One of the things that I find eye-opening about this tumultuous stock market is that it is in this market situation that bad habits of investing come up. A lot become panicky and emotional. There are valid reasons for that. But in general, I've come to realize to the fact that emotions when mixed with investing may result in a bad investment love.
What else do you guys consider as bad investing habits of people
Nice blog, you've covered the big ones. Ie, don't panic, just accumulate, add incrementally (monthly), and wait. That's how my 401k made it to a million.
As for over-spending on the small stuff - I don't attach nearly as much importance to it as others do. Reusing baggies, buying in bulk, skipping lattes, etc - that might save a $3K or $5k per year - that is 'small" compared to the Big Two - cars & shelter. If you have a McMansion at $36,000/yr and a pair of late model cars at $16k per year, cutting your $2k/yr latte habit is not going to be a life-changer. If you direct your income stream to it's "highest and best use" you can be both rich and have fun on a limited income.
If a young couple prioritizes and invests $10k/yr, EVERY year, at 11%/yr for 30 years, that is $2.2M. If that is the family plan, then you are free to spend everything ELSE that you earn on family fun. And you can enjoy spending, safe with the knowledge that you are going to be multimillionaires.
I read your "eating out' blog. 'Eating out" as a form of entertainment is relatively recent in our history. McD gave us Fast-Food in the 1950s - then Pizza, and later came the Chain Restaurants - Outback, Olive Garden, Red Lobster, and so on. When I was a kid (WW2) people 'ate out' only if they were away from home - eg, lunch, on an auto trip, etc. And it sure wasn't "fast" , you drove around in a town until you located a Cafe, then you sat for an hour for the 'server, cook" process. Not entertaining, lol.
The industry sales - $710B/yr - about $2500 for every person in the US. Interesting, $710B is about 1/4 of the total US budget.
DW & I spend more than that on breakfast, lol - we're retired - we wake up at 5:30A, in the car by 6:30, head over to the bagel place. And spend about $10, ie $3600/yr.
Sat Jan 30, 2016 5:34 pm
Cash: $ 2.90
Joined: 27 Jan 2016
You are absolutely right when you say to focus more on the big items rather than the small ones (i.e. lattes). A lot of people are so fixated with cutting down on expenses that they forget to cut the items that cost a lot, in this case, the car and shelter.
Although car and shelter are both necessities, cutting down on these will dramatically cut costs down. When I cut down my expense to be more closer to financial freedom, I cut down on big ticketed items. I'm now debt-free, which is good and would like to be in that situation forever.
Thanks for reading and I hope you keep on reading my blog posts. I just started but I have great ideas that I will put into writing.
Sun Jan 31, 2016 12:35 am
oldguy Senior Member
Cash: $ 717.80
Joined: 21 May 2006
quote: I'm now debt-free, which is good and would like to be in that situation forever.
Well, not necessarily. That's mostly true with day-to-day consumer loans - eg, Dave Ramsey's credit card abusers.
But borrowed capital is a powerful business tool, don't overlook it. Eg, if I refi and add an extra $50,000 to a rental house loan, that costs me about $268/m ($98,000). And if I invest that $50,000 in an 11%/yr SP500 Index Fund, that becomes $1,100,000 in 30 yrs. I did that with my rental houses whenever their equity climbed. It worked very well over the past 40 years. At one point I had 6 mortgages on 4 houses - so, in my world, "debt-free" was something to avoid.