Ok, so as I was waiting for ‘untitled bookstore' to open @ 10am , went across the street to Vessuvio Bakery and ordered a latte to go. (cost $4.10) The coffee was great but as I was sipping and waiting for the bookstore to open, I realized that I spend about 15 to 20 dollars daily on coffee alone.
That is about 300 dolares a month! ”¦of course that doesn't include the books I bought today, but that's a different story.
Any thoughts? How much you guys spend? Does it affect your overall budgets?
well...well...
I too was spending the same amount of "dolares" a month...my solution? I no longer buy $4.08+ Venti Latte's from *-bucks (of course, I couldn't go in there just once a day...I think they put some majic powder in their coffee to create a craving/withdrawal in the afternoon), I have been buying coffee from the hole-in-the wall deli next to the office for a buck and a quarter. Like you, when I looked at the monthly expense I realized I could buy another r/t ticket to Miami with the savings!
I have an espresso machine at home (ebay) and joined the espresso club at work (also an ebay machine) - dirt cheap caffeineation once amortized.
Our office is scheduled to move to a new building across a 4-lane suburban arterial from an existing starbucks - i'm sure we'll lose several people crossing that road.
make my own espresso at home before work. then i force down the folgers if i need to while at work. i am fortunate enough to live in a city that starbucks has only recently infiltrated, yes such cities exist. Down with $4 lattes! if you've ever been to Italy, you know that they run about 75 cents and are way better and of course better ambiance than the gobbledygook of bucks. what are you paying for - ? glad you came to your senses. hope you're not one of those that bitches about $2.00 for a GALLON of gas. those always seem to be the same people you know bitch at the pump, then run inside and buy $8 worth of pop, coffee, and candy that they take a bite out of and throw away. sorry, i got moved (motivated)
i don't drink lattes as black coffee is all i need. and the office pays for that habit.
but finding out your latte habits makes me not feel so bad for spending about the same amount of money monthly on alcohol.
Amen to the black coffee! every once and awhile I gotta splurge and walk a block to the Dunkin' Donuts though, but even the $1.30 I spend there isn't that bad compared to what some of you seem to be dropping for your fix.
As far as paying the same for alcohol, I've found that when about 60% of your friends are still straight edge, you don't have to worry about that too much...
Stark - I'm a big investor as well but it is tought when your are living of an architects income and are not married to a doctor. Getting back to the coffee, I kicked the habbit and managed to save the money but probably spend it all on booze. Lately I've been tracking all my expenses in Quicken. Wow, that has been an eye opener.
$4-5 every morning on my soy latte. It adds up, but it makes my life better, and I make up for it at lunch - all brown bagged and about $2 worth of food.
Stark - I like your plan, especially the part about marrying a dr!
WE HAVE ONE NOW AND ONE ON THE WAY IN DEC.
YES THAT WILL HURT THE SAVINGS.
BUT WE HAV BUDGETED FOR IT.
I WILL STILL MAX OUT MY 401K
BUT MY WIFE IS TAKING 6 MONTHS OFF.
WE SHALL SEE HOW MUCH WE CAN SAVE THEN.
KIDS WILL BE A TRUE TEST.
I'LL KEEP YOU POSTED.
"A" YOU MENTIONED QUICKEN THAT IS A VERY GOOD WAY TO
TRACK WHERE THE MONEY GOES.
HOW MANY ARCHITECTS HAVE A BUDGET OR EVEN KNOW WHAT ONE IS. I AM HELPING ONE OF MY FRIENDS OUT OF $26,000 DEBT, I DIDN'T GIVE HIM A DIME BUT I TAUGHT HIM HOW TO BUDGET. WHICH THINGS TO PAY OFF FIRST
HIS DEBT LOAD IS NOW DOWN TO 8,000 IN ONE YEAR. HE GAVE UP THE SMALL STUFF LIKE COFFEE, EATING OUT, AND GIFTS.
Yes, I created a budget not because I'm in huge debt but I imagine somtime sooner than later I'd like to settle down into home ownership and possibly even get married - gasp.
Most of my co-workers are idiots when it comes to budget and finances. When the guy from Fidelity was in to go over our 401k plan most people had to be taught how mutual funds work. Somewhere in our education system here in America we have falled short on econ & finance. I wouldn't be surprised if most architects live mostly paycheck to paycheck.
My wake up, with the help of Quicken, was seeing that I'm spending hundreds of $$ each month on dining out and on alcohol at the bars. I had thought all my money was going to traveling but that in fact was a minimal expese compared to the weekly martini and steak dinner. It truly is the small stuff that eats up all your cash flow.
I keep a few boxes of tea in my desk and my office has one of those hot water spouts on the water cooler so I just fill it up.
A tea box costs less than $3 for 20 bags. Each bag makes 2 cups of tea. I am tea drinking all day and not broke. Not broke. Not broke.
I also have instant apple cider, instant cocoa (with milk in the fridge on weeks I want cocoa), cup-o-noodle type things, instant miso soup, instant flavored coffee.. but mostly green tea.
I also have a jar of PB and some tinned salmon and tuna and some rice cakes.
School taught me the lesson of supplementing one's diet with nonperishable inexpensive instant food. OK, maybe the cocoa is kind of gross, but you can't really diss tea, PB, and rice cake. That's HEALTHY.
the wife and i spend about 3.50-4.50 a pound for green beans and roast our own. haven't really figured out the cost per day, but it is far cheaper (and fresher) than buying roasted bean or plunking down the change for a cup at coffee joint. i would guess that a pound lasts us, let's say two and a half weeks, so that would come out to about 6 cents a cup.
Stephanie –
We got a zach & dani’s roaster from some old friends/ former employer of my wife (they ran a coffee house and roasted in house) as a wedding gift. The one we have will run you about 100 dollars (about 1/3 of what Francisco spends per month). There are other roasters out there and I would suggest doing a little research on them if you are looking to buy. Ours gets us a little frustrated at times with its limited capacity, we’re often times roasting two batches back to back to get enough to last the week. This isn’t really a downside for us, but if you (your office) is in to flavored coffee or decaf (shudder), you definitely will have to do your research (for equipment and recipes/processes), as that type of coffee is a result of things done during roasting process and I’m not sure it is possible with home roasters
Take what ever Raise or Bouns you get and invest it.
Thus you live on the same amout you lived on the year before.
Example if your making 40,000 now and you get a 5% raise.
Take the $2,000 / 12 = 166.67 and invest it
into a small cap no load Mutual Fund every month.
You won't miss what you don't have.
Great discussion, finally some practical advance, Stark 3d you sound wise for a young man, coming from some one who's been around a while. Get rid of your student loans. Once you've paid them off continue to live as if you still were paying the loans and take the money and invest it.
Use the bank of grandma who may give you more favourable terms than a bank, so if you skip a payment they won't hammer you and pick it up next month.
I am not sure about the states but Canadian RRSP's ( akin to the 401K ) is tax debuctible and should be maxed out when possible as you will get money back which in turn at tax time can be reinvested and will be worth more down the road. Invest early in life. and have a plan set up that takes it out of your account without you having to write a cheque I have three kids under the age of nine who all have education savings accounts, and investment accounts that they will never know about. The investment acounts all have more money in them than what I paid for my first three cars combined.
Man I wish my Dad was a little more hip to early investing when I was young. Looking at their statements puts a real smile on my face when you know how happy they will be when they see that account years from now and the lack of financial stress I might have experienced once they all head off to college
I couldn't agree more with Whistler... this is a very useful & practical discussion. I too had to learn the hard way to be compatible with my finances after arc school. I always wish they taught us some financing & business classes in arc schools. So for those of us who want to start a small firm as young architects, would have the basic ideas how to handle the finance of the firm.
Tips from Stark3D are pretty much what I've been reading from books and magazines. I actually spread out my savings into 1) long term like 401K, 2) intermediate term such as CD accounts,and 3) immediate access accounts like Interest Savings. I too max out my 401K and save another percentage from my paychecks for emergency funds. Everything else (salary raise, bonuses, side jobs, etc) goes to my intermediate accounts. Of course it was really hard at first to be disciplined, but once you have the habit going, you will forget about that latte or capuccino. And you will realize that suddenly this little daily habit has giving you more freedom to do more things in life that you actually enjoy better.
I also recommend to get a financial advisor if you can. Some of them will make the first visit free, they will help you and force you to realize how much you are spending, and how much you can potentially save. You don't need to make a lot of money to see an advisor. The idea is to guide you with what you have and how you can expand financially depending on your goals.
I would avoid American Express Financial Advisors - they are way too aggressive and charge too much for their services.
I personally don't believe in the myth of "architects generally don't make money" or "architects are generally poor", or however people like to put it.
It is not all in the making, but mostly is in the planning. Also next time when you find yourself in a bookstore, instead of picking up another Monograph of a famous architect, try reading Harvard Business Review. It might make you look at Architecture differently.
Thank you Francisco for bringing up this subject of Architects and Finances.
One thing to note is that another option in addition or in lieu of the 401k is the Roth IRA. Max that out to the $3000 each year. It has to be funded with after tax money but when you turn 59 1/2 years you can take the money tax free. If you invest each year from age 25 or so with compounding intrest you could have a decent nest egg by your 60's.
My current employer doesn't offer a 401k so I'm limited to the Roth as well as non-retirement investing. DSPP or direct stock purchase plans are a good way to economically invest in some large blue chips without the expense and hassle of a broker. Many major companies offer those plans like GE, ExxonMobil, Altria, etc. My old rule of thumb was whatever I got back in my tax refund went 100% into the stock market.
The Only Investment Guide You'll Ever Need - a book by Andrew Tobias. It is entertaining and useful, will show you things you never knew about money like the investment return on buying a case of your favorite wine instead of by the bottle. There is a chapter about how you only become richer by saving your money, not making more. You get taxed on your income, especially overtime, and he mathematically explains how time and half is more like time (depending of course on your tax bracket).
But the language is oreinted to engage the person who doesn't like financial speak, and the stories and examples are real and funny, a book you can read and learn from and not cuss at.
I highly recommend it.
Are there any good books you guys could recommend on investing/finances for people who don't have and never plan on having children? I know there is stuff I am saving for such as purchasing a home and retirement. But I would like more info on how to pick & choose, as I don't intend to have any heirs. Like.. how to make sure those assets go to nonprofit organizations of choice, or if there is even any point to saving a lot other than providing for one's own comfort in this case.
The Wealthy Barber... a simple good humerous read using the 10% rule ( ie saving 10% of what you make and basic, basic investment advice) kind of like what your uncle would tell you. Pretty simplistic and can be read in a day but a place to start and then move on to better more professional advice.
I read it 15 yrs back just out of school. It was good just to get your head into the idea of savings and its importance even when I couldn't afford much to put aside.
for once this thread has turned into a good resource. I have my 401 maxed out + I rolled my old 401 into Roth with Morgan Stanley. After a long battle with "unsecured debt" (credit cards to you an me) I am at a point where all I have is my 70k @ 2.25% in student loans to pay over 25 yrs. Although I would love to pay it off ASAP, the financial Advisor from Morgan Stanley suggested that rather than pay the loans off quickly, use that money to invest. The return on that money will outweigh the interest payments (I have a low %) It kind of makes sense...any input on this STARK3D? Anyone?
After cutting the "Latte" spending out of my life, I find it kind of difficult to save any money. My "cushion" is not growing or shrinking, but it would be nice to get it up from 3 months to 6-8 months....just in case. Yes, I could cut down on the bi-weekly travels...and happy hours...digital cable w/dvr...etc...etc...but when does quality of life outweigh savings? how about enjoying every day to its fullest? some crazy F*ck can kill me tomorrow...
J3 - I believe the book by Andrew Tobias I mentioned a few posts up has a chapter on what to do if you have debt and still want to save and invest. I just got married to a guy who has some college debt, I will probably have to reread that chapter as I skimmed thru it last time cause I was debt-free. If I read anything anytime soon, I will post about it. I really do recommend this book, and I know it has been a best seller. I got it for X-mas two years ago and was leery about it. But one day I just sat down and read it and next thing you know I was quoting it, taking it to my friend's house and making them read parts etc. I read it in a day.
J3 - your financial advisor is correct on the student loan thing as long as your investments are growing more than 2.25% annually. Usually not too tough as the "historic" growth of the market is somewhere around 10%. Then again, there is a risk to everything, just like you could get killed tomorrow.
Just remember to balance all things in life. I once read that the #1 determinant of success in life is delayed gratification. So the Lexus might have to wait until you are 50ys. So what. If my meager pay has taught me one thing it is to learn to appreciate what I do have.
J3
Good point Some Debt is GOOD Debt some Debt is bad.
2.25% is great rate if it is a fixed rate.
If you had $70.000 would you pay that loan off.
The Answer is NO
Because you can make money with interest from
your investments than 2.25%.
My parents were not rich...,but they were NEVER in debt
and they had five kids.
My parents had No credit cards, No home loan,No Car loans
And No School loans and all five of us kids got our degrees.
Today this almost unthinkable with No kids.
But it can be manged.
I got lucky and belong to a Credit Union.
My loan on the house is a 10 year loan at 4.5% fixed. Fair Debt
We have the same problem I debate if should We pay it off early.
We hope to pay this of in 5 years. But then we loose a big Tax deduction and then we will have alot of money tied up in a house that
we would have to sell to get the money out of. More about house debt. Do not be fooled into these Interest Only Loans or even an adjustable 1% apr. Above Prime Rate loan with no money down. You will never ever pay off your home. And with the adjustible rate loans
you will get killed when the rates start to go up.
For the last 8 years we had no Car payments,
So We saved up before we bought our New Van. I know We should have bought a 2-3 year old Van. We only put down 1/2 because the rest is at 3.125%. Good debt.
Our Credit cards are at 9.9% BAD DEBT.
Thus we always pay them off at the end of the month.
Thus we really pay no intrest on them.
J3 for your second part Yes you can still have a Life even if you save.
A much better life because when you save you feel you have power over money not the other way around. I remember being 22-23 just out of school making good money. I spent more money on Drinks than any of you. But I was Broke. The only thing that saved me was I never had a credit card till I was 27-28. And The only reason I got a credit card then was I could not rent a car without one.
Thanks for the input.
In contrast to you, my first credit card was at age 17. By the time I was 24 I was 20k in the hole (close to 35 after late fees, and interest). It took me 6 years and a lot of anguish to pay that off. Now @ 31 I have only 1 card which like you is paid off at the end of every month.
My advice to the younger audience on Archinect is be very careful with credit card temptation when you first start school...
Overtime I have come to realize that those who are finanicially responsible and value a hard-earned dollar are so b/c 1) they were raised in working class families and witnessed it first-handed...or 2) those with parents who taught them to be responsible. I found your post interesting...b/c your parents sound like mine...and that's why I am who I am.
I'm 27 with less than 2 years of work experience. Obviously, b/c of our field...I do not make much money. But I have managed to limit myself to only buying "necessities" (which is hard, considering i'm female) and only once in a while do I treat myself to something nice. And since I have came to the realization that my job would never pay me enough to live as comfortably as I like, I have learned different ways to making the most of the savings I have (hint: real estate investing is ideal when you have the money...and just as nice when you have the knowledge and trust of family/friends who have more money than you to share the investment with).
My life is far from perfect at this moment considering that I do not solely own anything i deem valuable (other than my family and friends). But more important than what I have physically...is what I believe I can achieve down the road. I believe I (and anyone else for that matter) can be finanically comfortable w/o marrying a doctor (although I'm sure it wouldnt hurt) while pursuing our design careers. These are some pointers I have learned through the years (the hard way, unfortunately)....
1. Success is not accidental - it's planned. Shortly after Andrew Carnegie (one of the wealthies man in american history) died, they found in small piece of paper by his nightstand...and it read something to the effect of "I will spend half of my life making money, and the other half giving it away." Write your goals down ladies and gentleman - it's make a difference.
2. Believe in yourself. Most of us are not naturally confident...be we can learn to be by surrounding ourselves with loving people and various sources of inspiration - books, music, arts, etc...whatever moves you.
3. Befriend with those who are wiser than you. These are the best kind of lessons to obtain - and they're free!!
4. Success is not measured by what you have...but what you have overcomed...so expect to work hard. Someone had mentioned in an earlier posting that he could die the next day, so he wanted to enjoy life. I agree...but if he wants to get out of finanical debt...he has to find ways to enjoy life w/o the extra cash - everything is possible if you can learn to not make excuses.
5. This took me a long time to learn -It pays to be fair and honest..and be good to those around you. There's this stigma in our society that one must be a cheater to get ahead in life. Well, that's only partially true. Cheating gives one an early boost...but it also always ensures a heavy fall. Honesty instills a lifetime of trust and integrity.
A couple of clarifications:
1. Stark3D’s Numbers are a bit out of date: The maximum 401(k) contribution is $13k in 2004 and will increase to $14k in 2005.
2. 2004 IRA Contribution maximum: Traditional IRA + Roth IRA ≥ $3k
3. "A" recommended a Roth IRA if you don’t have access to a 401(k). Typically one should invest in a Traditional (not ROTH) IRA if his/her employer does not offer a 401(k). Investing in a Roth IRA after you have maxxed out your 401(k) is great.
BOTH Traditional IRA and 401(k) contributions reduce your taxable income. This means that you pay less in taxes in April. A Roth does not (though you pay no taxes when you withdraw you money).
The decision of a Roth IRA vs. Traditional IRA boils down to this: are you willing to BET that the tax rates will be LOWER when you retire at 59.5 than they are NOW?
If you are willing to take that bet, forego today’s tax savings for an unknown, perhaps even loss (if taxes are higher) in perhaps as many as 33 years (if you are 26 today). If you are not willing to take that bet, invest in a 401(k) or traditional IRA.
For literature, I recommend "investing for dummies" because it covers all the big bases. Sure, you feel like a dumbass buying it or checking it out of the library (free), but you will learn a lot.
Your are Right it is $13,000 Max for the 401k this Year Johnny Thanks
Yes Also on question 2 If you don't have a 401K My Accountant
recommends to do The Traditional IRA because of tax laws right now.
Great input.
Maybe this is what Frank and Loius were talking about.
Less cars,boats,houses,debt,toys or anything that we do not need to survive = less to worry about.
We do not have to live in tents or walk to work.
But when you simplify your life, you will see you enhance your life.
For the next three months try to cut out what you do not need
in this world to survive.
This could mean No Cable TV.
No eating out. No Drinking booze. No strip Clubs.
God think of the money you'll save.
I would say No Hi Speed Internet.
But that’s crazy talk.
Simplify or Die in a Complex Web of Debt you have made.
buy gourmet beans of coffee freshly roasted,
hand grind them early in the morning,
pour seriously boiling water into a french press,
enjoy the best brew you've ever had,
$5 = 2 weeks of seriously good coffee
since the max i can put into an ira ...traditional for me i'm pretty
sure...is 3k..where can i put more money? i don't really want to
put it into stock necessarily..but i do have a mutual fund...it's just
not earning any money right now...i'm considering moving it..but
i'm not sure to where...i think it has about 13k in it right now..i have
about 16-20k to invest...i was going to put 1.5k to 2k into the ira
right now...just to make sure i have enough saved for when i need
to pay taxes..i'm an independant consultant...
plus just as a question...i'm paying taxes quarterly...how much
should i expect to pay on 65k? or so...and how much would you
put away monthly as a percentage for taxes?
thanks for any info
plus...why is the contribution gap so great for ira's and 401k's?
seems like i.c's get screwed...
here's an 8-step plan to make you never want coffee again: It worked for me!
1.Drink your latte... about an hour later--
2.Get drunk
3.Go to casino
4.Buy a foot-long cigar
5.Smoke it
6.Lose all your money
7.Become unbelievably nausious (sp?)
8.Puke up latte.
I oversimplified the decision between a Traditional and Roth IRA.
To keep it simple, don't invest in a Roth IRA until you have maxed out your 401(k). The max one can defer to a 401(k) in 2004 is $13k. In 2005 that max will be $14k.
See I'm lucky... sort of. While I'm in school racking up my house sized debt, I can't drink coffee. Hot caffeine makes me sick (odd, not cold, probably because heat increases the rate of chemical reactions). So I save money on coffees (a mocha would be like $10 if you figure in loan interest), but I'm tired all the time.
Good Questions
Beg your company to start a 401k program.
My wife's practice did not have a plan.
So I did all the work for them. Now they have a 401k plan.
No match but its tax free investing.
This is your best way to get tax free savings.
DISCLAIMER:Before you invest see your tax advisor or an accountant.
Keep your money where it is unless you need it.
Best trick is to buy and hold and to keep adding to your investments over time.
If You have 15 to 20 K. I'd advise NOT to buy one single stock.
Keep investing in mutal funds, Index funds or no-load mutal funds. Then buy some bond funds when the interest rate go over 6%.
Keep the number of funds you invest in low 5 or 6 MAX.
It is a pain to keep track of all these funds and the paper work.
Start Slow 50 to 100 a month in to each one. Do this for 30 years
And be sure to put me in your Will.
Today roughly 24 percent of personal expenditures in this country are made with credit and debit cards.
Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts.
Banks would not lend to them; they rented their homes and if they did own a house, it was paid for as it was being built.
A typical credit card purchase ends up costing 112 percent more than if cash were used.
A $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) -- if only 2 percent minimum payments are made.
Some 40 percent of American families annually spend more than they earn.
About 60 percent of active credit card accounts are not paid off monthly.
Average credit card debt among all American households is $8,400.
Average card debt among people who have at least one card is $9,205 -- triple what it was in 1990.
Average personal wealth of a 50-year-old American, including home equity: less than $40,000.
A typical American family today pays about $1,200 annually in credit card interest.
The average interest rate on credit cards is 18.9 percent.
Last year the credit card industry took in $43 billion in card fees.
But 47 percent would refuse to tell a friend how much they owe.
Twenty-three percent of Americans admit to maxing out a credit card.
Eleven percent of Americans admit card debts went to collection.
Latte finances
Ok, so as I was waiting for ‘untitled bookstore' to open @ 10am , went across the street to Vessuvio Bakery and ordered a latte to go. (cost $4.10) The coffee was great but as I was sipping and waiting for the bookstore to open, I realized that I spend about 15 to 20 dollars daily on coffee alone.
That is about 300 dolares a month! ”¦of course that doesn't include the books I bought today, but that's a different story.
Any thoughts? How much you guys spend? Does it affect your overall budgets?
well...well...
I too was spending the same amount of "dolares" a month...my solution? I no longer buy $4.08+ Venti Latte's from *-bucks (of course, I couldn't go in there just once a day...I think they put some majic powder in their coffee to create a craving/withdrawal in the afternoon), I have been buying coffee from the hole-in-the wall deli next to the office for a buck and a quarter. Like you, when I looked at the monthly expense I realized I could buy another r/t ticket to Miami with the savings!
I have an espresso machine at home (ebay) and joined the espresso club at work (also an ebay machine) - dirt cheap caffeineation once amortized.
Our office is scheduled to move to a new building across a 4-lane suburban arterial from an existing starbucks - i'm sure we'll lose several people crossing that road.
make my own espresso at home before work. then i force down the folgers if i need to while at work. i am fortunate enough to live in a city that starbucks has only recently infiltrated, yes such cities exist. Down with $4 lattes! if you've ever been to Italy, you know that they run about 75 cents and are way better and of course better ambiance than the gobbledygook of bucks. what are you paying for - ? glad you came to your senses. hope you're not one of those that bitches about $2.00 for a GALLON of gas. those always seem to be the same people you know bitch at the pump, then run inside and buy $8 worth of pop, coffee, and candy that they take a bite out of and throw away. sorry, i got moved (motivated)
This reminds me of the new Toyota pickup commercial that ends with a statement something like: for less than the cost of 3 mocha soy latte's a day...
Kick the habbit and get yer'self and urban assault vehical...
i don't drink lattes as black coffee is all i need. and the office pays for that habit.
but finding out your latte habits makes me not feel so bad for spending about the same amount of money monthly on alcohol.
You are only Worth what you Save.
Here.., I'm make you all Rich.
I try to save 50% of our take home income.
If your married both of you need to max out your
401k 11,500 each
+
Roth IRA 3,000
= $29,000 So far a year
Then add 3 Mutal Fund
250 a month into each one
= 9,000
38,000 saved for the year
It is hard to do but if I cando, you can too.
In ten years this adds up to 570,000
In 25 years over 1.2 million
All my side jobs go to mutal funds.
I have over 14 Now
It can be done.
Stock options help too.
If all else fails marry a Doctor
I did.
if you have money it is easy to save money. it is a cycle.
Stark - how can you and your spouse save that much? you live in a tent and eat tuna?
Amen to the black coffee! every once and awhile I gotta splurge and walk a block to the Dunkin' Donuts though, but even the $1.30 I spend there isn't that bad compared to what some of you seem to be dropping for your fix.
As far as paying the same for alcohol, I've found that when about 60% of your friends are still straight edge, you don't have to worry about that too much...
i don't do coffee, alcohol, or Southern Baptist. and i've never cut myself with an Xacto knife.
No we live in a gated Community.
We do not eat out that much.
We are both savers That the key.
I want a Viper but that nuts to spend 90,000 on a car.
Stark - I'm a big investor as well but it is tought when your are living of an architects income and are not married to a doctor. Getting back to the coffee, I kicked the habbit and managed to save the money but probably spend it all on booze. Lately I've been tracking all my expenses in Quicken. Wow, that has been an eye opener.
$4-5 every morning on my soy latte. It adds up, but it makes my life better, and I make up for it at lunch - all brown bagged and about $2 worth of food.
Stark - I like your plan, especially the part about marrying a dr!
STARK3D - do you have kids?
WE HAVE ONE NOW AND ONE ON THE WAY IN DEC.
YES THAT WILL HURT THE SAVINGS.
BUT WE HAV BUDGETED FOR IT.
I WILL STILL MAX OUT MY 401K
BUT MY WIFE IS TAKING 6 MONTHS OFF.
WE SHALL SEE HOW MUCH WE CAN SAVE THEN.
KIDS WILL BE A TRUE TEST.
I'LL KEEP YOU POSTED.
"A" YOU MENTIONED QUICKEN THAT IS A VERY GOOD WAY TO
TRACK WHERE THE MONEY GOES.
HOW MANY ARCHITECTS HAVE A BUDGET OR EVEN KNOW WHAT ONE IS. I AM HELPING ONE OF MY FRIENDS OUT OF $26,000 DEBT, I DIDN'T GIVE HIM A DIME BUT I TAUGHT HIM HOW TO BUDGET. WHICH THINGS TO PAY OFF FIRST
HIS DEBT LOAD IS NOW DOWN TO 8,000 IN ONE YEAR. HE GAVE UP THE SMALL STUFF LIKE COFFEE, EATING OUT, AND GIFTS.
Yes, I created a budget not because I'm in huge debt but I imagine somtime sooner than later I'd like to settle down into home ownership and possibly even get married - gasp.
Most of my co-workers are idiots when it comes to budget and finances. When the guy from Fidelity was in to go over our 401k plan most people had to be taught how mutual funds work. Somewhere in our education system here in America we have falled short on econ & finance. I wouldn't be surprised if most architects live mostly paycheck to paycheck.
My wake up, with the help of Quicken, was seeing that I'm spending hundreds of $$ each month on dining out and on alcohol at the bars. I had thought all my money was going to traveling but that in fact was a minimal expese compared to the weekly martini and steak dinner. It truly is the small stuff that eats up all your cash flow.
just to make you all jealous
WE HAVE FREE STARBUCKS COFFEE AT OUR FIRM =P
i've got other vices to take coffee's place... 900 numbers, copenhagen.. new glarius spotted cow..
anyone else have good investment tips?
Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.
I keep a few boxes of tea in my desk and my office has one of those hot water spouts on the water cooler so I just fill it up.
A tea box costs less than $3 for 20 bags. Each bag makes 2 cups of tea. I am tea drinking all day and not broke. Not broke. Not broke.
I also have instant apple cider, instant cocoa (with milk in the fridge on weeks I want cocoa), cup-o-noodle type things, instant miso soup, instant flavored coffee.. but mostly green tea.
I also have a jar of PB and some tinned salmon and tuna and some rice cakes.
School taught me the lesson of supplementing one's diet with nonperishable inexpensive instant food. OK, maybe the cocoa is kind of gross, but you can't really diss tea, PB, and rice cake. That's HEALTHY.
the wife and i spend about 3.50-4.50 a pound for green beans and roast our own. haven't really figured out the cost per day, but it is far cheaper (and fresher) than buying roasted bean or plunking down the change for a cup at coffee joint. i would guess that a pound lasts us, let's say two and a half weeks, so that would come out to about 6 cents a cup.
how much does it cost you to roast your beans? did you build your roaster? i am very interested in this idea! our office needs a roaster!
Stephanie –
We got a zach & dani’s roaster from some old friends/ former employer of my wife (they ran a coffee house and roasted in house) as a wedding gift. The one we have will run you about 100 dollars (about 1/3 of what Francisco spends per month). There are other roasters out there and I would suggest doing a little research on them if you are looking to buy. Ours gets us a little frustrated at times with its limited capacity, we’re often times roasting two batches back to back to get enough to last the week. This isn’t really a downside for us, but if you (your office) is in to flavored coffee or decaf (shudder), you definitely will have to do your research (for equipment and recipes/processes), as that type of coffee is a result of things done during roasting process and I’m not sure it is possible with home roasters
Check out sweet maria’s for a good introduction to roasting your own.
Ok Saving Tip of the Week
Take what ever Raise or Bouns you get and invest it.
Thus you live on the same amout you lived on the year before.
Example if your making 40,000 now and you get a 5% raise.
Take the $2,000 / 12 = 166.67 and invest it
into a small cap no load Mutual Fund every month.
You won't miss what you don't have.
Great discussion, finally some practical advance, Stark 3d you sound wise for a young man, coming from some one who's been around a while. Get rid of your student loans. Once you've paid them off continue to live as if you still were paying the loans and take the money and invest it.
Use the bank of grandma who may give you more favourable terms than a bank, so if you skip a payment they won't hammer you and pick it up next month.
I am not sure about the states but Canadian RRSP's ( akin to the 401K ) is tax debuctible and should be maxed out when possible as you will get money back which in turn at tax time can be reinvested and will be worth more down the road. Invest early in life. and have a plan set up that takes it out of your account without you having to write a cheque I have three kids under the age of nine who all have education savings accounts, and investment accounts that they will never know about. The investment acounts all have more money in them than what I paid for my first three cars combined.
Man I wish my Dad was a little more hip to early investing when I was young. Looking at their statements puts a real smile on my face when you know how happy they will be when they see that account years from now and the lack of financial stress I might have experienced once they all head off to college
I couldn't agree more with Whistler... this is a very useful & practical discussion. I too had to learn the hard way to be compatible with my finances after arc school. I always wish they taught us some financing & business classes in arc schools. So for those of us who want to start a small firm as young architects, would have the basic ideas how to handle the finance of the firm.
Tips from Stark3D are pretty much what I've been reading from books and magazines. I actually spread out my savings into 1) long term like 401K, 2) intermediate term such as CD accounts,and 3) immediate access accounts like Interest Savings. I too max out my 401K and save another percentage from my paychecks for emergency funds. Everything else (salary raise, bonuses, side jobs, etc) goes to my intermediate accounts. Of course it was really hard at first to be disciplined, but once you have the habit going, you will forget about that latte or capuccino. And you will realize that suddenly this little daily habit has giving you more freedom to do more things in life that you actually enjoy better.
I also recommend to get a financial advisor if you can. Some of them will make the first visit free, they will help you and force you to realize how much you are spending, and how much you can potentially save. You don't need to make a lot of money to see an advisor. The idea is to guide you with what you have and how you can expand financially depending on your goals.
I would avoid American Express Financial Advisors - they are way too aggressive and charge too much for their services.
I personally don't believe in the myth of "architects generally don't make money" or "architects are generally poor", or however people like to put it.
It is not all in the making, but mostly is in the planning. Also next time when you find yourself in a bookstore, instead of picking up another Monograph of a famous architect, try reading Harvard Business Review. It might make you look at Architecture differently.
Thank you Francisco for bringing up this subject of Architects and Finances.
One thing to note is that another option in addition or in lieu of the 401k is the Roth IRA. Max that out to the $3000 each year. It has to be funded with after tax money but when you turn 59 1/2 years you can take the money tax free. If you invest each year from age 25 or so with compounding intrest you could have a decent nest egg by your 60's.
My current employer doesn't offer a 401k so I'm limited to the Roth as well as non-retirement investing. DSPP or direct stock purchase plans are a good way to economically invest in some large blue chips without the expense and hassle of a broker. Many major companies offer those plans like GE, ExxonMobil, Altria, etc. My old rule of thumb was whatever I got back in my tax refund went 100% into the stock market.
The Only Investment Guide You'll Ever Need - a book by Andrew Tobias. It is entertaining and useful, will show you things you never knew about money like the investment return on buying a case of your favorite wine instead of by the bottle. There is a chapter about how you only become richer by saving your money, not making more. You get taxed on your income, especially overtime, and he mathematically explains how time and half is more like time (depending of course on your tax bracket).
But the language is oreinted to engage the person who doesn't like financial speak, and the stories and examples are real and funny, a book you can read and learn from and not cuss at.
I highly recommend it.
While we're on the topic..
Are there any good books you guys could recommend on investing/finances for people who don't have and never plan on having children? I know there is stuff I am saving for such as purchasing a home and retirement. But I would like more info on how to pick & choose, as I don't intend to have any heirs. Like.. how to make sure those assets go to nonprofit organizations of choice, or if there is even any point to saving a lot other than providing for one's own comfort in this case.
I heard that there is a book out by the founder of Starbucks about how to become a millionaire...dont spend $$$ on Starbucks
Buy a bottle of NoDoz and drink tap water.
The Wealthy Barber... a simple good humerous read using the 10% rule ( ie saving 10% of what you make and basic, basic investment advice) kind of like what your uncle would tell you. Pretty simplistic and can be read in a day but a place to start and then move on to better more professional advice.
I read it 15 yrs back just out of school. It was good just to get your head into the idea of savings and its importance even when I couldn't afford much to put aside.
for once this thread has turned into a good resource. I have my 401 maxed out + I rolled my old 401 into Roth with Morgan Stanley. After a long battle with "unsecured debt" (credit cards to you an me) I am at a point where all I have is my 70k @ 2.25% in student loans to pay over 25 yrs. Although I would love to pay it off ASAP, the financial Advisor from Morgan Stanley suggested that rather than pay the loans off quickly, use that money to invest. The return on that money will outweigh the interest payments (I have a low %) It kind of makes sense...any input on this STARK3D? Anyone?
After cutting the "Latte" spending out of my life, I find it kind of difficult to save any money. My "cushion" is not growing or shrinking, but it would be nice to get it up from 3 months to 6-8 months....just in case. Yes, I could cut down on the bi-weekly travels...and happy hours...digital cable w/dvr...etc...etc...but when does quality of life outweigh savings? how about enjoying every day to its fullest? some crazy F*ck can kill me tomorrow...
J3 - I believe the book by Andrew Tobias I mentioned a few posts up has a chapter on what to do if you have debt and still want to save and invest. I just got married to a guy who has some college debt, I will probably have to reread that chapter as I skimmed thru it last time cause I was debt-free. If I read anything anytime soon, I will post about it. I really do recommend this book, and I know it has been a best seller. I got it for X-mas two years ago and was leery about it. But one day I just sat down and read it and next thing you know I was quoting it, taking it to my friend's house and making them read parts etc. I read it in a day.
J3 - your financial advisor is correct on the student loan thing as long as your investments are growing more than 2.25% annually. Usually not too tough as the "historic" growth of the market is somewhere around 10%. Then again, there is a risk to everything, just like you could get killed tomorrow.
Just remember to balance all things in life. I once read that the #1 determinant of success in life is delayed gratification. So the Lexus might have to wait until you are 50ys. So what. If my meager pay has taught me one thing it is to learn to appreciate what I do have.
J3
Good point Some Debt is GOOD Debt some Debt is bad.
2.25% is great rate if it is a fixed rate.
If you had $70.000 would you pay that loan off.
The Answer is NO
Because you can make money with interest from
your investments than 2.25%.
My parents were not rich...,but they were NEVER in debt
and they had five kids.
My parents had No credit cards, No home loan,No Car loans
And No School loans and all five of us kids got our degrees.
Today this almost unthinkable with No kids.
But it can be manged.
I got lucky and belong to a Credit Union.
My loan on the house is a 10 year loan at 4.5% fixed. Fair Debt
We have the same problem I debate if should We pay it off early.
We hope to pay this of in 5 years. But then we loose a big Tax deduction and then we will have alot of money tied up in a house that
we would have to sell to get the money out of. More about house debt. Do not be fooled into these Interest Only Loans or even an adjustable 1% apr. Above Prime Rate loan with no money down. You will never ever pay off your home. And with the adjustible rate loans
you will get killed when the rates start to go up.
For the last 8 years we had no Car payments,
So We saved up before we bought our New Van. I know We should have bought a 2-3 year old Van. We only put down 1/2 because the rest is at 3.125%. Good debt.
Our Credit cards are at 9.9% BAD DEBT.
Thus we always pay them off at the end of the month.
Thus we really pay no intrest on them.
J3 for your second part Yes you can still have a Life even if you save.
A much better life because when you save you feel you have power over money not the other way around. I remember being 22-23 just out of school making good money. I spent more money on Drinks than any of you. But I was Broke. The only thing that saved me was I never had a credit card till I was 27-28. And The only reason I got a credit card then was I could not rent a car without one.
Thanks for the input.
In contrast to you, my first credit card was at age 17. By the time I was 24 I was 20k in the hole (close to 35 after late fees, and interest). It took me 6 years and a lot of anguish to pay that off. Now @ 31 I have only 1 card which like you is paid off at the end of every month.
My advice to the younger audience on Archinect is be very careful with credit card temptation when you first start school...
Stark3D:
Overtime I have come to realize that those who are finanicially responsible and value a hard-earned dollar are so b/c 1) they were raised in working class families and witnessed it first-handed...or 2) those with parents who taught them to be responsible. I found your post interesting...b/c your parents sound like mine...and that's why I am who I am.
I'm 27 with less than 2 years of work experience. Obviously, b/c of our field...I do not make much money. But I have managed to limit myself to only buying "necessities" (which is hard, considering i'm female) and only once in a while do I treat myself to something nice. And since I have came to the realization that my job would never pay me enough to live as comfortably as I like, I have learned different ways to making the most of the savings I have (hint: real estate investing is ideal when you have the money...and just as nice when you have the knowledge and trust of family/friends who have more money than you to share the investment with).
My life is far from perfect at this moment considering that I do not solely own anything i deem valuable (other than my family and friends). But more important than what I have physically...is what I believe I can achieve down the road. I believe I (and anyone else for that matter) can be finanically comfortable w/o marrying a doctor (although I'm sure it wouldnt hurt) while pursuing our design careers. These are some pointers I have learned through the years (the hard way, unfortunately)....
1. Success is not accidental - it's planned. Shortly after Andrew Carnegie (one of the wealthies man in american history) died, they found in small piece of paper by his nightstand...and it read something to the effect of "I will spend half of my life making money, and the other half giving it away." Write your goals down ladies and gentleman - it's make a difference.
2. Believe in yourself. Most of us are not naturally confident...be we can learn to be by surrounding ourselves with loving people and various sources of inspiration - books, music, arts, etc...whatever moves you.
3. Befriend with those who are wiser than you. These are the best kind of lessons to obtain - and they're free!!
4. Success is not measured by what you have...but what you have overcomed...so expect to work hard. Someone had mentioned in an earlier posting that he could die the next day, so he wanted to enjoy life. I agree...but if he wants to get out of finanical debt...he has to find ways to enjoy life w/o the extra cash - everything is possible if you can learn to not make excuses.
5. This took me a long time to learn -It pays to be fair and honest..and be good to those around you. There's this stigma in our society that one must be a cheater to get ahead in life. Well, that's only partially true. Cheating gives one an early boost...but it also always ensures a heavy fall. Honesty instills a lifetime of trust and integrity.
6. Anything that is worthwhile requires patience.
Just my 2 cents.
A couple of clarifications:
1. Stark3D’s Numbers are a bit out of date: The maximum 401(k) contribution is $13k in 2004 and will increase to $14k in 2005.
2. 2004 IRA Contribution maximum: Traditional IRA + Roth IRA ≥ $3k
3. "A" recommended a Roth IRA if you don’t have access to a 401(k). Typically one should invest in a Traditional (not ROTH) IRA if his/her employer does not offer a 401(k). Investing in a Roth IRA after you have maxxed out your 401(k) is great.
BOTH Traditional IRA and 401(k) contributions reduce your taxable income. This means that you pay less in taxes in April. A Roth does not (though you pay no taxes when you withdraw you money).
The decision of a Roth IRA vs. Traditional IRA boils down to this: are you willing to BET that the tax rates will be LOWER when you retire at 59.5 than they are NOW?
If you are willing to take that bet, forego today’s tax savings for an unknown, perhaps even loss (if taxes are higher) in perhaps as many as 33 years (if you are 26 today). If you are not willing to take that bet, invest in a 401(k) or traditional IRA.
For literature, I recommend "investing for dummies" because it covers all the big bases. Sure, you feel like a dumbass buying it or checking it out of the library (free), but you will learn a lot.
As far as hot stock tips, I recommend investing in the peace dividend: http://www.commondreams.org/headlines03/0522-01.htm
Your are Right it is $13,000 Max for the 401k this Year Johnny Thanks
Yes Also on question 2 If you don't have a 401K My Accountant
recommends to do The Traditional IRA because of tax laws right now.
Great input.
Remember: You are only Worth What you Save.
Tip of the Week.
Less is More.
Maybe this is what Frank and Loius were talking about.
Less cars,boats,houses,debt,toys or anything that we do not need to survive = less to worry about.
We do not have to live in tents or walk to work.
But when you simplify your life, you will see you enhance your life.
For the next three months try to cut out what you do not need
in this world to survive.
This could mean No Cable TV.
No eating out. No Drinking booze. No strip Clubs.
God think of the money you'll save.
I would say No Hi Speed Internet.
But that’s crazy talk.
Simplify or Die in a Complex Web of Debt you have made.
Screw cable TV. I put some rabbit ears on my television and now tune in MTV2 quite well. Go figure.
No cable TV here. Can't work without a cable modem, though.
Yeah, the 'less' thing is what killed FLW's prefab/mass production ideas. God forbid Americans have to get rid of some of their junk!
I can do without eating out, but no booze or strip clubs??
Order the BEST by the case! You won't be sorry.
http://www.cafebritt.com/
buy gourmet beans of coffee freshly roasted,
hand grind them early in the morning,
pour seriously boiling water into a french press,
enjoy the best brew you've ever had,
$5 = 2 weeks of seriously good coffee
question stark and others providing advise...
since the max i can put into an ira ...traditional for me i'm pretty
sure...is 3k..where can i put more money? i don't really want to
put it into stock necessarily..but i do have a mutual fund...it's just
not earning any money right now...i'm considering moving it..but
i'm not sure to where...i think it has about 13k in it right now..i have
about 16-20k to invest...i was going to put 1.5k to 2k into the ira
right now...just to make sure i have enough saved for when i need
to pay taxes..i'm an independant consultant...
plus just as a question...i'm paying taxes quarterly...how much
should i expect to pay on 65k? or so...and how much would you
put away monthly as a percentage for taxes?
thanks for any info
plus...why is the contribution gap so great for ira's and 401k's?
seems like i.c's get screwed...
here's an 8-step plan to make you never want coffee again: It worked for me!
1.Drink your latte... about an hour later--
2.Get drunk
3.Go to casino
4.Buy a foot-long cigar
5.Smoke it
6.Lose all your money
7.Become unbelievably nausious (sp?)
8.Puke up latte.
...the power of association
Correction (to my own posting):
I oversimplified the decision between a Traditional and Roth IRA.
To keep it simple, don't invest in a Roth IRA until you have maxed out your 401(k). The max one can defer to a 401(k) in 2004 is $13k. In 2005 that max will be $14k.
See I'm lucky... sort of. While I'm in school racking up my house sized debt, I can't drink coffee. Hot caffeine makes me sick (odd, not cold, probably because heat increases the rate of chemical reactions). So I save money on coffees (a mocha would be like $10 if you figure in loan interest), but I'm tired all the time.
larslarson
Good Questions
Beg your company to start a 401k program.
My wife's practice did not have a plan.
So I did all the work for them. Now they have a 401k plan.
No match but its tax free investing.
This is your best way to get tax free savings.
DISCLAIMER:Before you invest see your tax advisor or an accountant.
Keep your money where it is unless you need it.
Best trick is to buy and hold and to keep adding to your investments over time.
If You have 15 to 20 K. I'd advise NOT to buy one single stock.
Keep investing in mutal funds, Index funds or no-load mutal funds. Then buy some bond funds when the interest rate go over 6%.
Keep the number of funds you invest in low 5 or 6 MAX.
It is a pain to keep track of all these funds and the paper work.
Start Slow 50 to 100 a month in to each one. Do this for 30 years
And be sure to put me in your Will.
We owe We owe so its off to work you go.
Today roughly 24 percent of personal expenditures in this country are made with credit and debit cards.
Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts.
Banks would not lend to them; they rented their homes and if they did own a house, it was paid for as it was being built.
A typical credit card purchase ends up costing 112 percent more than if cash were used.
A $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) -- if only 2 percent minimum payments are made.
Some 40 percent of American families annually spend more than they earn.
About 60 percent of active credit card accounts are not paid off monthly.
Average credit card debt among all American households is $8,400.
Average card debt among people who have at least one card is $9,205 -- triple what it was in 1990.
Average personal wealth of a 50-year-old American, including home equity: less than $40,000.
A typical American family today pays about $1,200 annually in credit card interest.
The average interest rate on credit cards is 18.9 percent.
Last year the credit card industry took in $43 billion in card fees.
But 47 percent would refuse to tell a friend how much they owe.
Twenty-three percent of Americans admit to maxing out a credit card.
Eleven percent of Americans admit card debts went to collection.
Ok go home and cut up the cards right now.
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