Building wealth?

[watsoninc]

We're debt free except for the mortgage (have been for 1.5 years), have a fully-funded emergency fund, & other funds. We still have so many financial goals to hit before we retire, but we're still in our twenties. We try to enjoy everyday but are conscientious about our plans for the future. The answer is relative to what it takes to make you feel comfortable. For example, we know we are better off than we were say 4 years ago but are still a long for the day were we can write a $50,000 check for a cause we support and think nothing of it.

[EEinNJ]

LAL, by the time you get to the status you describe, you may find your priorities or situation have changed. When you get to that point depends on how much you make and how far "below your means" you live.

[LivingAlmostLarge]

Good point EE. What sort of change in priorities and situation?

[jIM_Ohio]

Good point EE. What sort of change in priorities and situation?

I wondering, when do you stop playing catch up and start living? I mean in the sense, where you only have mortgage debt, and are debt free otherwise? And are satisfied with saving for retirement, sinking funds, and are able to save for luxuries like vacations, home repairs, newer cars, college, etc and then still have money left over? I guess when you are saving for everything and have nothing left to "save" for, but can buy anything. And that left over money can be invested?


When do you reach that point? I sort of feel like we won't get there for another 5 years at least, so mid to late 30s at the earliest. That we really have a lot of pots of money/savings to fill before we can really get to building wealth. I'm not sure if this is typical or not.

I doubt too many people which are not multi millionaires (billionaires?) ever reach the point where they can buy anything they want.

What changes is how you mentally view your own situation. Its not the money which necessarily drives the change. Might be kids. Might be finances. Might be cash flow. Might be a death of a close friend or family member.

For example, you might set short term goals, in my case, by the time I am 40, I expect my 2nd mortgage to be paid off, be able to pay cash for any car we want, and be taking 2-3 significant vacations per year.

That does not mean I have no house to live in now, that does not mean I do not take 2-3 vacations per year now, that does not mean I have no cars now.

You should always live, as tomorrow is not a guarantee. If you are saving every last penny in an effort to "get ahead", you might be skipping out on a much needed vacation (or two or three).

I bet lots of people here on this board paid cash for cars before they were 30, and yet for me its a goal to do that by time I am 40. Because some people did this 10 years in life before me does not make one better or worse than the other person. Every person on this board has been dealt their own hand by the powers that be, and that is the only hand you can play.

Here is my suggestion- you have to have faith that what you are doing is what is right for you. Meaning spending less than you earn, saving X% for retirement, an emergency fund of $Y and a budget which allows you to spend $Z each month and 12*$Z every year.

Right now our vacations are simple-
we have an annual wine tasting trip to NY which costs us about $200 for 3 nights, plus another $100 for food. We buy around $1000 of wine, that is discretionary, and gas is another $200 for the weekend maybe. No kids, which is the best part. So we know our fixed costs for weekend are $500 and the wine is whatever we can afford to save/spend based on how that year and that budget turned out.
In the future, we know of bigger trips we want- Disney world, sea world, NYC, Chicago, Boston, Philadelphia, Wash DC and more- all with kids (probably). So the trips get more expensive, and the destinations and attractions will be more pricey. Those trips wait until kids are old enough to remember them and also wait until some larger items in the budget go away (like $1500 of car payments and 2nd mortgage payments).

You know when its right for your situation to spend more money on something. If it does not feel right, decide what will feel right. For example, take a small vacation, and spend some money doing it. Afterwards decide if the amount seemed right based on what you did. You will then know what is small for you, and what amount you might want to budget for in the future for a larger vacation.

[Beppington]

You know when its right for your situation to spend more money on something. If it does not feel right, decide what will feel right.

Or call in on the "Can I Afford It?" segment on The Suze Orman Show!!! I love that show!!

[LivingAlmostLarge]

Jim, really interesting points to think about. I will likely join you in the paying cash for a car at 40 club. I doubt we'll be doing it anytime soon.

[reptile411]

I wondering, when do you stop playing catch up and start living? I mean in the sense, where you only have mortgage debt, and are debt free otherwise? And are satisfied with saving for retirement, sinking funds, and are able to save for luxuries like vacations, home repairs, newer cars, college, etc and then still have money left over? I guess when you are saving for everything and have nothing left to "save" for, but can buy anything. And that left over money can be invested?


When do you reach that point? I sort of feel like we won't get there for another 5 years at least, so mid to late 30s at the earliest. That we really have a lot of pots of money/savings to fill before we can really get to building wealth. I'm not sure if this is typical or not.

We did it at 30yo. We do have a mortgage. We purchased out house in November 08 and we still do finance 2 cars however. Our house payment plus the 2 car payments only run up $1,653 total per month and our household income hovers around 5K per month. We normally splurge and through away about 1K per month which leaves about 2K for savings after paying other bills. The only time we ever played catch up was several years ago when both my daughter and I had some health problems and racked up some pretty big bills. I was to young or dumb or immature to care so a good deal of them I didn't even try to pay. When it came time to buy our house it also came time to answer those old demons. There were many a month that we barley even broke even trying to pay them all off to get our house. Other than that we have always been fairly fortunate when it comes to finances.

[Broken Arrow]

Every person on this board has been dealt their own hand by the powers that be, and that is the only hand you can play.

I absolutely agree with this! Reminds me of one of my favorite quotes:

"The game of life is not so much in holding a good hand as playing a poor hand well." -H. T. Leslie.