies that specialize with obesity since that's growing. Next time you email/speak with your day ask him for a few of his favorites; researching stocks and trying to strike it big is a lot of fun for me at least. I've hit some home runs on picks that went way up and then down; just didn't sell at right time so didn't make what I should have.

INTC will again be competitive in the processor marketplace, but has it's brand been irreparably harmed? People used to buy "Intel Inside" without thinking. Since they moved from 1.3 mm to 90 nm with the Prescott introduction, they've been getting their clock cleaned by AMD. The Prescott ran way too hot and enthusiasts couldn't overclock them. Most bought AMD and companies began to notice. Your Best Buy ad now included some AMD systems, and people began to ask questions before they purchased. Some bought AMD, which was more than before. AMD grew their market share, and it's stock has skyrocketed since early last year.

Now Dell who was previously an Intel only shop began offering Opertons to their server customers a while back, and this week they announce that consumers can buy AMD's now too. The people at Intel had to be thinking - Is nothing sacred?

I hear INTC got things worked out with the move to 60nm on the dual cores and they won't perform like easy bake ovens anymore, but I don't know if that will prop the stock back up. The cat is out of the bag, and people know they have a real choice - i.e. the brand has been damaged.

I know where you guys are coming from, as I've been extremely tempted to buy INTC because it looks so danged cheap.

[Bretsky]

Here's a link to some information on it directly from Canon. http://www.canon.com/technology/display/

I would definitely say that article is very conservative in the ramifications of this. It's never wise to put all your eggs in one basket, but canon and toshiba poured a ton of money into this and it is definitely looking like a technology that is going to catch on. I've been following the development of this for awhile, since back in the day when DLP first came around. HDTV is not user friendly at all right, and I expect that when they ships, it will compete with DLP/LCD on price, and probably beat plasma. After a year or two, it will be much cheaper once they get the R&D revenue paid off. This is going to be huge, it is coming out at the perfect time, and will all this hype of the next-gen dvd players and game consoles, this thing is going to explode.

The colors are going to be more vibrant by a mile then anything that is out today, it will be brighter, use less energy, it has a 1ms latency which is faster than then plasma, lcd and dlp (clearer image), and if they decide to go with an external power supply and tuner (which I think they will), I don't think its unreasonable to expect less than 2cm thick tv's that are very light yet sturdy. Essentially, they can make this as thin as they want.


THIS GIVES ME A NICE RESEARCH PROJECT FOR THE WEEKEND. I'D DEFER BACK TO THE THEORY ON CAMERA PHONES GREATLY EXPANDING THAT I POSTED. I'd buy the companies that dominate production of chips that go into the technology.

Likewise, I don't think I'd want Toshiba or Canon. Too known; gotta find the companies that they need to make this work well.

B

[Bretsky]

INTERESTING ARTICLE THAT I DON"T UNDERSTAND THAT WELL FROM MSN MONEYCENTRAL

Jubak's Journal
The 7 next big things in tech

The biggest winners in technologies are the ones that change the game completely, sending rivals to the scrap heap.

Want to find the next big thing in technology? Follow the destruction.

No truly big change takes place without overturning traditions, sending competitive rules to the dustbin of history, and destroying formerly flourishing companies. Avoid the victims and own the agents of change and you'll retire richer, buy that house in Tuscany, and still send the kids to the college of their choice even if they don't win that lacrosse or flute scholarship.

Today I'm going to help you along to those goals by giving you my list of seven disruptive technologies that are cutting a wide path of destruction. It should get you started in putting together your own list of destructive opportunities.

Change is a good thing. A faster and more powerful graphics chip sends me to the store to buy a new PC … to buy new games that take advantage of the chip … to upgrade my display so I can see the full glory of those new graphics. See the news
that affects your stocks.
Check out our
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And that's all good news for Nvidia (NVDA, news, msgs), which made the graphics chips, for Electronic Arts (ERTS, news, msgs), which distributed the games, and for Dell (DELL, news, msgs), which sold the display. A steady stream of new products -- what we often call progress -- is the lifeblood of technology companies.

And, as I wrote in my last column, "What's the matter with tech stocks?," when this kind of change-as-usual dominates the technology sector, the sector tends to do well, driving the stock market as a whole higher.

But too much change is a bad thing. It can make obsolete a company's entire product line. I'd tell you to go ask minicomputer maker Digital Equipment, except that, well, it's out of business. It can force a wrenching shift in direction that crushes a company's momentum for years. Just think of how long it has taken IBM (IBM, news, msgs) to come up with a strategy to replace the tiny mistake it made when it let Microsoft (MSFT, news, msgs) grab control of the new operating system for PCs. (Microsoft owns MSN Money.)

Obviously, disruptive change creates huge problems for investors. But disruptive change also presents huge opportunities for investors. EBay (EBAY, news, msgs) and Google (GOOG, news, msgs), for example, have done pretty well by investors by rearranging the landscape for online retailing and advertising.

Once you've identified a promising patch of destruction, how do you find the profitable opportunities? I'd offer three general rules:
Look for companies that actually have a plan for profiting from the disruptive shift in technology. Innovation is neat, but for investors it's not nearly as important as a profitable business plan.


Don't pay too much. Yes, it's notoriously hard to value the stock of a truly disruptive technology company. More than 20% of the readers who responded to my pre-IPO survey on Google thought the stock was worthless. But since the odds are that at least 30% of the stocks that you pick as disruptive opportunities will head south, the key is not to pay so much for them that the successful picks can't put your portfolio comfortably in the black.


Don't ignore established companies that are willing to cannibalize their existing business in order to reap the potential profits of disruption. Since these companies aren't betting the store on the disruptive technology, the returns to you, the investor, won't be as high as with a home-run-or-bust bet. But the losses won't be as large either.

Now, on to my disruptive opportunities.

The "Cell" microprocessor. A product of a joint venture between IBM, Sony (SNE, news, msgs) and Toshiba (TOSBF, news, msgs), this chip will power Sony's PlayStation 3 and high-definition TVs from Sony and Toshiba. The chip combines nine cores, a big leap from the two-core chips just being introduced by Intel (INTC, news, msgs) and Advanced Micro Devices (AMD, news, msgs), to provide extremely fast rendering of computation-intensive graphics for uses that range from military displays to consumer electronics. I see this chip putting more pressure on Intel and AMD, which are both struggling to expand beyond their role as makers of chips for PCs. Who's the winner? Too soon to tell.

The home-entertainment gateway. Who is going to control how entertainment media, from music to movies, gets into the home? This is a big deal for the cable companies and for the phone companies. Cisco Systems (CSCO, news, msgs), a name that most investors don't associate with home entertainment, has made the most interesting moves in the sector recently. The company's acquisition of cable-box maker Scientific-Atlanta (SFA, news, msgs) puts Cisco right in the middle of efforts by the cable and phone companies to roll out video on demand and video over the Internet.

But if you combine the video processing power of Scientific-Atlanta's set-top boxes with the home networking products of the company's Linksys, you start to get a home entertainment business that isn't dependent on any specific pipeline into the home. If you still think that Cisco Systems doesn't have ambitions in this space, I suggest you look at the July purchase of KiSS Technology of Denmark, a maker of DVD players and recorders that can be connected to the Internet. The game certainly isn't over, but Cisco suddenly looks like a major player. (About 23% of company revenues now come from the Advanced Technology division that includes Linksys and Scientific-Atlanta.)

The home-entertainment hub. Lots of folks are going after this one because the potential here is to develop something that would replace or combine the TV, the PC, the family stereo system, etc. with a single device that can store and route media in the home. I'll bet that Cisco has this market in mind. So do Microsoft, Sony and Apple Computer (AAPL, news, msgs), just to name a few. The takeaway lesson of Apple's iPod is that ease of use rules. (Think software and design as key to a successful product.) I think this category is still wide open with the disruptive powers still to be fully unleashed.

Internet telephony over mobile phones. Voice Over Internet Protocol (VOIP) hit the mobile phone industry in late February, when Nokia (NOK, news, msgs) introduced its first mass-market phone capable of sending and receiving calls over the Internet. Think of it: No more per-minute charges or limits on your wireless calls. (That's the model at Skype, the VOIP company acquired by eBay, where users can talk for free as long as they pay a flat monthly fee for a broadband connection to the Internet.) Nokia, which owns 48% of Symbian, the biggest supplier of operating systems to high-end mobile phones, is one company to watch in this space. Symbian's latest software supports VOIP. So does Microsoft's Windows Mobile operating system.

Electronic, networked health-care records. Just because President Bush talks so much about the need to put patient records on a national computer network and actually does so little about it, don't assume this won't happen. They're actually building such a system in the United Kingdom at a cost of $11 billion. The goal of the system, due for completion in a decade, is to enable patients and their doctors to access an electronic health-care record, to access prescription records and digital images such as MRIs, and to make appointments. In the U.S., such a system would cost $100 billion to $200 billion, according to government estimates, but it has the potential to save $700 billion a year. The disruptive potential of such a system is huge. For example, all the data would be available in such a system to compare mortality rates at individual hospitals and for consumers to compare prices for various procedures. While we're all waiting for a national solution, take a look at an interesting project from Johnson Controls (JCI, news, msgs) and Emergin. To produce something that Johnson Controls calls the "future-ready" hospital, the company will add Emergin's software communication solutions to the wireless capabilities in Johnson's building-control systems.

Mapping everywhere. I love to look at the new digital maps offered by Google and Microsoft on my PC. But that's only the first stage of a huge increase in digital navigation. The move is toward adding mapping and route-finding software to smaller and smaller devices, a transition from car-based systems, for example, to those in wireless phones and personal digital assistants. According to research from IDC, by 2008, 383 million wireless handsets will be equipped with GPS capability that will allow the delivery and use of digital mapping. That would be six times higher than in 2004. What is clear is that more devices mean more, and more detailed, maps. And that's good for the few companies that supply digital maps to this market. There are two major players: Tele Atlas (TLATF, news, msgs) and Navteq (NVT, news, msgs).

Batteries. They're a key bottleneck for all kinds of products -- and nowhere more so than in the auto industry, where the sudden popularity of gas/electric hybrids has just highlighted the heavy weight and inefficiency of current battery technology. Hybrid vehicles now rely on nickel-metal-hydride batteries, which are a problem looking for a solution. Whether that solution is a better nickel battery or something new -- such as an improved lithium-ion battery (which now has better energy storage but is a fire hazard in a collision) -- the transition will shake up the ranks of auto suppliers around the globe. One stock to watch on the technology front is Johnson Controls (again -- see No. 5 above), which has recently teamed up with Saft, a company with 10 years’ experience in lithium batteries, to develop a new generation of battery for hybrid vehicles. The results of that research probably won't bear fruit until the end of the decade. In the meantime, Johnson Controls has been making inroads into the global auto battery market, thanks to its acquisition of the battery business of Delphi (DPHIQ, news, msgs).

[Partial]

So they have a power brick like a laptop?

Yes. It won't be like Xbox 360 sized or anything, it will be like a MacBook sized powerbrick (60 watt version, 3x2x1 dimensions probably)

[Partial]

INTC will again be competitive in the processor marketplace, but has it's brand been irreparably harmed? People used to buy "Intel Inside" without thinking. Since they moved from 1.3 mm to 90 nm with the Prescott introduction, they've been getting their clock cleaned by AMD. The Prescott ran way too hot and enthusiasts couldn't overclock them. Most bought AMD and companies began to notice. Your Best Buy ad now included some AMD systems, and people began to ask questions before they purchased. Some bought AMD, which was more than before. AMD grew their market share, and it's stock has skyrocketed since early last year.

Now Dell who was previously an Intel only shop began offering Opertons to their server customers a while back, and this week they announce that consumers can buy AMD's now too. The people at Intel had to be thinking - Is nothing sacred?

I hear INTC got things worked out with the move to 60nm on the dual cores and they won't perform like easy bake ovens anymore, but I don't know if that will prop the stock back up. The cat is out of the bag, and people know they have a real choice - i.e. the brand has been damaged.

I know where you guys are coming from, as I've been extremely tempted to buy INTC because it looks so danged cheap.

Intel just released the first processor from it's brand new Core 2 architecture (think P4, P3, P2) yesterday. It was Woodcrest, the server processor. All these new chips they're making are built around one central design that is extremely overclockable and electrically efficient.

AMD released their latest offerings about a month ago. They are solid processors no doubt, but still stuck on the 90nm build. Meanwhile, Intel is well underway with a 45nm build which will come out in 2007. They're WAY ahead right now in that department, and what that means is as they get smaller they're going to be much more efficient and a lot less electricity is going to be lost. All around, it's a good thing.

Intel's Woodcreast is beating the pants of AMD's top end Operton. I am talking 30% improvement in performance, which is ridiculous in the world of computing. Spanking it. Intel has officially won over the server market again, especially since they decided to cut costs on all upcoming products to really stick it to AMD.

Conroe, Intel's desktop consumer chip of the Core 2 variety, is even spanking AMD's best server processor (higher powered). The mid-range version of Conroe beat AMD's highest offering available period by 8%. It is expected that the highest version of Conroe will beat it out by 25%.

Merom, the laptop variant of Core 2 is awesome. Right now, the original core duo is doing very well. It is killing the AMD offering since they were very late to introduce a mobile dual-core processor, and its rather unimpressive at that. Core duo is ridiculous, and Intel has guaranteed Merom will be 20% faster. From some of the benchmarks I have read online, people have experienced up to 50% improvement in the flagship version of Merom (core duo 2) versus Yonah (core duo) which is virtually unheard of.

In addition to this, these chips are designed to natively run at an 800 mhz bus, but are being shipped wiith 667 buses. That means it's extremely overclockable. EXTREMELY.

I have read some articles where people have taken Merom and Conroe from 2.4ish ghz to over 4ghz with air cooling alone. That is ridiculous!!

Intel's road map looks a lot better than AMD's also. They swore off their policy of sticking with one architecture (Netburst AKA Pentium 4) for 5 years again, and swore they would evolve with each processor cycle.

The one thing that AMD may have going is the reverse hyper threading that I read about on Digg today. It can get a dual-core processor to act as one really fast processor, rather than be two seperate processors for the sake of multitasking. This is pretty cool, and if it works the performance in games could sky-rocket!! However, Intel also has this technology built into Core 2 duo.

In summary, Intel is going to rock the faces of extremists and consumers everywhere in the next year. In 2007, their advantage should get even bigger, since the jump from 65nm to 45nm should yield much greater performance (especially in notebooks) difference in comparison to jumping from 90nm to 65nm.

Go Intel!

[Partial]

Bretsky, if you find out any really good nanotech companies you think are going to do alright, let me in on your secrets! :D I should have about 1,000 to invest after this summer!! I'm excited to buy some stocks!

[pittstang5]

Bretsky and maybe the others in here - I hope this isn't a repeat, but I just noticed this thread and didn't feel like reading through 6 pages.

I have one little blemish on my credit report - a late payment to an electrical company while I was in college. What can I do to get it off my credit report or do I have to wait the 7 or however many years it takes to go away. Which leads me to another question, will it go away in 7 years?

So far it really hasn't affected anything. I was able to get a mortgage and car loan. However, my wife is on the mortgage as well and she has excellent credit. But I hate seeing that one little negative.

[Fosco33]

Bretsky, if you find out any really good nanotech companies you think are going to do alright, let me in on your secrets! :D I should have about 1,000 to invest after this summer!! I'm excited to buy some stocks!

I worked loosely with a startup nanotech company called Imago Scientific during my senior year at Madtown.. They were started by some former UW Madison profs and built a 3-D atom probe microscope. The potential upside is huge - at last check they weren't public (in rounds of financing). The basic idea is this microscope can be used in material application in many industries. Initially, they focused on semiconductor chips (silicon and other elements interact to create processing power - requires about 1000 steps and all trial and error). It could remove an atom and identify what element it was - greatly reducing time to market, efficiency of processors and overall cost. My best guess - they'd sell this to an Intel or AMD. Check 'em out if you're interested.

http://www.imago.com/imago/

[Bretsky]

Bretsky and maybe the others in here - I hope this isn't a repeat, but I just noticed this thread and didn't feel like reading through 6 pages.

I have one little blemish on my credit report - a late payment to an electrical company while I was in college. What can I do to get it off my credit report or do I have to wait the 7 or however many years it takes to go away. Which leads me to another question, will it go away in 7 years?

So far it really hasn't affected anything. I was able to get a mortgage and car loan. However, my wife is on the mortgage as well and she has excellent credit. But I hate seeing that one little negative.


Sorry Pitt, have bad news here. There is no way to get the negative trade removed from credit. After 7 years it should fall by the wayside. Just remember it becomes less and less of a factor for every month that goes by and you make all your payments on time. And nothing helps a credit score more than mortgage payments on time.......in same tone......nothing will kill a credit score more than being last on a mortgage payment. So shake it off, buy a bunch of houses, and get rich.


Cheers,
B

[Bretsky]

Bretsky, if you find out any really good nanotech companies you think are going to do alright, let me in on your secrets! :D I should have about 1,000 to invest after this summer!! I'm excited to buy some stocks!

I worked loosely with a startup nanotech company called Imago Scientific during my senior year at Madtown.. They were started by some former UW Madison profs and built a 3-D atom probe microscope. The potential upside is huge - at last check they weren't public (in rounds of financing). The basic idea is this microscope can be used in material application in many industries. Initially, they focused on semiconductor chips (silicon and other elements interact to create processing power - requires about 1000 steps and all trial and error). It could remove an atom and identify what element it was - greatly reducing time to market, efficiency of processors and overall cost. My best guess - they'd sell this to an Intel or AMD. Check 'em out if you're interested.

http://www.imago.com/imago/

Went to bed with a headache last night trying to understand this technology.

But Partial really has me thinking about Intel.

Cheers,
B

[MJZiggy]

Didn't they just start putting Intel chips in Macs?

[retailguy]

Bretsky and maybe the others in here - I hope this isn't a repeat, but I just noticed this thread and didn't feel like reading through 6 pages.

I have one little blemish on my credit report - a late payment to an electrical company while I was in college. What can I do to get it off my credit report or do I have to wait the 7 or however many years it takes to go away. Which leads me to another question, will it go away in 7 years?

So far it really hasn't affected anything. I was able to get a mortgage and car loan. However, my wife is on the mortgage as well and she has excellent credit. But I hate seeing that one little negative.


Sorry Pitt, have bad news here. There is no way to get the negative trade removed from credit. After 7 years it should fall by the wayside. Just remember it becomes less and less of a factor for every month that goes by and you make all your payments on time. And nothing helps a credit score more than mortgage payments on time.......in same tone......nothing will kill a credit score more than being last on a mortgage payment. So shake it off, buy a bunch of houses, and get rich.


Cheers,
B


Well, I just got back from vacation and read this thing. Whoooo. Gosh where to start? I thought about just letting it go and pretending that I didn't see it, but.... :mrgreen:

Lots of good advice in this thread, some not so good and some just plain wrong.

B, what you wrote above is accurate, PROVIDED he made the payment late. If that is the case, he MIGHT be SOL. First off, I'm puzzled by the "electric company" on a credit report. I've been buyin' electricity for about 28 years, and have NEVER seen the electric company on my credit report or any of my clients, UNLESS it went to collection. That's more than a late payment.

So, Pitt, assuming that you really didn't pay on time, as it looks that way, you may be SOL. There is, however, no harm in disputing it with the credit bureau. They've got 30 days to verify it with the creditor who placed it. If the creditor does not/ or cannot verify it, it gets removed. Most verify these days, however some do not. Also, items of <$50 should not appear on the credit report. Electricity could fall into this category.

It is important to note that to dispute anything you must do it off of a current credit report (within last 30 to 60 days for the most part), and second, it is recommended that you only dispute ONE ITEM at a time. Disputing multiple items makes it look like you don't have a valid complaint, and the credit bureau can legally ignore your request.

[retailguy]

Bretsky, if you find out any really good nanotech companies you think are going to do alright, let me in on your secrets! :D I should have about 1,000 to invest after this summer!! I'm excited to buy some stocks!

Why does everybody want the "latest greatest, can't miss opportunity"? Partial, I just finished reading a book that would probably bore most of the people in here to death in the first 5 pages, but it applies to your situation.

Without boring you with details, it discusses "visionary companies". It was published in the late 90's so the info is a bit dated, however, the authors can support that their 18 "visionary companies" all in existence since before 1950 have an earnings track record that would amaze most.

You can pick an "unknown" company and "strike it rich" or you can pick a solid blue chip company, buy it and HOLD FOREVER and you will almost invariably do very well and better than the speculative stuff. The key is TIME.

You minimize risk by buying established (boring) companies in industries you understand and buying and buying and buying, EVERY MONTH. Buy when the price goes up, buy when the price goes down, and barring anything illegal, immoral, or just plain stupid, NEVER sell it.

[Bretsky]

Bretsky and maybe the others in here - I hope this isn't a repeat, but I just noticed this thread and didn't feel like reading through 6 pages.

I have one little blemish on my credit report - a late payment to an electrical company while I was in college. What can I do to get it off my credit report or do I have to wait the 7 or however many years it takes to go away. Which leads me to another question, will it go away in 7 years?

So far it really hasn't affected anything. I was able to get a mortgage and car loan. However, my wife is on the mortgage as well and she has excellent credit. But I hate seeing that one little negative.


Sorry Pitt, have bad news here. There is no way to get the negative trade removed from credit. After 7 years it should fall by the wayside. Just remember it becomes less and less of a factor for every month that goes by and you make all your payments on time. And nothing helps a credit score more than mortgage payments on time.......in same tone......nothing will kill a credit score more than being last on a mortgage payment. So shake it off, buy a bunch of houses, and get rich.


Cheers,
B


Well, I just got back from vacation and read this thing. Whoooo. Gosh where to start? I thought about just letting it go and pretending that I didn't see it, but.... :mrgreen:

Lots of good advice in this thread, some not so good and some just plain wrong.

B, what you wrote above is accurate, PROVIDED he made the payment late. If that is the case, he MIGHT be SOL. First off, I'm puzzled by the "electric company" on a credit report. I've been buyin' electricity for about 28 years, and have NEVER seen the electric company on my credit report or any of my clients, UNLESS it went to collection. That's more than a late payment.

So, Pitt, assuming that you really didn't pay on time, as it looks that way, you may be SOL. There is, however, no harm in disputing it with the credit bureau. They've got 30 days to verify it with the creditor who placed it. If the creditor does not/ or cannot verify it, it gets removed. Most verify these days, however some do not. Also, items of <$50 should not appear on the credit report. Electricity could fall into this category.

It is important to note that to dispute anything you must do it off of a current credit report (within last 30 to 60 days for the most part), and second, it is recommended that you only dispute ONE ITEM at a time. Disputing multiple items makes it look like you don't have a valid complaint, and the credit bureau can legally ignore your request.


Retailguy,

I didn't read your whole post and will go back, but when I read about the electric company I wanted to note that WI Electric absolutely DOES report on time and late payments to the credit bureas. I see them on there everyday of the week.

B

[retailguy]

Bretsky, you asked for my advice, and I'll give it. FOR FREE. Just for members of this forum. My "consulting rate" is $80 per hour for financial planning, but considering you are all "Packer fans"... :smile:

Somewhere, I've got an analysis of home buying that I'll refine and share with you. I promise you, you won't like it.... but it doesn't make it less true.

It was a presentation that I did for a rotary group about 5 years ago and I titled it "The fallacy of the 30 year mortgage with ZERO down".

It usually raises the "fur" off the neck of every mortgage broker I've ever met. It should, because it attacks the very bread and butter of your livelihood.

Essentially, I do not believe that a "homeowner" who purchases a home on a 30 year mortgage with zero down and faithfully pays the payment for the entire 30 years has made an "investment". He's merely rented from his bank instead of a landlord, his bank made a profit, and he's lucky if he broke even in real dollars. Undoubtedly, he could have invested the difference between the mortgage payment, taxes and upkeep versus what he could have paid in "rent" in a good mutual fund and blown the doors off his return on the "house" he invested in.

Please understand that I recognize there are many reasons to purchase a home that have ZERO to do with money. The "money" reasons chanted by most are usually unsupported bullshit, however. (IMO) - That's for you, RED. :wink:

I'll enjoy this debate with you, my friend.

[retailguy]

Retailguy,

I didn't read your whole post and will go back, but when I read about the electric company I wanted to note that WI Electric absolutely DOES report on time and late payments to the credit bureas. I see them on there everyday of the week.

B

Well if that is the case, Pitt is SOL. I haven't lived in WI in 18 years so my "knowledge" of WI is a bit dated.

[Bretsky]

Bretsky and maybe the others in here - I hope this isn't a repeat, but I just noticed this thread and didn't feel like reading through 6 pages.

I have one little blemish on my credit report - a late payment to an electrical company while I was in college. What can I do to get it off my credit report or do I have to wait the 7 or however many years it takes to go away. Which leads me to another question, will it go away in 7 years?

So far it really hasn't affected anything. I was able to get a mortgage and car loan. However, my wife is on the mortgage as well and she has excellent credit. But I hate seeing that one little negative.


Sorry Pitt, have bad news here. There is no way to get the negative trade removed from credit. After 7 years it should fall by the wayside. Just remember it becomes less and less of a factor for every month that goes by and you make all your payments on time. And nothing helps a credit score more than mortgage payments on time.......in same tone......nothing will kill a credit score more than being last on a mortgage payment. So shake it off, buy a bunch of houses, and get rich.


Cheers,
B


Well, I just got back from vacation and read this thing. Whoooo. Gosh where to start? I thought about just letting it go and pretending that I didn't see it, but.... :mrgreen:

Lots of good advice in this thread, some not so good and some just plain wrong.

B, what you wrote above is accurate, PROVIDED he made the payment late. If that is the case, he MIGHT be SOL. First off, I'm puzzled by the "electric company" on a credit report. I've been buyin' electricity for about 28 years, and have NEVER seen the electric company on my credit report or any of my clients, UNLESS it went to collection. That's more than a late payment.

So, Pitt, assuming that you really didn't pay on time, as it looks that way, you may be SOL. There is, however, no harm in disputing it with the credit bureau. They've got 30 days to verify it with the creditor who placed it. If the creditor does not/ or cannot verify it, it gets removed. Most verify these days, however some do not. Also, items of <$50 should not appear on the credit report. Electricity could fall into this category.

It is important to note that to dispute anything you must do it off of a current credit report (within last 30 to 60 days for the most part), and second, it is recommended that you only dispute ONE ITEM at a time. Disputing multiple items makes it look like you don't have a valid complaint, and the credit bureau can legally ignore your request.


Guess I should note regarding Pitt's scenario that it was my assumption that the late charge on the credit report from college was accurate. You can always dispute these things if they are not. Better to do it with a written note than a phone call, and while we like to believe the credit bureau's follow through with things as well as they can that is not reality so if you are truly concerned you will want to verify they did their job a few months later by looking at a current credit report again.

[Bretsky]

Bretsky, you asked for my advice, and I'll give it. FOR FREE. Just for members of this forum. My "consulting rate" is $80 per hour for financial planning, but considering you are all "Packer fans"... :smile:

Somewhere, I've got an analysis of home buying that I'll refine and share with you. I promise you, you won't like it.... but it doesn't make it less true.

It was a presentation that I did for a rotary group about 5 years ago and I titled it "The fallacy of the 30 year mortgage with ZERO down".

It usually raises the "fur" off the neck of every mortgage broker I've ever met. It should, because it attacks the very bread and butter of your livelihood.

Essentially, I do not believe that a "homeowner" who purchases a home on a 30 year mortgage with zero down and faithfully pays the payment for the entire 30 years has made an "investment". He's merely rented from his bank instead of a landlord, his bank made a profit, and he's lucky if he broke even in real dollars. Undoubtedly, he could have invested the difference between the mortgage payment, taxes and upkeep versus what he could have paid in "rent" in a good mutual fund and blown the doors off his return on the "house" he invested in.

Please understand that I recognize there are many reasons to purchase a home that have ZERO to do with money. The "money" reasons chanted by most are usually unsupported bullshit, however. (IMO) - That's for you, RED. :wink:

I'll enjoy this debate with you, my friend.


I can buy your PREMISE Retailguy, and you are right in that we can debate this forever. But your premise is loaded full of assumptions that simply do not occur. First, I want to point out that I don't pound the pavement for no money down programs. I work for a bank and am not a broker who whacks people with unnecessary closing fees or jacks the rate up to pad my own wallet. That being said, I do have several no money programs that I use when the need calls for it, and for good credit people I try to find a way for them not to pay PMI, which greatly drives up the cost of the mortgage.

Also, I know very few who has plan to faithfully make the payment for 30 years. The reality is if you buy a home for 250G anybody who lets the course ride will probably pay around 600G over the next thirty years. That's a rarity in our world anymore. The average person stays in the same mortgage for 3.5 years in Wisconsin, and moves every 6-7 years. And equity is built.

Secondly, your assumption is that the renter will do will do exactly what he should do with the money savings. And that simply is not reality. I consider myself very fiscally responsible; good credit....savings history....etc. But when my wife and I both worked and rented for the first couple years we pissed away money left and right. Because we could and we had no worries or real responsibilities.

Sure we could have been saving a ton of money in the world of idealists; but reality is we were living the high life and getting NOWHERE until we bought this little FSBO ranch for 96G, paid the mortgage down over 40% (refinancing to a lower rate and 15Yr in between) , and selling it for 120G six years later. That allowed us the downpayment to buy a much much bigger house with 20% down that we've now been in for three more years, and we've built up a lot more equity in this house .....while putting money away in stocks/mutuals and 401K and reaping the tax benefits as well as the equity position/ pride of homeownership as well.

Maybe your premise would apply to .5% of the population, but I think the growth in equity through home ownership can be realistically achieved by any Joe or Jane.

[retailguy]

Bretsky,

A few things. First, in no way was I implying that you'd do anything "unethical" or "seek" to sell something that someone didn't want. I have many friends who are mortgage brokers, some disagree with me on this, some understand my point. I don't see them as unscrupulous sales people, and they know that. I hope you do as well.

Second, when I'm talking about equity, I'm not talking about "equity" in tax return dollars, nor am I talking about a "standard" equity calculation. I'm talking "real" dollars. Over the term of the loan, you put X dollars into the house, and sell for Xplus dollars. Real dollars does minimize equity, and the "tax savings" for most people, especially those with children, is ridiculous.

Finally, you can't "force" people to save money. But, in my example, as unrealistic as you think it may be, that individual pays approximately 127% of the purchase price of the home in interest costs over the loan (6.5%) That same loan over 15 years pays 57% in interest costs. That is a HUGE difference for a couple hundred dollars per month. The difference directly affects the homeowners "equity" and could very well mean the difference between a "good" investment and a "terrible" investment.

Your PMI point is well taken, that is a LARGE part of the equation. For my information, what is the cost of PMI on zero down 150000 loan annually these days?

I understand about "equity" and don't disagree with that, however, I think I would calculate that equity quite differently than most.

Oh, and I do support buying homes. I recommend it to clients whenever I'm asked. I NEVER recommend a 30 year mortgage, for the very reasons you state in the above posts about whether or not people will actually save. If you give people the choice of variable mortgage payments, most choose the LEAST amount. That typically equates in my mind to "negative" savings.

[retailguy]

Sure we could have been saving a ton of money in the world of idealists; but reality is we were living the high life and getting NOWHERE until we bought this little FSBO ranch for 96G, paid the mortgage down over 40% (refinancing to a lower rate and 15Yr in between) , and selling it for 120G six years later. That allowed us the downpayment to buy a much much bigger house with 20% down that we've now been in for three more years, and we've built up a lot more equity in this house .....while putting money away in stocks/mutuals and 401K and reaping the tax benefits as well as the equity position/ pride of homeownership as well.

Maybe your premise would apply to .5% of the population, but I think the growth in equity through home ownership can be realistically achieved by any Joe or Jane.

B,

Paying a mortgage down 40% in six years is NOT something that any Joe or Jane would do. That takes "commitment" that most Jane's and Joe's don't have. Your "circumstances" are just a "unlikely" as mine. And, yes, you do build equity that way. How much equity would you have built, if you "just made the payment over those six years? See my point now?

I'll think of an example using the timeframe and dollar amounts you've stated. I'll give what I believe most would use as "profit" then tell you what I see the "profit" as. Maybe you'll see that my purpose was not to "attack" you or home buying, but to say primarily that most homebuyers believe the "bullshit" they are told from all angles. Most of it is just not true.

[Bretsky]

Sure we could have been saving a ton of money in the world of idealists; but reality is we were living the high life and getting NOWHERE until we bought this little FSBO ranch for 96G, paid the mortgage down over 40% (refinancing to a lower rate and 15Yr in between) , and selling it for 120G six years later. That allowed us the downpayment to buy a much much bigger house with 20% down that we've now been in for three more years, and we've built up a lot more equity in this house .....while putting money away in stocks/mutuals and 401K and reaping the tax benefits as well as the equity position/ pride of homeownership as well.

Maybe your premise would apply to .5% of the population, but I think the growth in equity through home ownership can be realistically achieved by any Joe or Jane.

B,

Paying a mortgage down 40% in six years is NOT something that any Joe or Jane would do. That takes "commitment" that most Jane's and Joe's don't have. Your "circumstances" are just a "unlikely" as mine. And, yes, you do build equity that way. How much equity would you have built, if you "just made the payment over those six years? See my point now?

I'll think of an example using the timeframe and dollar amounts you've stated. I'll give what I believe most would use as "profit" then tell you what I see the "profit" as. Maybe you'll see that my purpose was not to "attack" you or home buying, but to say primarily that most homebuyers believe the "bullshit" they are told from all angles. Most of it is just not true.

I didn't take it as an attack so my apologies if I came on too strong. And I do see your point of view; in general my feeling is that most people are not discliplined enough to execute nearly what you would suggest they do. Not sure I would be and I'm more disciplined than most.

On the other hand, most clients do just make the minimal payment rather than refinancing to cut down the term and paying extra on that each month. After thinking about it the term I began with a 15Yr Fixed, and refinanced to 10Yr's at a lower rate, and it took me 7 years to pay that down......but my wife and I had good jobs that allowed us to poor extra money into the mortgage. It was actually a bit painful to sell that house and buy the big boy that we have now with the term spread out to 30 again when we only had about 8 years left on the other.

With a no money down 150G loan, the PMI would be around $89, and that's assuming best case. PMI is scaled on tiers now for different risk levels so for a clean credit buyer it could be as low as $89 and as high as a couple hundred dollars for a rough deal through a mortgage broker.

Truth be told, experiences in my area have led me to believe there are many more shady mortgage brokers than good ones. I've been doing this for 4+ years and I've only come across two that I feel comfortable sending buyers to (if they can't get approved at a bank) in my area.

Gotta hit the hay, but I'm sure we'll debate a bit more.

BTW, got any hot stock picks ? I'm into the 401K and ROTH, but I have a small portion of money on the side that I almost consider my fun money.....hence I try to swing for the fence on those.


Cheers,
B

[GrnBay007]

Essentially, I do not believe that a "homeowner" who purchases a home on a 30 year mortgage with zero down and faithfully pays the payment for the entire 30 years has made an "investment". He's merely rented from his bank instead of a landlord, his bank made a profit, and he's lucky if he broke even in real dollars. Undoubtedly, he could have invested the difference between the mortgage payment, taxes and upkeep versus what he could have paid in "rent" in a good mutual fund and blown the doors off his return on the "house" he invested in.



So how much extra should be put on a mortgage payment each month? I know you will say ...as much as you can, but are there some general "rule of thumb" figures? I'm in my first year in my house. I pay extra every month....about enough to amount to a little over an extra payment a year. Is that amount going to make any great difference in the end?


-

[MJZiggy]

I wanna guess and tell me if I'm right. Anything is better than nothing especially at the beginning of the loan.

[pittstang5]

Bretsky and retailguy,

Thanks for the help and response, but as retailguy put it, I think I'm SOL. This happened over five years ago (yeah, I know) and the late payment occurred over 90 days after the bill processed...however I never new I had a balance. Long Story short - I was young, in college, naive and trusted a friend. The thing that irritates me, the bill couldn't have been for more than $30. But, like I said, I was able to get a mortgage and a car payment with no problem. Since then I make it a habit to pay bills way before they are due.

Thanks again.

[Bretsky]

Essentially, I do not believe that a "homeowner" who purchases a home on a 30 year mortgage with zero down and faithfully pays the payment for the entire 30 years has made an "investment". He's merely rented from his bank instead of a landlord, his bank made a profit, and he's lucky if he broke even in real dollars. Undoubtedly, he could have invested the difference between the mortgage payment, taxes and upkeep versus what he could have paid in "rent" in a good mutual fund and blown the doors off his return on the "house" he invested in.



So how much extra should be put on a mortgage payment each month? I know you will say ...as much as you can, but are there some general "rule of thumb" figures? I'm in my first year in my house. I pay extra every month....about enough to amount to a little over an extra payment a year. Is that amount going to make any great difference in the end?


-


Absolutely. You only put extra in there if you are comfy doing it. I don't have the numbers in front of me, but if you stay there 30 years, and make one doublepayment each year at the first payment from the beginning of the mortgage (etc...close in June, make a doublepayment from the start every August of every year)............you will cut around 7 years off the end of the mortgage.

And if your rate is not that good and you can improve it by a point or so, shave that 30Yr down to a 15Yr in the future. Then each payment really puts a dent in the principal.

[Scott Campbell]

Essentially, I do not believe that a "homeowner" who purchases a home on a 30 year mortgage with zero down and faithfully pays the payment for the entire 30 years has made an "investment". He's merely rented from his bank instead of a landlord, his bank made a profit, and he's lucky if he broke even in real dollars. Undoubtedly, he could have invested the difference between the mortgage payment, taxes and upkeep versus what he could have paid in "rent" in a good mutual fund and blown the doors off his return on the "house" he invested in.



So how much extra should be put on a mortgage payment each month? I know you will say ...as much as you can, but are there some general "rule of thumb" figures? I'm in my first year in my house. I pay extra every month....about enough to amount to a little over an extra payment a year. Is that amount going to make any great difference in the end?


-

That Givens book I quoted earlier (Wealth Without Risk) supports Retail. If I remember it correctly (it's been 15 years or so), he made an unbelieveably strong case for the 15 year fixed rate mortgage. The amount of money saved was staggering. The rate used to be about a half a point lower than the 30 year fixed, and the principal was paid down so much quicker that payments are not even close to double that of a 30 year. Bretsky or Retail could probably calculate what the additional payment percentage is, but I want to guess that it was around 20-25%. It was tough, but workable.

I did the same exact thing B did, but I'm a few years older. Bought the first modest house on a 30 year fixed. We made extra payments and as soon as it appreciated enough so that we had 20% equity, we refinanced to a 15 year and were able to drop the damned PMI. What a waste of money that is. Then we upgraded to the big house in 95 with enough equity to skip PMI altogether this time and did the 15 year fixed again. The new house was paid off 5 or 6 years ago, and I barely remember what a mortgage payment is like. It kind of pisses me off that I never got in on those ridiculously low rates in the 5-6% range over the last couple of years, but that's just quibbling. Paying off your home early works. Don't get sucked in by the government subsidizing your interest rate with the tax break.

Re: "So how much extra should be put on a mortgage payment each month?"

How much you got? Don't take money from your 401K or Roth to do it though.

[Partial]

so essentially, the jist that I am getting is as soon as you're out of college, max out your Roth IRA and put as much into your 401k that your company will match. Then, while I'm still young and in the process of getting settled, live in a craphole for a few years, and avoid having kids until I am 30.

Then, once I am settled and decide to buy a house, buy something modest while the kid is young, and after I max out my IRA & 401k matched-amount each year, then pour the rest of the money that I can reasonably afford to into the mortgage to get that mofo paid off. After I get about 50% paid off, I should refinance the mortgage to get a lower rate over less years?

Then, once that is paid off, I do some simple fixes myself (i'm pretty handy) IE paint the walls, put new counter tops, sinks in, and ideally convert the basement from a storage area to a finished area and sell this mofo off for some modest profit.

About 5 years out of school I want to go back and get my MBA so I can move from being an engineer to managing engineers and making the big bucks for a big corporation.

I figure i'd buy another a keeper house around 40, design it myself and have a company build it how I want it, and pour as much money as I can into it to try and pay it off within like 10 years.

Is that a good idea to just pay off your mortgages right away while maxing out the IRA/401k? Or is it better to take the mortgage a little slower and get some stocks and mutual funds?

What is the best way to pay off student loans in this?

What if at 27 I decide to take on the additional burden of 10,000 a year for 2 years to get an MBA. Would it be wise to pay this out of pocket, or take out a low interest loan student loan like a stafford loan?

I guess I don't really understand the value of a dollar because I haven't learned much about investing in school, and where as taking out a 5% loan on 20,000 dollars seems like a good idea in theory if I could invest that 20,000 into something and make 20% interest on it, however I have no idea if that is how the real world works.

[retailguy]

Bretsky and retailguy,

Thanks for the help and response, but as retailguy put it, I think I'm SOL. This happened over five years ago (yeah, I know) and the late payment occurred over 90 days after the bill processed...however I never new I had a balance. Long Story short - I was young, in college, naive and trusted a friend. The thing that irritates me, the bill couldn't have been for more than $30. But, like I said, I was able to get a mortgage and a car payment with no problem. Since then I make it a habit to pay bills way before they are due.

Thanks again.

Pitt,

It wouldn't hurt to dispute it. If they validate it, you are still in the same position that you are in right now. If it is over 5 years old, it is probably not affecting you, especially if the rest of your credit is solid. You'd be amazed at the things people do to their credit.

[retailguy]

I wanna guess and tell me if I'm right. Anything is better than nothing especially at the beginning of the loan.

True. Good guess. :wink:

Think of it as the power of compound interest in reverse. Once you "pay" that $50, or however insignificant of an amount you pay, the bank cannot continue to charge interest on it. So you may only save 10 cents (interest savings) a month, but each time you pay $50 extra, you save the same amount, and it adds up much faster than you think.

[retailguy]

So how much extra should be put on a mortgage payment each month? I know you will say ...as much as you can, but are there some general "rule of thumb" figures? I'm in my first year in my house. I pay extra every month....about enough to amount to a little over an extra payment a year. Is that amount going to make any great difference in the end?


-

Yes, it'll make a big difference. Use excel and an amortization spreadsheet, or use a calculator on the web. Insert the extra that you make on your payment and you'll see what I mean. Even a modest payment makes a HUGE difference.

The rule of thumb is dependent on your personal situation. As I recall you are buying the home and raising kids by yourself. My hats off to you. That's not easy.

However, if you can figure out what it takes to pay off the mortgage you have in 15 years, and you can make that payment, you will improve the "financial value" of your investment. The difference in money "invested" in your home will stagger you.

For example, a $150,000 loan at 6.5% interest on a 30 year loan gives a payment of $948.10, whereas the payment on a 15 year loan is $1306.66, a difference of 358.56. That's a difference of 38% on the original payment. Nowhere near double the payment. As your income increases, it should become easier to make that payment, then as you do, the interest you pay the bank drops dramatically, placing more of your payment against the principal balance.

In short, I think Scott Campbell said not to take money from your IRA or a Roth, and I agree. Other than that, paying down what you already have is a great idea.

[Scott Campbell]

After I get about 50% paid off, I should refinance the mortgage to get a lower rate over less years?

There is a reason I used 20%. The mortgage company can no longer require you to carry expensive and worthless PMI once you have 20% equity in your home. Two things affect your equity. The amount of principal you've paid down, and appreciation. We had our home appraised after we had been in a couple of years, and made sure the appraiser knew exactly where his appraisal needed to come in so the math would work out correctly for the 20% equity. We used the excess cash flow from not having to pay PMI to qualify for the 15 year loan and paid down the principal quicker.

If you have been in your home for a couple of years, you may have already seen enough appreciation to get rid of your PMI.

[Partial]

I've never taken a finance class and don't have to for my major. Would that be a good decision to take that or can I learn what this stuff means/tips on all of this stuff from reading "the millionaire next door"?

I've taken microeconomics, but I had a liberal hippie for a teacher who preached about adam smith and a bunch of other contemporary liberals and how their views dispute trickle down economics and capitalism in general. Essentially, it was a bullshit class where nothing was learned. Amazingly, we did not use any math at all during the course. In fact, the only numbers I saw were labeling my outlines with letters, numbers, and roman numerals to keep track of notes!!

[retailguy]

so essentially, the jist that I am getting is as soon as you're out of college, max out your Roth IRA and put as much into your 401k that your company will match. Then, while I'm still young and in the process of getting settled, live in a craphole for a few years, and avoid having kids until I am 30.



Check with your financial planner for Roth vs 401K. The decision is dependent upon the type of 401K you have available. I see the 401K as more important than a Roth, provided the employer does some type of "match". Matching funds are the biggest blessing an employee can hope to get from an employer.

When you have a 401K available, find a way to contribute the amount required for the max employer match immediately. Then structure a "plan" to get to the maximum you can invest. One painless way to do that, is to take a portion of your annual raise, I suggest 1% or 2% if you got a great raise, and add that percentage to your contribution EVERY year up to the max allowable. You still get a "raise", and your take home paycheck never falls. It is as "painless" as it gets.

I don't know your situation, however, I might be inclined to steer you from a Roth at this early point, and have you save in a common sense mutual fund first towards a down payment. The reason for that, is, that while single and earning a good income, you are in the worst tax situation you could be in. I could honestly advocate you purchasing a home with less than 20% down, because of the tax ramifications for you. You will actually see a tax benefit in the early years, whereas a married couple with a child may not see any tangible benefit in tax savings with a home purchase.

I still wouldn't recommend purchasing with less than 10% down, HOWEVER, you could make that work fairly well if you can achieve an income of $50K as you stated. I'd think in 1 1/2 -3 years you could accumulate $25K for a solid down payment, maybe more depending upon your lifestyle choices.

Whatever you do, resist the urge to buy that $40K set of wheels. PLEASE. Get a sensible car, pay it off early and drive it until the wheels fall off.

Five years of good planning will leave you "set" for life. I'm not kidding.

I've got more for you later....

[pittstang5]

Partial,

A little friendly advise concerning your MBA. Get this done as soon as possible. At the least, take a class here or there to stay with it. Some companies, if you're fortunate will even pay for all, most or even some of it. Sometimes they require you to stay with the company for X amount of years.

But, I vowed to get my Masters 2 - 3 years after college and I'm 5 years out, got married, have a mortgage and we're going to try to have kids in the next year or so. No MBA for me in the future. Get it done while you're young, if you can.

[Scott Campbell]

For example, a $150,000 loan at 6.5% interest on a 30 year loan gives a payment of $948.10, whereas the payment on a 15 year loan is $1306.66, a difference of 358.56. That's a difference of 38% on the original payment. Nowhere near double the payment.


I think the difference between your 38%, and my 20-25% was that I was able to shave an additional 1/2 point off my interest rate by moving from the 30 year fixed to a 15 year fixed. I'm not sure what the spread is today.

[retailguy]

I've taken microeconomics, but I had a liberal hippie for a teacher who preached about adam smith and a bunch of other contemporary liberals and how their views dispute trickle down economics and capitalism in general. Essentially, it was a bullshit class where nothing was learned. Amazingly, we did not use any math at all during the course. In fact, the only numbers I saw were labeling my outlines with letters, numbers, and roman numerals to keep track of notes!!

But.... did you "feel" better when it was over? That is the really important point. :mrgreen:

You experience "trickle down economics" every single day.

Capitalism proves that the "economy" is not a zero sum game.

Microeconomics could have been a great class to explore the "hideous" effect of a capital gains tax, which is probably the most egregious tax out there, even at the 15% maximum that the Bush administration was able to get. Oh, Ronald Reagan, I miss you...... <sigh>

[Fosco33]

Partial,

A little friendly advise concerning your MBA. Get this done as soon as possible. At the least, take a class here or there to stay with it. Some companies, if you're fortunate will even pay for all, most or even some of it. Sometimes they require you to stay with the company for X amount of years.

But, I vowed to get my Masters 2 - 3 years after college and I'm 5 years out, got married, have a mortgage and we're going to try to have kids in the next year or so. No MBA for me in the future. Get it done while you're young, if you can.

Make sure if you want an MBA that the industry your in values it. An MBA in Marketing or Sales is basically useless. Also consider the opportunity cost (plus the cost of school) in your decision. Let's say you go to a good school (20K/yr) and don't work your previous job (say 65K) - the cost of that degree just went up to $150K! Plus, you may be missing out on nice ROI on your income. If it makes sense, go for it - but you can always get an exec MBA later in life if you desire to be a C suite type guy.

[retailguy]

I think the difference between your 38%, and my 20-25% was that I was able to shave an additional 1/2 point off my interest rate by moving from the 30 year fixed to a 15 year fixed. I'm not sure what the spread is today.

Yes, I assumed that there was no change in rates. You're right that there used to be an advantage, but you don't even see anyone advertise 15 year rates anymore. It's been so long since I've had a mortgage, I just assumed that there is no difference. B?

Even a half percentage difference would put the figure in your 20% range. Maybe less than that.

[Scott Campbell]

Five years of good planning will leave you "set" for life. I'm not kidding.

This is very true. I retired for the first time at 40, and it was primarily due to knowing the basic outline of my financial plan when I graduated college at 25. Well part of it was knowing the plan, and part of it was just being used to living on nothing.

[Scott Campbell]

Check with your financial planner for Roth vs 401K. The decision is dependent upon the type of 401K you have available. I see the 401K as more important than a Roth, provided the employer does some type of "match".


I'm going to divert from conventional wisdom here. I'd max out both the 401K and Roth, and also include a company Employee Stock Purchase Plan if you have access to one of those. And that's for one of the same reasons you love the 401K plans. Companies usually subsidize your purchase, which conceptually gives these plans the same advantage as matching funds, but without the tax advantages. And you can always sell twice yearly if you really need the money for cash flow, or want to invest somewhere else.

I view the Roth as incredibly critical because once your money is in there, it and all of it's earnings will never be taxed again. The first year it was available (98 or 99) they allowed you to roll over any existing amount you had in a conventional IRA into the new Roth plan. The catch? You had to pay taxes on the entire amount as ordinary income. Ouch. They might have let me spread it out over 2 years - I don't exactly remember. I had money from a previous 401K that I had rolled over into a conventional IRA when I left that job. We swallowed hard and came up with all that extra tax money to give to Uncle Sam. The payoff? It was 1999,and I quadrupled the money in less than a year. And Uncle Sam won't get even one red cent of those earnings or any future earnings. Not now. Not ever. Well, unless I tapped it before age 55 and triggered a penalty. Even if you do need the money, you can tap original contributions without penalty. You just can't touch earnings without paying a 10% penalty and treating the withdraw as ordinary income.

In terms of asset allocation, many people will likely have their house, and their 401K which is typically invested in highly diversified mutual funds, and their Roth. The house and the 401K were the "safe" and well diversified portion of my investments. For me, that meant the Roth was the place for owning individual stocks. I can trade there unburdened by tax consequences. I've never owned more than 4 at a time as I just can't follow them adequately enough to take on more than that. That's the part of what I've done that I believe most financial planners would strongly disagree with. It is not for the faint of heart. But the Roth is the best place for your biggest upside investments because Uncle Sam won't demand his cut of your earnings. IMO.

[retailguy]

SC,

Don't disagree with your analysis at all. I just think my point is a bit different.

Partial is 20, maybe 21? Somewhere in that arena. While I see the value of compound interest, I also see that he won't be "using" that money for the next 40 years or so. "using" a small portion to fund the purchase of an asset is not such a bad deal.

From my vantage point, he gets tax free earning with his 401K plus a company match. Yeah, he's gotta pay taxes on that money at some point, however, if done right, those taxes will be at a lower income than they are right now. Also, the larger principal enables the money to "grow" faster since those are "pre-tax" dollars.

But, the stuff you said about the Roth. Agree, totally. Roth's are a wonderful vehicle.

[Scott Campbell]

I've never taken a finance class and don't have to for my major. Would that be a good decision to take that or can I learn what this stuff means/tips on all of this stuff from reading "the millionaire next door"?

I'd skip the classes even if such a class was available, and just use the widely available resources at the library and on the web. A word of caution about Millionairre Next Door - it's very conceptual - 30,000 foot overview type stuff. It helps you understand the mindset and financial culture of people that have done very well. But there's no real detail. It's a great read though, and should help get you excited about doing the right things.

You are beginning to invest in your understanding of personal finance, and that might be the most important investment you'll make. It takes some time and effort, but it's really not that hard. I don't believe in running to professionals for the relatively easy to understand "no brainers" that we are discussing in here. You can and should take the time to figure that stuff out on your own. It'll raise your financial IQ so that when you do need professionals for the high degree of difficulty type stuff like setting up trusts, you'll be better equipped to deal with them. No one will look out for you like you will. There's bad advice and bad people out there sprinkled among the good. Without investing in your own knowledge, you might not be able to spot them.

[Scott Campbell]

SC,

Don't disagree with your analysis at all. I just think my point is a bit different.

Partial is 20, maybe 21? Somewhere in that arena. While I see the value of compound interest, I also see that he won't be "using" that money for the next 40 years or so. "using" a small portion to fund the purchase of an asset is not such a bad deal.

From my vantage point, he gets tax free earning with his 401K plus a company match. Yeah, he's gotta pay taxes on that money at some point, however, if done right, those taxes will be at a lower income than they are right now. Also, the larger principal enables the money to "grow" faster since those are "pre-tax" dollars.

But, the stuff you said about the Roth. Agree, totally. Roth's are a wonderful vehicle.

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

[Scott Campbell]

so essentially, the jist that I am getting is as soon as you're out of college, max out your Roth IRA and put as much into your 401k that your company will match. Then, while I'm still young and in the process of getting settled, live in a craphole for a few years, and avoid having kids until I am 30.

Not having kids till your 30 is probably very good financial advice. But that may or may not work for you on a personal level, so that's your call.

I suggest that you don't stop contributing to your 401K at the company match limit. Go ahead and max it out for the remaining tax advantage. One of the best features of the 401K is the payroll deduction. It takes the discipline requirement completely out of the equation, as you never see the money.

[retailguy]

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.

[Scott Campbell]

One more opinion seeing that I'm on a roll.

I've heard a few of you state "do what you love, the money will follow". I kind of agree with that up to a point. But my primary role in life is not to be a happy employee. I am first and foremost the provider for my family, and that takes precedence over everything else. So I'd modify that saying to "Do what you love, and make damned sure they're paying you well for it."

Most of us spend 40-80 hours a week working for someone else so that they will pay us the money we need to survive. Yet very few will spend nearly the amount of time figuring out what to do with that money as they have to earn it. It's just as important to manage the money on the way out as it is on the way in. So why is so little effort typically made to understand personal finance, when so much effort has been made to earn that money in the first place? At best it's misguided logic, and at worst it's stupid and tragic.

Sorry for the rant.

[Partial]

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.

isn't 50k damn good for someone who is single and very young with plenty of room to grow?

[Scott Campbell]

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.

isn't 50k damn good for someone who is single and very young with plenty of room to grow?

Yeah, it's damned good. But what you'll find as a single guy with a decent income and no deductions is that $100K isn't all that much once the government is done bending you over. If you max out all your investment opportunities like we've talked about, there won't be much left to live on. That's the discipline part that we've been talking about.

[Fosco33]

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.

isn't 50k damn good for someone who is single and very young with plenty of room to grow?

Yeah, it's damned good. But what you'll find as a single guy with a decent income and no deductions is that $100K isn't all that much once the government is done bending you over. If you max out all your investment opportunities like we've talked about, there won't be much left to live on. That's the discipline part that we've been talking about.

Word.

Back to the MBA discussion - check out this video on BusinessWeek link....

http://www.businessweek.com/mediacenter/video/bwweekend/8a0eac595b84e841e7eb566140b52e908b2be8ae.html

[retailguy]

I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.

Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.

isn't 50k damn good for someone who is single and very young with plenty of room to grow?

Yeah, it's damned good. But what you'll find as a single guy with a decent income and no deductions is that $100K isn't all that much once the government is done bending you over. If you max out all your investment opportunities like we've talked about, there won't be much left to live on. That's the discipline part that we've been talking about.

Partial - 50K is a great income to start at. But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available), plus pay taxes at 15% (maybe more) plus state taxes at 7%, that equals 47%. Now your income is about 28K give or take. Thats $2333 per month to live and save for a house...., it just stretches the time it takes to save a "suitable" down payment, that's all.

[Partial]

Would it better to rent when you don't have the money for a suitable down payment, or to buy something cheap and do some minor fixes yourself and sell it? I mean you always risk losing money, but if you break even you essentially lived somewhere for free, that to me seems like a good deal.

What about buying a duplex right out of school and living in half and renting the other section to someone?

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

If the first 5 years are so important and could make me much wealthier and better off in the long run, I am considering the thought of living at home. It's essentially saving probably 1000 a month that way. That would be brutal, but I could deal with it for a year or two if it gives me a much better life in the long run.

[Scott Campbell]

Partial - 50K is a great income to start at. But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available), plus pay taxes at 15% (maybe more) plus state taxes at 7%, that equals 47%. Now your income is about 28K give or take. Thats $2333 per month to live and save for a house...., it just stretches the time it takes to save a "suitable" down payment, that's all.

Does that count 7.5% for FICA (Social Security) and whatever they steal now for Medicare?

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?


Yes. Vote Republican.

[MJZiggy]

If you can get away with it, LIVE AT HOME FOR AS LONG AS POSSIBLE!!!

Take all the money that you're not paying in rent and put it toward your future house. At $1K/month, after 2 years you will have 24,000 dollars toward the downpayment. Then buy a duplex and let someone else pay half your mortgage for you.

[Scott Campbell]

If the first 5 years are so important and could make me much wealthier and better off in the long run, I am considering the thought of living at home. It's essentially saving probably 1000 a month that way. That would be brutal, but I could deal with it for a year or two if it gives me a much better life in the long run.

Genius move if you and the parents get along, as long as you're piling all that money saved away.

[Scott Campbell]

But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available).............

My understanding is that your Roth contribution limits are not tied to 401K contributions. For singles, you can contribute the maximum $4000 (for those under 50 years old not eligible for catch up contributions) as long as your adjusted gross income is less than $95K. For married couples it's $150K.

Though I'm not in the biz, and could be wrong.

[Partial]

what is the interest rate on a roth? 4000 contributed over 40 years is 160000 on it's own, without any compound interest. That could become a ridiculous amount of money.

Say you inherit some money, say like 200,000 dollars. Are their any CDs or anything that just have massive interest I could throw that all in?

[retailguy]

Partial - 50K is a great income to start at. But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available), plus pay taxes at 15% (maybe more) plus state taxes at 7%, that equals 47%. Now your income is about 28K give or take. Thats $2333 per month to live and save for a house...., it just stretches the time it takes to save a "suitable" down payment, that's all.

Does that count 7.5% for FICA (Social Security) and whatever they steal now for Medicare?

It's a total of 7.65% and NO I didn't include it.... Don't know why, I just "forgot" about it. :shock:

But I did estimate a bit high on the state taxes and maybe the fed taxes depending upon his situation so it may even out in the end.

Partial - this is why SC & I were kind of discussing options. After taxes, and savings, there is not much left. Proper savings plans really change the lifestyle you can live. A couple years of paying these kind of taxes, feeling like you're struggling while making $50K can disillusion someone pretty quickly. Personally, I think that is why all the misinformed liberals like to say "F... it" and get high with what is left over. It is the only way you can "feel" good after paying taxes. Then, the natural result is to bash Wal-Mart and the other evil companies for "taking" all the money and good jobs away.

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

The serious answer is that your 401K contributions do decrease your current taxable income dollar for dollar. The older style conventional IRA's used to reduce your current taxable income too, but I think the contribution limits were affected by 401K contributions. I'm not paying much attention to those lately because I much prefer the Roth for younger people. As you get much older with fewer years until retirement, you might opt instead for a conventional tax deductable IRA because you won't have time to make up for having paid the taxes up front in the Roth. For those people, getting the tax deduction now can be better than not paying taxes on Roth earnings.

You can deduct mortgage interest if you buy a home too, and a second home if you live in it 14 days a year or more. Some people are able to write off their boat or RV interest this way. It's got to be a pretty big boat, and I think you're required to have a galley and toilet, and you better be able to prove you lived in it. And then you can flip houses if you live in them for at least 2 years and avoid paying capital gains taxes on any appreciation - up to a $500K limit for each home. Many states offer 529 plans that allow state income tax deductions for education savings accounts. What else am I missing??? Those are all the easy no brainer tax dodges that I can think of. I think any thing else is going to require more elaborate planning and professional advice that I'm not qualified to give.

Well, I guess starting a business opens up a whole bunch of ways to avoid taxation.

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?


Yes. Vote Republican.


I already feel bad about this smartass comment of mine. Good financial planning is not a partisan issue.

[retailguy]

what is the interest rate on a roth? 4000 contributed over 40 years is 160000 on it's own, without any compound interest. That could become a ridiculous amount of money.

Say you inherit some money, say like 200,000 dollars. Are their any CDs or anything that just have massive interest I could throw that all in?

There is no "interest rates" per se. An IRA (Roth included) is an "investment vehicle". You can buy stocks, bonds, etc. You earn a return based upon dividends and stock price, a bond would pay interest, etc.

You can't really earn "massive" interest right now in any vehicle you choose, however, having that amount of cash opens up many options not resembling a passbook savings account. :wink:

[Scott Campbell]

It's a total of 7.65% and NO I didn't include it.... Don't know why, I just "forgot" about it. :shock:



I tend to foget about it too, as I just assume I'll never see a dime of it when my time comes to collect. Frigg'n government do-gooders.

And that goes for both Republicans and Democrats.

[retailguy]

Well, I guess starting a business opens up a whole bunch of ways to avoid taxation.


Unless you live in the "Peoples Republic of Washington". :sad:

[retailguy]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?


Yes. Vote Republican.


I already feel bad about this smartass comment of mine. Good financial planning is not a partisan issue.

Personally, I kind of enjoyed your comment. And it is "political" in the sense that the philosophies are different. The dems believe that the government does a much better job of "distributing" the money than the people do hence Clinton's higher taxes, and the tax cuts Bush put into place kind of sum up the other view.

[retailguy]

But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available).............

My understanding is that your Roth contribution limits are not tied to 401K contributions. For singles, you can contribute the maximum $4000 (for those under 50 years old not eligible for catch up contributions) as long as your adjusted gross income is less than $95K. For married couples it's $150K.

Though I'm not in the biz, and could be wrong.

Well, then things have changed since I had a big company 401K. I'm in a very small town so I'm no expert on today's 401K plans. I guess it gives me some homework for the next few nights. :wink:

[Scott Campbell]

what is the interest rate on a roth?

There is no interest rate. A Roth is merely an account. But it's your account for you to manage. Your employer has nothing to do with it. You decide how the money gets invested. Individual stocks, bonds, mutual funds, money market funds. Your choices are extremely flexible, unlike your 401K where you are only likely to have a handful of mutual fund selections to choose from.

Or you can give a financial advisor limited power of attorney for your IRA, which means that they can trade or invest in your account on your behalf, but they can't make withdrawls. Though I would never do this personally.

[Scott Campbell]

Personally, I kind of enjoyed your comment. And it is "political" in the sense that the philosophies are different. The dems believe that the government does a much better job of "distributing" the money than the people do hence Clinton's higher taxes, and the tax cuts Bush put into place kind of sum up the other view.


I know where you're coming from. But I think it would be a shame if this thread disintegrated into a partisan discussion, as there is plenty of valuable information here for god damned liberals and the filthy greedy conservatives alike. We've got FYI for that other stuff.

[Partial]

damn, if you did that right you could make a killing using that.

[Partial]

yes, I am going to make sure to keep this thread devoid of political spamming. Anything that ruins this thread will be moved, that is for sure, as I feel strongly about this and feel everyone here can benefit from this. I'll see to it this stays focused and somewhat organized.

Bretsky, I have to give you props for getting this started. I have learned more reading this than in my two years of higher education so far. This is a great thread. And to think it all started with a debate in Tank's blog :lol:

[Scott Campbell]

damn, if you did that right you could make a killing using that.

LOL

That's why I keep beating you over the head with the Roth. But don't just take my word for it. Do you due diligence, and confirm it for yourself.

[Scott Campbell]

And to think it all started with a debate in Tank's blog :lol:

I always knew Tank had a special purpose.

[Partial]

Yes, I was under the impression is was like a 5% interest rate bank account or something. Even that would make a ton over 40 years. I am going to have to talk to my dad more in person about this so I can get a better feel and understanding of how that works. I may plunk 2000 or so into one at the end of summer.

[Scott Campbell]

Yes, I was under the impression is was like a 5% interest rate bank account or something. Even that would make a ton over 40 years. I am going to have to talk to my dad more in person about this so I can get a better feel and understanding of how that works. I may plunk 2000 or so into one at the end of summer.

I've gone to the extreme of a short term (month or two) loan just to beat the April 15th deadline and max mine out.

[MJZiggy]

Wait a minute...isn't there a way for a stay-at-home spouse to open an IRA where the money is held separate from the rest of the family income? I can't remember how to do that and what happens when someday we win the lottery (tax on people who can't do math)?

[Partial]

How much interest does a good mutual fund normally net you in dividends and profit in this day and age? Is that 4000 going to gain like 1000 a year? or how much is reasonable to expect?

[Scott Campbell]

Yes, I was under the impression is was like a 5% interest rate bank account or something.

It could be, if that's how you choose to invest your money. But you could bet the whole account on INTC if you wanted to. And NO, I'm not suggesting that.

[Scott Campbell]

Wait a minute...isn't there a way for a stay-at-home spouse to open an IRA where the money is held separate from the rest of the family income? I can't remember how to do that and what happens when someday we win the lottery (tax on people who can't do math)?

Both spouses can open their own account. The $4000 yearly limit is for EACH spouse. Sometimes it really pays to be married. Somebody (hopefully not me) needs to post a couple of credible links, as I'm probably going to begin screwing up or omitting details.

[retailguy]

How much interest does a good mutual fund normally net you in dividends and profit in this day and age? Is that 4000 going to gain like 1000 a year? or how much is reasonable to expect?

25% is stretching it a bit. It used to be fairly easy to earn 15% a year. While that's probably difficult today with low interest rates, 8% is probably pretty doable if you keep yourself well informed and invest wisely.

[Partial]

Went to bed with a headache last night trying to understand this technology.

But Partial really has me thinking about Intel.

Cheers,
B


Bretsky, if you're thinking that, I would make sure you keep up with the news. I find it hard to believe AMD is going to sit idley by despite what they have out now being so far back in performance. There are rumors that they are going to introduce a firmware update that allows the dual-core processor to work as one processor that is twice as fast. As it stands of today, Intel looks to explode in the next couple years because their road map looks really, really good. AMD's looks less than impressive but who knows what they have up their sleeve.

Some good news on this matter can be read at www.tomshardware.com.

[Scott Campbell]

How much interest does a good mutual fund normally net you in dividends and profit in this day and age? Is that 4000 going to gain like 1000 a year? or how much is reasonable to expect?

$1000 on a $4000 investment is 25%. That's pretty unrealistic, and anyone promising such is probably committing some kind of fraud. Typically you'll do 7-10%/year. And that's all it will take. Honestly, it doesn't matter that much. Your truly critical success factor is getting it put away, and getting it put away early. That's all discipline, and there is no luck or "being right" about some stock involved. Avoid taxes. Legally. You have so much time working in your favor that investment return % is your least concern.

[Partial]

I just did the math behind it at 8% interest a year while putting away 4000 dollars a year starting at 22.

Assuming you withdraw this 43 years later at the age of 65, you will withdraw 1,415,689.95 dollars. Thats a ton of money. It's an even more ridiculous amount when you factor in only putting in 172000. That's an absolutely ridiculous amount of profit.

What is a common matching amount for a company on your 401k?

[Scott Campbell]

I just did the math behind it at 8% interest a year while putting away 4000 dollars a year starting at 22.

Assuming you withdraw this 43 years later at the age of 65, you will withdraw 1,415,689.95 dollars. Thats a ton of money.

It's a lot more money when you consider that it's not taxable income.

[retailguy]

I just did the math behind it at 8% interest a year while putting away 4000 dollars a year starting at 22.

Assuming you withdraw this 43 years later at the age of 65, you will withdraw 1,415,689.95 dollars. Thats a ton of money. It's an even more ridiculous amount when you factor in only putting in 172000. That's an absolutely ridiculous amount of profit.

What is a common matching amount for a company on your 401k?


<switch> Light bulb, ON. :lol:

I used to participate in a 401K with a major oil company that matched up to 6%. It is probably lower now? don't really know but it is company specific. The company can choose to match as it pleases. There is probably some maximum, I don't know what that is, but there is no minimum. Plenty of small companies offer a 401K but do not match.

[Partial]

It's a lot more money when you consider that it's not taxable income.


Yeah, that is absolutely ridiculous. Normally that would be taxed like what? 35%

[Scott Campbell]

Plenty of small companies offer a 401K but do not match.

I think those are still a good idea becuase they're tax deferred, and I've always liked the way automatic payroll deductions force you to save.

[Scott Campbell]

It's a lot more money when you consider that it's not taxable income.


Yeah, that is absolutely ridiculous. Normally that would be taxed like what? 35%

It totally depends on how much taxable income you have. In the loose scenario we've been talking about, you'll only be paying taxes on your 401K withdrawls and any Social Security income if you're lucky enough to receive any. The taxes on your 401K withdrawls shouldn't be too bad, because any of the Roth money you withdraw to live on isn't treated as taxable income, and will allow your 401K withdrawls to be taxed at a much lower rate.

You don't need or want all of your money in a Roth, because you can have retirement income up to a certain amount before they really start sticking it to you in taxes.

[Partial]

What does tax deffered mean?

At my estimated 50k salary out of college and assuming the company matched to 5%, which is what the company I am interning at does now, I would be putting in 4000 a year when you don't factor in annual raises. Thats the same as the IRA, so in total I would be putting in 344,000 and getting out 2,831,379.90. That's absolutely ridiculous!

I am assuming by getting my MBA, working hard, and annual raises I could get my salary up to 80,000 a year, and with that extra money I could pay for my children's college and stuff someday.

[retailguy]

What does tax deffered mean?

At my estimated 50k salary out of college and assuming the company matched to 5%, which is what the company I am interning at does now, I would be putting in 4000 a year when you don't factor in annual raises. Thats the same as the IRA, so in total I would be putting in 344,000 and getting out 2,831,379.90. That's absolutely ridiculous!



And that concludes our discussion in the value of compound interest. :cool:

[Scott Campbell]

What does tax deffered mean?

Good qeustion. Tax deferred means you don't pay any taxes on it now when putting it away, or while it's growing. You pay taxes when you withdraw it.

Example. 401K.
Let's say your making $100K/year. And just to keep the numbers nice and round, let's assume your marginal tax rate is 50%. Marginal tax rate is the percentage of tax you pay per dollar of income on the last dollar you've earned for the year. In other words, your tax rate on the first $1000 you earn for the year is 0%. The tax rate on the last $1000 you earn for the year is 50%. In this case your marginal tax rate is 50%, even though your likely to only pay about 30% in taxes overall. That is illustrative of how this country's progressive tax scheme works.

Anyway, you can put up to $15,000 of your own money into your 401K for the year. That's irrespective of the company match. Doing so lowers your tax bill for this year by $7,500 ($15K 401K contribution x 50% marginal tax rate) because it's tax deffered. So it really only cost you $7,500 out of this years cash flow to put that $15,000 away. That is our governments way of telling anyone who can do math that they'd really like them to save for retirement.

Now your contribution grows tax free for 40 years or so, and it's time to withdraw. But you have no income from working anymore, and you've got a bunch of money in your Roth, so the money you take out of your 401K to live on puts you into a (lets say for the sake of argument) 10% tax bracket. Not only have you deferred the tax until withdraw, but you've managed to avoid much of it altogether by withdrawing it while you're in a lower tax bracket.

That's pretty much what tax deferred means. In this case you'd have to have $8000 of income to net the $4000 after taxes investment required to max your Roth for the year. And it takes quite a few years before the money you make as a return on investment in that Roth will exceed the advantage of being able to defer the taxes until retirment withdrawls.

You don't want all non taxable income - Roth money. And you don't want all tax deferred income in retirement like the 401K money (unless you have so little that you'd never trigger any tax liability). You want some mixture of both to optomize your tax situation.

[Partial]

I want to thank you guys for all the time you've taken to share your wealth of knowledge. I appreciate it very much, and I'm sure everyone else around here does too. There is some really powerful and great information in here!!

[Bretsky]

so essentially, the jist that I am getting is as soon as you're out of college, max out your Roth IRA and put as much into your 401k that your company will match. Then, while I'm still young and in the process of getting settled, live in a craphole for a few years, and avoid having kids until I am 30.



Check with your financial planner for Roth vs 401K. The decision is dependent upon the type of 401K you have available. I see the 401K as more important than a Roth, provided the employer does some type of "match". Matching funds are the biggest blessing an employee can hope to get from an employer.

When you have a 401K available, find a way to contribute the amount required for the max employer match immediately. Then structure a "plan" to get to the maximum you can invest. One painless way to do that, is to take a portion of your annual raise, I suggest 1% or 2% if you got a great raise, and add that percentage to your contribution EVERY year up to the max allowable. You still get a "raise", and your take home paycheck never falls. It is as "painless" as it gets.

I don't know your situation, however, I might be inclined to steer you from a Roth at this early point, and have you save in a common sense mutual fund first towards a down payment. The reason for that, is, that while single and earning a good income, you are in the worst tax situation you could be in. I could honestly advocate you purchasing a home with less than 20% down, because of the tax ramifications for you. You will actually see a tax benefit in the early years, whereas a married couple with a child may not see any tangible benefit in tax savings with a home purchase.

I still wouldn't recommend purchasing with less than 10% down, HOWEVER, you could make that work fairly well if you can achieve an income of $50K as you stated. I'd think in 1 1/2 -3 years you could accumulate $25K for a solid down payment, maybe more depending upon your lifestyle choices.

Whatever you do, resist the urge to buy that $40K set of wheels. PLEASE. Get a sensible car, pay it off early and drive it until the wheels fall off.

Five years of good planning will leave you "set" for life. I'm not kidding.

I've got more for you later....


Everyone clings to that down payment. Scott brought up that crappy PMI.
PMI does suck; but you don't need 20% equity anymore to have it.

Good Ratios, Good Credit, a Few Reserves. A bank can do a 80% Fixed Rate First Mortgage and a 15% 2nd Mortgage with 5% downpayment. NO PMI. Now the 15%, being a 2nd, is at a higher rate of around 9%, but paying 9% on a 22,500 Mortgage (150G Purchase) will provide you with a MUCH GREATER savings than paying Private Mortgage Insurance, or what I refer to as Poof Away Money. And some banks can also do a 80% First Mortgage and a 20% 2nd Mortgage w/o PMI as well.

And if you are a good buyer and at a bank that doesn't have these programs, then IMO you are at the wrong bank.

[Bretsky]

I think the difference between your 38%, and my 20-25% was that I was able to shave an additional 1/2 point off my interest rate by moving from the 30 year fixed to a 15 year fixed. I'm not sure what the spread is today.

Yes, I assumed that there was no change in rates. You're right that there used to be an advantage, but you don't even see anyone advertise 15 year rates anymore. It's been so long since I've had a mortgage, I just assumed that there is no difference. B?

Even a half percentage difference would put the figure in your 20% range. Maybe less than that.

Right now the difference between a 30Yr to 15 Yr is around 3/8th of a percentage point.

[Bretsky]

yes, I am going to make sure to keep this thread devoid of political spamming. Anything that ruins this thread will be moved, that is for sure, as I feel strongly about this and feel everyone here can benefit from this. I'll see to it this stays focused and somewhat organized.

Bretsky, I have to give you props for getting this started. I have learned more reading this than in my two years of higher education so far. This is a great thread. And to think it all started with a debate in Tank's blog :lol:


Thanks Partial,

My motivations for doing this was several. It occured to me that our beginning discussion in Tank's blog could get monsterous and I didn't want to ruin his blog with valuable real world information.

Secondly, I felt I could add a lot of views to ponder in here; I'd argue there is no exact right or wrong way to accomplish your goals as there are many ways for you to get there. Others might disagree. So to have views/theories debated and tested can be helpful to many.

As a sidenote, I had no idea about the wealth of knowledge Scott would provide to this thread and appreciate and respect him in a new light.

Third, in all honesty, I want to get the word out to others in here about what I do for a living and the fact that I'm dam good and treat others fairly.
People in here buy and sell houses. I do loans throughout the midwest. There is no reason why I can't help people in here out and a little marketing never hurts. I've even thought about using my personal pic as my avatar along with a signature at the bottom regarding my profession..........but for those of you who've seen me I just might scare people away.

And Fourth, I enjoy giving views to any blood fresh out of college who is open enough to listen. Many of us are part way through the journey, and it's the smart ones who learn from other successes and failures. Hopefully the thread can allow a couple smart ones to emerge from Packerrats.


Cheers,
B

[Bretsky]

I just did the math behind it at 8% interest a year while putting away 4000 dollars a year starting at 22.

Assuming you withdraw this 43 years later at the age of 65, you will withdraw 1,415,689.95 dollars. Thats a ton of money. It's an even more ridiculous amount when you factor in only putting in 172000. That's an absolutely ridiculous amount of profit.

What is a common matching amount for a company on your 401k?


SOME DO MORE, but I'd say typical around the area is a company will match up to 3% for every 6% your invest. This means at bare minimum you should invest 6%.

[Scott Campbell]

Everyone clings to that down payment. Scott brought up that crappy PMI.
PMI does suck; but you don't need 20% equity anymore to have it.

Good Ratios, Good Credit, a Few Reserves. A bank can do a 80% Fixed Rate First Mortgage and a 15% 2nd Mortgage with 5% downpayment. NO PMI. Now the 15%, being a 2nd, is at a higher rate of around 9%, but paying 9% on a 22,500 Mortgage (150G Purchase) will provide you with a MUCH GREATER savings than paying Private Mortgage Insurance, or what I refer to as Poof Away Money. And some banks can also do a 80% First Mortgage and a 20% 2nd Mortgage w/o PMI as well.

I wish I had that option when I bought my first house. Any mortgage broker/banker that helps you avoid those kind of fees deserves the transaction fees they're earning.

Any other tips for minimizing transaction costs when you're closing on the next house?

[MJZiggy]

I've even thought about using my personal pic as my avatar along with a signature at the bottom regarding my profession..........but for those of you who've seen me I just might scare people away.



Oh puhleaze!! Can we get Mrs. Bretsky on here to give her opinion on this? You must not be too bad or she'd never agree to boymaking. :wink:

[Scott Campbell]

I want to thank you guys for all the time you've taken to share your wealth of knowledge. I appreciate it very much, and I'm sure everyone else around here does too. There is some really powerful and great information in here!!

Packer Rats - your one stop internet shop for Packer news and retirement planning. If only we could round things out with a thread covering menapause.

[MJZiggy]

I want to thank you guys for all the time you've taken to share your wealth of knowledge. I appreciate it very much, and I'm sure everyone else around here does too. There is some really powerful and great information in here!!

Packer Rats - your one stop internet shop for Packer news and retirement planning. If only we could round things out with a thread covering menapause.

Be careful what you wish for...

[Scott Campbell]

If only we could round things out with a thread covering menapause.

Be careful what you wish for...[/quote]

Global warming - the hot flashes version.

[Bretsky]

I should mention that I have an extra motivation. I didn't adhere to my actual plan so if my wrongdoings help somebody else I'd be quite happy.

1. I didn't understand the ROTH well enough in the past and started way too late.

2. Our first starter house was a great investment and we were 8 years from paying it off. Then we had two kids and Mrs Bretsky wanted bigger bigger bigger.

So we bought this huge Big Kahuna and are back on a 30Yr Mortgage (without PMI), and with two kids and a boatlad of house related bills I'm back in that category that will work long and hard til 55-60 and retire very comfortably instead of wealthy.

My 401K balance is very very healthy, but my ROTH IRA was started WAY too late. And now with a house worth well over 250G, the wife is happy but the cash flow is not what it used to be.

So unless I find a few boomer stocks, roll the dice a little, and succeed, I see myself working for another 23 years (I'm 37) and retiring very very comfortably, but not what I consider wealthy. That's why I have my eye on a stock and am considering buying overstock.com...........because it could grow dynamically........but I also understand.....it could end up being worth zero.

I'd make an interesting case study for somebody; but I think the person doing that case study would conclude I've did a lot of things right but a few key things wrong.

And if I can share those to help make another rich earlier I'll be a happy camper.

[MJZiggy]

I'm in the same boat as you, B. I never had much money when I was younger, but if I could have stashed just a little bit away, I'd have much more wealth built up for retirement than I do right now.

[Bretsky]

I'm in the same boat as you, B. I never had much money when I was younger, but if I could have stashed just a little bit away, I'd have much more wealth built up for retirement than I do right now.

I could have saved more when I was younger, but partied a lot and lived the good life via sports and after fun as opposed to watching my money better. Didn't start a ROTH til mid 30's. stupid stupid stupid.

Never educated by folks much or schools as to money. Always responsible and had perfect credit, started a mutual fund on my own at age 22 and did some stocks, but all that time I should have been packing away in a ROTH. And if you do the Math the years of appreciation I lost on the ROTH is traumatic.

[pacfan]

A question for Bretsky if he doesn't mind me asking....

I'm thinking about a Home Equity Line of Credit for some repairs on the house and my CC. What are your views on this? I have heard nothing but good things from the people that want me to do business with them
(Interest is tax deductible, the monthly payment drops when you pay down on the principal, things like that).

Are HELOC's as good as they say they are and whats the current rate?

[Bretsky]

A question for Bretsky if he doesn't mind me asking....

I'm thinking about a Home Equity Line of Credit for some repairs on the house and my CC. What are your views on this? I have heard nothing but good things from the people that want me to do business with them
(Interest is tax deductible, the monthly payment drops when you pay down on the principal, things like that).

Are HELOC's as good as they say they are and whats the current rate?


SOME GOOD QUESTIONS in here Pacfan so I'll give some thoghts to ponder and others can chime in. I have a Home Equity Loan. The most serious of money guys may say you shouldn't spend the money if you don't have it; that is not always practical. In my scenario, I needed a new roof a year after I bought the home and used it for other fixings. I also have two kids and a wife so cash flow and emergency money is quite important for me.

A HELOC essentially can serve as a lower interest credit card. If you have some credit card debt at a high interest rate a HELOC is a solid option. Most go this route. If you have strong credit, more people are also using 0$ Credit Cards, and then rotating these cards to another 0% card before the interest is due. Back when HELOC's had a great rate I'd pound for them harder; now both of the above scenarios are not bad options.

All of the interest is tax deductible, which is nice. And if you take out 10G, pay it down to 5G, you can often dip back in for the extra at a later date.

Three years ago HELOC's were a very hot thing; back then rates were as low as 4% on a Line of credit. Now the FED has raised interest rates around a dozen times and they did it again last week and this has driven the rate on that loan way up. The average HELOC interest rate is between 8-9% depending on the bank you are at.

So now it's not quite as good as it use to be. Banks make very good money on these and push them quite hard. All of the above mentioned points made by your bank is valid. They give you flexibility. They can reduce your monthly payments on credit card debts, thus adding flexibility to your life. And they are tax deductible. All good points. And if you are paying 15-25% interest on a CC, a HELOC is certainly a better option.

On the other hand, over the past few years people have really driven up their debts with these Home Equity Loans. Banks often offer interst only payments..........unfortunately many people only make interest only payments so the balance never goes down. If you get one of these PLZ do not do that. They serve a nice purpose and it sounds like you make a nice fit for one of these. But use it responsibly; that is the key. If you pay off CC debt and take out a HELOC to pay it off, ask your banker how much of a montly payment you have to make to pay it off in five and ten years and then plan accordingly.

So my general view; good idea......but use it responsibly.

Feel free to ask any further question, and others feel free to chime in as well.


B

[Partial]

Man, I just received my first paycheck for the summer, and it really sucks knowing that 25% total was taken out for taxes, and that 55 bucks every two weeks will be going to social security.

If I don't make 10,000 dollars a year, do I get everything that is Fed Withholding and WI Withholding back? That sure would be nice to get that back.

[Partial]

after hearing the stories of park workers sleeping on the job from my gf, I don't think i'll ever vote democrat again. This taxation is ridiculous. Something needs to be done about social security. That is another topic though. But shit, 6% of my salary to something I will never see really sucks, especially at this age when money is sparse as is.

[SkinBasket]

Man, I just received my first paycheck for the summer, and it really sucks knowing that 25% total was taken out for taxes, and that 55 bucks every two weeks will be going to social security.

If I don't make 10,000 dollars a year, do I get everything that is Fed Withholding and WI Withholding back? That sure would be nice to get that back.

LOL, try hitting the max every year knowing that shit ain't gonna be around. And when you find out that between taxes, Medi, SS, and insurance (if you have to pay some of the benefit), 40-45% of your money isn't yours... well that's a real special feeling. Special indeed. Put gas, sales, property, excise, and every other goddamn tax and "fee" in the pot and we're talking 45-50+%. Beautiful!

[retailguy]

Man, I just received my first paycheck for the summer, and it really sucks knowing that 25% total was taken out for taxes, and that 55 bucks every two weeks will be going to social security.

If I don't make 10,000 dollars a year, do I get everything that is Fed Withholding and WI Withholding back? That sure would be nice to get that back.

for the fed - you get a $5150 standard deduction, and a $3300 personal exemption, so the limit is $8450, after that you pay fed taxes at about 10% for starters.

I don't know the Wisconsin limits off the top of my head but it should be similar, maybe a bit higher if you qualify for the renters credit.

Social Security and Medicare are 7.65% for you , and an ADDITIONAL 7.65% for your employer. Thats 15.3% for both of you, but really just you, because it is part of the compensation package that the employer planned for when they hired you.

[Partial]

So, If I have a choice of making 9500 or 8400 and quiting, it would probably make more sense to stop working just before the 8400 since I wouldn't be using my time wisely, correct?

[pacfan]

after hearing the stories of park workers sleeping on the job from my gf, I don't think i'll ever vote democrat again.

The park workers are democrats?

[retailguy]

So, If I have a choice of making 9500 or 8400 and quiting, it would probably make more sense to stop working just before the 8400 since I wouldn't be using my time wisely, correct?

NO! You'd pay tax on the income ABOVE $8450 at 10% to start, therefore you'd keep 90 cents for every dollar you earned in federal taxes. Even when you "bump" into another tax bracket, it NEVER makes sense to not earn every dollar you can earn. Never stop earning money, instead structure your life on how to minimize taxes.

Take the extra money and funnel it into a retirement package and you STILL pay no tax. You don't get the money until you retire, but you need to start building retirement savings anyhow. Earn every single nickel you can this summer.

[Partial]

after hearing the stories of park workers sleeping on the job from my gf, I don't think i'll ever vote democrat again.

The park workers are democrats?

No, but all this damn money I am being taxed is being pissed away by government programs that if they were outsourced to a landscaping company in each county could be done in half the time and for half the price, since that company is looking to turn profit, versus the county workers which are unionized and non-profit. It's a load of crap is what it is. My roomate, for example, is working for the county up north as an assistant civil engineer, and he is getting a fat paycheck every week to do virtually nothing. He even agrees a much better use of money would be to pay a profit-seeking company to get the job done in a third of the time for a third of the money.

edit - This topic will NOT shift into a political debate. That will be the end of any political notion. I apologize for taking what could be considered a cheap shot.

[retailguy]

No, but all this damn money I am being taxed is being pissed away by government programs that if they were outsourced to a landscaping company in each country could be done in half the time and for half the price, since that company is looking to turn profit, versus the county workers which are unionized and non-profit. It's a load of crap is what it is. My roomate, for example, is working for the county up north as an assistant civil engineer, and he is getting a fat paycheck every week to do virtually nothing. He even agrees a much better use of money would be to pay a profit-seeking company to get the job done in a third of the time for a third of the money.


You just became a conservative.... May I be the first to welcome you. :wink:

[Partial]

So, If I have a choice of making 9500 or 8400 and quiting, it would probably make more sense to stop working just before the 8400 since I wouldn't be using my time wisely, correct?

NO! You'd pay tax on the income ABOVE $8450 at 10% to start, therefore you'd keep 90 cents for every dollar you earned in federal taxes. Even when you "bump" into another tax bracket, it NEVER makes sense to not earn every dollar you can earn. Never stop earning money, instead structure your life on how to minimize taxes.

Take the extra money and funnel it into a retirement package and you STILL pay no tax. You don't get the money until you retire, but you need to start building retirement savings anyhow. Earn every single nickel you can this summer.

Alright, that makes sense. I have my company currently taking the max amount out of my paycheck that they will match for the 401k. I have to talk to someone though and figure out how to access this. It's certainly not much, but atleast it is almost what they take out for social security, so it works I suppose. By the end of summer it may only be a few hundred bucks, but I suppose that is better than nothing. Are there rules about yanking that money out if necessary? I am thinking about getting it into something that can gain some interest rather than just having it sit and do nothing.

[pacfan]

You just became a conservative.... May I be the first to welcome you. :wink:

imagine this in Darth Vader's voice and its kinda funny.

[Partial]

Knock it off. NOW!!! :evil:

I realize this is my own doing for bringing that up to begin with. It was a mistake. I am not going to edit that. But it ends now. No more politics in this thread. This is really useful stuff that I do not want corrupted by a political debate.

We can create a seperate thread for that if thats what we want.

[SkinBasket]

Rush Limbaugh says to invest heavily in small banks because democrats are just lazy fools who hang out like bums in parks.


Maybe if you use ALL CAPS and bold it, someone will listen. Lighten up Partial. Even money matters need some comedy.

[Deputy Nutz]

Partial it doesn't matter if you vote republican or democrat, your money gets pissed away.

Join me in my milita, and we will put an end to big government.

[Partial]

How much does your average salary increase per year? I asked my mom this and she said 3% is pretty standard when there is no promotion or raise or anything. Any thoughts?

[Deputy Nutz]

right now it is about 2.7% standard.

[Partial]

Does that cap off? Assuming an engineer starts at 50,000, gets his MBA and jumps to 75,000 after 8 years, if you worked for like 37 years when all is said and done you'll be making approximately 174,300.30 at 3% salary increase per year. That just seems outrageously high to me for anyone

[Patler]

Does that cap off? Assuming an engineer starts at 50,000, gets his MBA and jumps to 75,000 after 8 years, if you worked for like 37 years when all is said and done you'll be making approximately 174,300.30 at 3% salary increase per year. That just seems outrageously high to me for anyone

Well, 37 years ago (1969) I thought I would be quite well-off if I could make $10,000-$15,000 per year. At the time, I believe I was working for $.95 per hour. I was excited when it went above a dollar.

I suspect that by 2045 you will look back at your starting salary and chuckle about how well you did with so little money!

[Partial]

touche, that makes sense because inflation is probably only slightly lower than the salary increase you'd get each year. On a bad year i'd guess it could be even more.

[retailguy]

Partial, I think you are really UNDERESTIMATING what your earning potential could be. Practically, you probably couldn't predict it if you tried, but that's not what is really important.

Today, just earn what you can, and if you can save for retirement, do that.

Your 401K can be moved if you leave your employer. Any credible financial planner can help you move it. You may want to leave it right where it is at, if that is allowed under the terms of the plan. Otherwise, you can roll it over to an IRA with a planner or investment broker. Just work with someone that you can trust, and don't buy and sell frequently. Buy it, hold it and don't sell it unless something drastically changes with the investment vehicle you chose.

edit: May the force be with you. Never forget, even Darth Vader became a "good guy" in the end. :wink:

[pacfan]

edit: May the force be with you. Never forget, even Darth Vader became a "good guy" in the end. :wink:

hey, hey, hey!!! it didn't happen 'til he saw all wrongs he committed and then it was to late. :smile:

Partial don't be yelling at me now, its just not nice.

[Bretsky]

ANYBODY EVER HAD ANY POSITIVE OR NEGATIVE EXPERIENCES WITH OVERSTOCK.COM ?

Plz note I don't own the stock and am not pimping it for a good investment. I'm beginning to research it and view it as a high risk high reward stock if it turns out. Interesting read below, but don't take it as advice about anything

The tempting numbers behind Overstock
Latest Market Update
July 05, 2006 -- 16:20 ET


Recognizing multibagger opportunities is difficult for most investors. Even when the opportunity sits squarely in front of them, most investors fail to see it.

For instance, observers were bewildered when Bill Miller was aggressively buying shares of Amazon.com (AMZN, news, msgs) below $7 per share in 2001. These observers couldn't see the earnings leverage in the Amazon model because of an overwhelming cloud of negativity.

An opportunity of similar magnitude to buying Amazon below $7 in 2001 exists today for investors in Overstock.com (OSTK, news, msgs). Over the next eight to 10 years, it's reasonable to expect Overstock will reach $4 billion in annual sales. If the operating model matures as I anticipate, the earnings and free cash flow will justify a business value of at least $4 billion, or more than nine times today's market value.

Increased share of market
While that may seem outrageous to some, there's a good chance that I'm too conservative. My sales-growth expectations, at 17% annually, are probably too low. Sales may be closer to $5 billion to $6 billion in eight to 10 years as Overstock continues to take share in the excess-inventory market, which is currently a $60 billion addressable market. Inefficient distribution of excess inventory is an expensive "headache" for brand-name manufacturers.

Overstock cures that headache.

Excess inventory levels are notoriously irregular and difficult for manufacturers to manage. They have to deal with unpredictable change in both the nominal level and across product categories. Using a single distribution partner, like Overstock, requires no capital outlay by manufacturers and results in fast conversion of excess inventory to cash.

Another reason my calculations may be too conservative is that the advantages of Overstock's business model may eventually command a premium valuation, perhaps 1.5 times sales. This implies a business value that is about 15 times the current value within this eight- to 10-year time period.

A model like Amazon is subject to assault based on price. For example, Buy.com is advertising books at 10% below the Amazon price. Overstock's model doesn't have the same vulnerability:

The online space that Overstock competes in is a winner-take-all category. As with eBay (EBAY, news, msgs), in the online auction space, there's a self-reinforcing dynamic at work here. Buyers naturally migrate to the inventory liquidation site that has the most product, and sellers want to sell on the site that has the most buyers. It's a mistake to underestimate the importance of this dynamic -- or its potential long-term value.

The 'magic' of organic growth
Look at the analyst reports in the early years of every great organic growth story, and you'll see that analysts miss this critical variable each and every time. That is, they underestimate earnings leverage. Organic growth begets powerful earnings leverage because it's exponentially cheaper to grow organically than to grow via acquisition.

It's irrefutable that Overstock has generated significant organic growth. The company's 2002 sales were $92 million, and sales this year will exceed 10 times that, or over $920 million. While I estimate that the Overstock model will eventually mature at a free cash flow margin of 3.5% of sales, it may be materially higher.

When Home Depot (HD, news, msgs) was generating 3.5% to 4% net margins several years ago, analysts (including me) failed to identify the earnings leverage in the model that resulted in 7% margins. It's quite impressive that Dell (DELL, news, msgs) can sell a low-margin commodity product and generate well over 6% net margins (up from less than 2% in the early years). If I had been given Dell's operating metrics in the early days, my guess is that I would have estimated, at the very most, an ultimate net margin level of only 3% or so.

The most powerful earnings leverage is found in operating models, like those discussed above, where there is a combination of both organic growth and category dominance. Because Overstock has both organic growth and dominates a winner-take-all online category, it's reasonably likely that I have underestimated its long-term profitability.

Because of the way earnings leverage works, the transition from losing 2 to 3 cents to earning 3 cents or more per dollar of revenue requires nothing heroic for Overstock. At $1 billion in sales, the company generates $150 million in gross profit dollars. (I consider a 15% gross margin a conservative assumption.) At $2 billion it generates $300 million, and at $4 billion it generates $600 million. Costs such as marketing, technology and G&A (general and administrative) grow in nominal terms, but not as a percentage of sales.

Think of technology and G&A as the cost of "headquarters." Much of that cost is front-end loaded. While headquarters will cost more at $2 billion in sales than it does at $1 billion in sales, it will not cost anywhere near twice as much.

High-risk phase is over
That marketing expense will decline as a percent of sales is obvious. But building a No. 1 brand -- a top-five retail online destination -- is expensive. According to industry sources, Overstock has gone from zero unprompted name recognition a few years ago to 4% about 30 months ago, to 29% today (for purposes of comparison, Amazon is at 44%). Prompted name recognition is also impressive, at 70%. With the brand-building phase nearly complete, marketing dollars naturally decline as a percentage of revenue.

The high-risk phase in the Overstock evolution is over -- that's the early phase in which Overstock emerged as the clear leader from a pack of competitors such as Ubid, eCost, Buy.com, Mercata and SmartBargains.

There will be dozens of reasons over the next eight to 10 years for Overstock investors to short-circuit this multibagger opportunity. While this model is exceedingly well positioned, it will not grow in a linear fashion. Like most great organic growth stories, this one will grow in fits and starts, marked by periods of brilliance as well as error.



http://articles.moneycentral.msn.com/Investing/TheStreet/TheTemptingNumbersBehindOverstock.aspx

[Partial]

Well B, if it means anything to you, which is probably doesn't, i've heard of the site, and been to it, but i've never once considered shopping there. Whenever I need a specific product, I first go to Ebay, then I go to Froogle and find it there, and then I check a retail store. I do a TON of online shopping. Just figured i'd lay it out there, but it is probably meaningless in the grand scheme of things.

[Patler]

I have purchased twice from Overstock. Both were satisfactory purchases. The first purchase was a set of tools in a briefcase type carrier. That was when the site was very small and had very few products to sell, maybe three years ago or so. I was kind of worried at the time, wondering if the site was legit, but they had just what I was looking for at a very reasonable price. The second purchase was a set of outdoor solar lights last year.

[Bretsky]

Thanks for your comments guys; the more I research this stock, the more I realize that it's one that could garner a huge gain or lose all money invested. I'd like to see the price come back a little, but think it's likely I might take a flyer on them.

[Bretsky]

HEY PARTIAL AND TECHIES


WHAT IS YOUR TAKE ON 3COM ??

From what I can tell it's a badly beaten down stock that is improving it's profitability and Earnings the past few quarters. A cheaply priced stock at around $5 per share so I may throw a few bucks at it.

[Partial]

I love my really old 3com network card, but thats all I really know about them.

[Bossman641]

Just want to thank everyone for the wealth of knowledge you have shared. I'm 22 and it's scary to think that in a year I'll be off on my own trying to figure this all out by myself. I'd much rather have a plan ahead of time than learn everything by doing it wrong the first time.

Thanks again guys

[Bretsky]

Just want to thank everyone for the wealth of knowledge you have shared. I'm 22 and it's scary to think that in a year I'll be off on my own trying to figure this all out by myself. I'd much rather have a plan ahead of time than learn everything by doing it wrong the first time.

Thanks again guys

Thanks for the kind words bossman; the goal of this thread is to share knowledge and learn from others. The smart ones will learn from the mistakes of others so the best thing you can do is start thinking about that plan and executing it.

[Bretsky]

Well B, if it means anything to you, which is probably doesn't, i've heard of the site, and been to it, but i've never once considered shopping there. Whenever I need a specific product, I first go to Ebay, then I go to Froogle and find it there, and then I check a retail store. I do a TON of online shopping. Just figured i'd lay it out there, but it is probably meaningless in the grand scheme of things.

Partial,

It definitely means something; it sounds a bit too simple, but before buying a stock I like to see how the company has treated customers. My wife has surfed there but never bought anything; if the customer service stinks the stock will fail and experiences people have had with overstock can go a longer than you think.

I owned Home Depot once; did well with it and at the time thought they gave pretty good service as well. My wife was never happy thought cuz I pushed her to shop there instead of Menards.

Cheers,
B

[Scott Campbell]

Your 401K can be moved if you leave your employer. Any credible financial planner can help you move it. You may want to leave it right where it is at, if that is allowed under the terms of the plan. Otherwise, you can roll it over to an IRA with a planner or investment broker. Just work with someone that

A financial planner or broker may charge fees that eat too far into your principal if you don't have a very large nest egg, so I'm not sure that advice would work for everyone. For many people, they can just roll it into a self directed IRA and buy a handful of mutual funds until they get the arms around what to do with the money.

[Partial]

Freescale first to put MRAM into mass production (http://www.tgdaily.com/2006/07/10/freescale_announces_mram/)


Austin (TX) - Freescale, the former semiconductor arm of Motorola, today announced commercial availability of magneto-resistive random access memory, short MRAM. The technology could become a threat to common memory technologies such as SRAM, DRAM and even Flash, but faces the challenge to catch up with the capacity of its established competition.

Just about two years after the first completed samples, Freescale claims that it has begun offering MRAM in volume quantities. The debut chip, named MR2A16A, is a 4 Mbit (512 KB) device that is organized in 256K words by 16 bits and operates at 3.3 volts - which, according to the manufacturer, allows the device to run in a "commercial temperature range."

MRAM has been considered for at least five years as a potential successor technology for NOR and NAND Flash, both of which are nearing their 20th birthday: Intel was the first company to offer a (256 Kb) NOR Flash module back in 1988; Toshiba is credited with inventing NAND Flash. MRAM is promised to combine the non-volatile storage characteristics with the speed of SRAM devices and offer unlimited read/write cycles. Compared to today's NAND Flash - the technology typically used in Flash storage cards - MRAM is about 1 million times faster to write the first bit and about 1000 times faster to read the first bit. Flash has also a limited number of read/write cycles, usually somewhere between 100,000 and 1 million, depending on the device.

The challenge of MRAM is to match the storage density of Flash. Flash still scales very well and remains a moving target for upcoming technologies - not only MRAM, but also ovonics memory (OUM), FRAM, Polymer memory (PFRAM), PCRAM or NRAM (Nanotube RAM). The cell sizes of MRAM are still more than 100 times larger than those of Flash, which explains the fact that we can buy Flash memory chips with capacities of up to 16 GB today and Freescale's new chip comes with "only" half a megabyte space - which is just about 0.003% of the status quo of its assumed competition.

The comparison may not be fair - yet - but the substantial distance is one of the reasons why MRAM isn't aimed at Flash at this time. Instead, Freescale believes that MRAM could become an option to replace (volatile) SRAM modules in portable devices, eliminating the need for a battery to feed the SRAM. "This technology could hasten new classes of electronic products offering dramatic advances in size, cost, power consumption and system performance," Freescale said.

But even in this segment, capacity may become an issue, especially if the premium price tag of MRAM is considered. In a demonstration to prove its capability to manufacture 45 nm devices, Intel announced in January of this year that it has produced a 153 Mbit SRAM chip that carries more than 1 billion transistors on a die with a size of 110 sqmm. The memory cell size of Intel's SRAM is 0.346 μm2 - while most prototypes of recent MRAMs used cell sizes of more than 1 µm2. Freesclae did not disclose the cell size of its first commercial MRAM chip.

[Partial]

Ricoh develops dual-format HD laser (http://www.vnunet.com/vnunet/news/2160061/ricoh-develops-hd-dvd-dual)


The battle between Blu-ray and HD-DVD to control the high-definition DVD market could be solved by a laser that can read the two competing formats.

According to reports in the Japanese press, Ricoh is developing a system that uses a single component to read both kinds of discs.

HD-DVD discs and regular DVDs hold data 0.6mm from the surface of the disc, while Blu-ray discs must be read at 0.1mm from the surface.

Ricoh's optical laser technology uses a "diffraction grate" to read the discs at the correct level.

However, the technology will initially be used only in high-definition DVD players because the process decreases the intensity of the beam. To counterbalance this effect, the devices will use higher powered lasers.

The technology will be on show for the first time at Tokyo's International Optoelectronics Exhibition on Wednesday.

According to Ricoh, the optical laser will be ready for use in devices by the end of the year and will be offered to OEM companies at that time.

[Partial]

Since you guys have all shared you wealth of knowledge with me whenever requested, I am going to do the same. I have started a thread where I will post the latest technology news that could have an impact on the economy or a large impact in the tech world. For example, both of those posts above are pretty cool and could make a huge impact. We can discuss the articles I pull, and I can give my opinion on them. That's what I know, so I'll try and help you guys out!!

edit - it may not be too useful, but it will be interesting atleast!! Right now, on the computer front, a lot of change is underway.

[Bretsky]

AWESOME !!

Let's find that next world changing technology like the Internet and a few bucks will turn into an awful lot of them.

B

[MJZiggy]

How much retirement funding is it worth it to forgo in order to go to grad school and take up something that you would enjoy more, but potentially make less?

[retailguy]

How much retirement funding is it worth it to forgo in order to go to grad school and take up something that you would enjoy more, but potentially make less?

Well, I'll take a stab at this one. The only one who can truly answer that question is YOU. Quite simply, I can tell you what the financial ramifications are of the "switch" and you then have to decide "is it worth it?"

The older I get, the less important money becomes. I'm not saying I want to be a pauper, nor that I want to give it away, but making XX dollars per year is not nearly as important as it once was.

I put greater value on being happy and saving some money than I do in working a job that I "hate" and putting away more money. What good is money if you're not happy?

I went back and got my MBA a few years ago. Best move I ever made. Without a doubt. There are MBA programs out there that'll bleed you dry until you never see the financial light of day, but there are lots of programs at smaller regional colleges that are just a good and half the price.

If you need that Master degree to get your "dream career" just do it. You may find that you don't lose that much money as the advanced degree makes you more marketable, and might open a door or two in the future that you can't conceive right now.

[Partial]

So, lets say I am fresh out of school with a job and the wind to my back. I have 3,000 riding in the bank and 10k in student loans the day I graduate. I need a place to live. What is the best thing to do to maximize wealth later on in life?

[GrnBay007]

Live rent free (or low amount of rent) with your parents for a few years!!! .....and save, save, save!

[MJZiggy]

So, lets say I am fresh out of school with a job and the wind to my back. I have 3,000 riding in the bank and 10k in student loans the day I graduate. I need a place to live. What is the best thing to do to maximize wealth later on in life?

I'll try this one. You do everything I didn't do and should have. Live in the cheapest place you can (if you can stand it, Mom's Place usually has good rents, but a lot of times they expect free labor and the landlady can be a little nosy).

During this time, put the max you can into your 401K and don't buy anything unless you'll have the money to pay for it before the bill comes. Save up an easily liquidated emergency fund of about 3 months salary and keep it as just that--an emergency fund. As your salary increases, remember to add to the fund a little. Once you have that done, start saving so that when you're ready you can buy a house. The goal here is to save enough so that you don't have to pay PMI insurance.

While you are saving for your emergency fund and down payment, You may want to start looking for someone to share it with (as a matter of fact, roommates or buying a duplex is not necessarily out of the question but really I was referring to wife). Then, hopefully, you should be good to go. Ok, guys, what did I miss?

[Fosco33]

So, lets say I am fresh out of school with a job and the wind to my back. I have 3,000 riding in the bank and 10k in student loans the day I graduate. I need a place to live. What is the best thing to do to maximize wealth later on in life?

I'll try this one. You do everything I didn't do and should have. Live in the cheapest place you can (if you can stand it, Mom's Place usually has good rents, but a lot of times they expect free labor and the landlady can be a little nosy).

During this time, put the max you can into your 401K and don't buy anything unless you'll have the money to pay for it before the bill comes. Save up an easily liquidated emergency fund of about 3 months salary and keep it as just that--an emergency fund. As your salary increases, remember to add to the fund a little. Once you have that done, start saving so that when you're ready you can buy a house. The goal here is to save enough so that you don't have to pay PMI insurance.

While you are saving for your emergency fund and down payment, You may want to start looking for someone to share it with (as a matter of fact, roommates or buying a duplex is not necessarily out of the question but really I was referring to wife). Then, hopefully, you should be good to go. Ok, guys, what did I miss?

I was in the near exact situation described above 4 years ago to the day (except I had about 10K in credit card debt and I had to move out of WI for my job).

So, I found a cheap place to live - well not cheap in Sconnie standards but I didn't want to pay more than 20% of my disposable income in rent.

I paid off the CC in about a year and, of course, locked in my student loans at the lowest possible rate and pay the min each month. I got into my companies 401k as soon as I could (most make you wait a year or so) and maxed the Roth each year.

You need possessions to live - so I got 'entry level' things - furniture and other household items. I figured I'd have to buy new things if and when I get married anyways. For almost three years, I did without a car (thus saving almost 800/mo in car payments and insurance - offsetting the higher cost of living/rent of being in Cali).

I don't know about the emergency fund savings right out of college. There are just so many options if you find yourself out of steady work (move back home, get a lower paying job, go back to school) that this money could be used for investments first. IMO, the emergency fund is definitely needed if you have a house but not before then.

I had a roomie for a little while but I couldn't stand the guy after 6 months. I've live w/ my girlfriend now - splitting it like 70/30 for rent and utilities.

Partial, you're in a good spot. Get the job you want and don't settle for less. Don't stress too much about money and just find a plan and stick w/ it. I believe you'll live longer and have more fun this way.

[Bretsky]

I'm strongly considering making my first real estate investment. 2,000 sq foot home on Whitewater Campus that normally is rented out to students for $1200 per month. From what I could pick it up as a FSBO for around 120G and I'm pretty sure it's worth more. The owner just wants to get rid of it after having two wrestlers do serious damage to the place; he's got er looking good again but wants out.

Any landlord's in here ? Anybody want to share good or nightmare experiences ? Or Biases ?

The scary part is that location and house wise it's the ultimate party house everybody would dream of renting in college.

My bias would be to try to rent to chicks; right or wrong it's my view they'd take care of the property better. Stict lease...etc.

Thoughts to share from experience ?

Maybe Retailguy would talk me out of this as a bad idea ?


Cheers,
B

[Partial]

Only rent to girls, definitely will work out better for you in the long run. Interview the group too, before you lease.

[MJZiggy]

I believe it was Motley Fools said a few years ago that that's how you should always house your children for college. You buy the house before they go in, rent it to your kid and a bunch of their friends and your student housing is paid for. You're just doing it a little before you actually need it. 1200 a month on a 120K investment doesnt' sound too bad to me. If possible, try to rent to adults returning to school or students paying their own way. They don't have time for parties and if they're older, don't necessarily mix much with the younger students.

[Partial]

yes, look for high GPA females with time consuming majors. I think that is the best way to go. That's a steal a friggin' steal at 120k.

[PaCkFan_n_MD]

Man, I have been tring to catch up with this thread and read it all, but so far really great advice.

[Partial]

so, i've been running the idea of opening my own business in my mind, does anyone have any tips or books on how to form a solid business plan? I would much rather work for myself then anyone else!!

Problem is, I don't know what there is a huge need in in the milwaukee area!!

[MJZiggy]

Try the Small Business Administration. They have classes, etc. on what to do to get started and if it's the right choice for you.