GTKY: Financial Security

noffgurl · February 2015

What do you consider to be financially secure?

vlagrl29 · February 2015

Having very little debt, an emergency fund, a savings account, and contributing to retirement on a regular basis....also not living paycheck to paycheck.

CuriousKiddosMama · February 2015

No debt (working on clearing the mortgage which is our only debt), an emergency fund. Being able to contribute to our savings and retirement monthly are also important.

Honestly I don't know if I will feel financially secure until we are able to retire. I'm definitely the nerd and worrier in the relationship.

Wulfgar · February 2015

1. To live on my income only (with MW working just enough to afford private school for our children).
2. To be "debt" free with the exception of larger purchases that we may not have time to save up to pay in cash.
3. To be able to have me retire in 25 years and have MW still only work part-time. This maybe the hardest to do.
4. It helps that I have a degree that has roughly 0% unemployment Nationwide and a lot in the field are nearing retirement age, the ones that are still unemployed have reasons that they are like that.

MommyLiberty5013 · February 2015

In no particular order:

1. Paying off CCs in full each month.

2. Having an E-Fund.

3. Having life insurance for both DH and me.

4. Having adequate auto insurance.

5. Having POA, trust, and will docs in place for our estate and wishes for our children.

6. Communicating our financial data locations and documents to the loved ones who will be handling them if we both died.

7. Cash on hand at home.

8. Wide range of assets - diversification across assets and diversification across companies with which we do business (home, precious metals, ETFs, mutual funds, stocks, cash, etc.).

9. Paying down the mortgage - it's our only debt.

10. Not living beyond our means and giving a lot of our excess away to people who have very little.

vlagrl29 · February 2015

I forgot about wills and life insurance. We have both, plus prenups, and all appropriate insurance (car and home) - we also have some cash at home.

hoffse · February 2015

1) No consumer debt (credit cards)

2) Being able to set financial goals and sticking with them most of the time

3) Having an emergency fund... the amounts needed are different for every family, but generally you need to have more if you are a homeowner and more if you are a single-income family

4) Having the means to address problems that pop up without relying on credit card debt. This may require some sacrifices from "wants," but that's ok. Being able to get through the crappy times without adding consumer debt is a pretty big accomplishment.

5) Being on track for retirement for your age/income

6) Being able to afford some wants or splurges

7) Not living paycheck to paycheck

8) Being properly insured

9) Being able to afford to give some away

10) If we had kids, having the means to educate them well, not just through school but through activities and experiences (dance, sports, music lessons, educational family trips, etc.).

Low interest debt doesn't bother me as much as others on this board. I feel financially secure with our student loans in place. But we did choose a less expensive house so that we could afford to live on a single income if we had to (it would be tight with our student loans, but possible). If one of us lost our job, I might be more worried about the student debt at that time. Having two incomes but being able to live off of one gives me huge peace of mind. Most of the things I "worry" about with money are simply choosing between various wants.

lifeonthehill · February 2015

1. Being debt free. Or be able to get out of debt rapidly if we accumulate any

2. Be saving 15% of income. We are at 10% right now.

3. Be able to afford the monthly bills while saving for extra wants/needs. Such as hockey for him and college classes for me.

4. Maintain our 10k E-fund which will cover 6+ mo. of living with our baby budget.

5. Having good insurance. Car, life, and more importantly health.

6. Be able to maintain the simple lifestyle we have while I stay home with a kid. We are hoping to be OAD so this will only be 4-5 years.

7. Have both of us working full time jobs with degrees until we retire! This one will be the hardest. I want that degree so badly!

Xstatic3333 · February 2015

I'll list my answer but say that I haven't achieved this yet, and won't have when we start our family. I'm risk averse and it will take me a while to feel truly financially secure.

1.) No debt except mortgage
2.) Six month e-fund
3.) Putting 20% to retirement (we got a late start)
4.) Ability to give lots to causes we support
5.) Ability to take one international, though not luxury or anything, trip per year
6.) Ability to live on one income (which will be tough for us)
7.) Ability to save a few thousand/year for future child's 529

noffgurl · February 2015

I know this is a really stupid question, but what do you mean by not living paycheck to paycheck? I'm not sure if I do or not, I plan each check a few checks ahead to determine which bills are paid when and what money will go where, but with as often as we get paid (me biweekly and h weekly) we always have plenty of money from the one check when the next check clears. Just to clarify, I am paying ALL our bills ahead of time, I think I worded that wrong above.

lifeonthehill · February 2015

noffgurl said:

I know this is a really stupid question, but what do you mean by not living paycheck to paycheck? I'm not sure if I do or not, I plan each check a few checks ahead to determine which bills are paid when and what money will go where, but with as often as we get paid (me biweekly and h weekly) we always have plenty of money from the one check when the next check clears. Just to clarify, I am paying ALL our bills ahead of time, I think I worded that wrong above.

For me it means that if something were to happen and DH or I missed a whole paycheck would we fall behind on bills? Would we need a CC to get food that week? That kind of stuff.

als1982 · February 2015

- No debt but maybe a mortgage (ideally 15 year and of course, no PMI)

- A year's salary in savings

- Yearly maxing out of all retirement accounts, both ROTHs (if we still qualify, which hopefully we won't!) and 403b/401k

simplyelise · February 2015

1. Debt free except for mortgage

2. If homeowners, steadily building equity

3. At least 6 month emergency fund

4. Appropriately insured

5. Plan in place for sickness/death of one or both of us

6. Adequately funding retirement

7. Regularly putting money towards future expenses, kid's college, vacations, home improvements, etc.

Husbands SL's are 6.8% interest, which doesn't feel very low to me. I know we're postponing some really important investments while we pay them off, but we'll be done by July of next year and then we'll both feel way more secure and able to reach more of those goals.

cbee817 · February 2015

1. No credit card debt that is charging you interest (I like 0% cards for big expenses that you can pay off in the time frame and don't have to dip into an emergency fund. For example, we charged our entire kitchen remodel and paid it off in 12 months at 0% back in 2010 and right now, we have $7,000 left on a massive sewer job using a 0% card for 13 more months).

2. Other debt (house, SL, car) is manageable on a monthly basis. I agree with @hoffse on this- I don't think this type of debt is bad if you're smart about it.

3. Contribute to retirement and be on track for age/income

4. 6 month (or more if you have kids) emergency fund in case of job loss or unexpected expenses

5. Insured - health, life, car, wills, etc.

6. The ability to purchase wants within reason, plan for a vacation, etc

7. Have savings for kids' schooling- may not cover it all, but we believe it's important to help out. Currently, the bulk of this is tied up in daycare payments but that will change over the next 2.5 years.

Based on these 7, we are financially secure. We both feel good about our financial well being and can sleep at night knowing we're in good shape for our future.

formerlyGDaisy09 · February 2015

1. not living paycheck to paycheck

to me this means that we've got enough money in the bank so that if a paycheck gets missed (for whatever reason) or isn't as much as usual (this happens sometimes with H) it's not a big deal. it might set some savings goals back, but we're not going to not be able to pay bills.

2. no consumer debt (credit cards)

3. e-fund in place

to be financially stable I'd consider this to be at least one person's monthly salary...though our ultimate goal is 3-6 months living expenses

4. being able to maintain our home and vehicles

things break...for the most part we expect to have funds in place to be able to fix them. example, wednesday H calls me because he got a flat tire, 3 years ago this would have been a huge deal, like pull money from the e-fund, worry about making bills that month, cut back on groceries. now, no big deal. I told H just go get it fixed, let me know how much the bill is I'll move some money from our car repair fund and if it's more that a few hundred dollars (like if we need a new set of tires) we could cash-flow the rest.

5. Contributing to retirement accounts.

we are not quite at the level we want to be yet, but we've got a 2 year plan to get our contributions up to where we'd like them. we've both reached the point where our employer match is vested, so that feels good. H was more agressive about contributing to retirement early on than I was, I've always taken at least the employer match but it wasn't 'til this year I started working towards 15%+

6. being able to take little weekend away or vacations

7. being a little free to act on whims

oh hey! did you see the review on that show at the play house, I know we already spent our entertainment budget, but that play sounds amazing and it closes before next month. or Look at that entertainment center...wouldn't it look great in our living room, and we could get rid of that $10 ikea bookshelf...oh, it's only $299...lets get it, we may not put quite as much into our vacation fund this month but all the other ones I've liked have been $800 or $900.

8. being able to work your budget to meet future goals

we're TTC so we've sat down and figured out what child care costs, and found where that money would come from in our budget.

9. being able to pay of debts in a reasonable amount of time.

I'm talking low interest debts like car loans and student loans

hoffse · February 2015

noffgurl said:

I know this is a really stupid question, but what do you mean by not living paycheck to paycheck? I'm not sure if I do or not, I plan each check a few checks ahead to determine which bills are paid when and what money will go where, but with as often as we get paid (me biweekly and h weekly) we always have plenty of money from the one check when the next check clears. Just to clarify, I am paying ALL our bills ahead of time, I think I worded that wrong above.

To me, living paycheck to paycheck means you need most (if not all) of your paycheck to make ends meet. People who don't live paycheck to paycheck usually have enough left over to do something else with it, whether that's save, pay off debt, cash flow unexpected expenses, etc.

brij2006 · February 2015

Have zero debt, and a net worth of $1million.

noffgurl · February 2015

Ok, this gives me a better idea of things. For living paycheck to paycheck, I was worried that we are but we aren't. We were able to cash flow $1,200 tires in 2 and a half weeks and still had burn money, savings, and paid all our bills without having to dip into savings or be late.

vlagrl29 · February 2015

what does net worth mean? what you are worth when you add up all your assets?

noffgurl · February 2015

I think net worth is if you add up all liabilities and all assets and see what the difference is.

hoffse · February 2015

noffgurl said:

I think net worth is if you add up all liabilities and all assets and see what the difference is.

This.

lifeonthehill · February 2015

brij2006 said:

Have zero debt, and a net worth of $1million.

A million! I think my eyes just fell out.

I was all giddy gumdrops when our retirement totaled over $1000 last month. Haha.

vlagrl29 · February 2015

so i'm worth more dead than alive huh?

I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

hoffse · February 2015

vlagrl29 said:

so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

Your assets don't normally include insurance policies, unless one of them is in the process of paying out. Typically your assets include houses, cars, liquid accounts, retirement accounts... things that you could liquidate and/or raid for their value while you are alive.

Xstatic3333 · February 2015

vlagrl29 said:
so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

That's really good! A few more years in the negative for us until the SLs are done. A little equity in our home but the cars balance it out.

vlagrl29 · February 2015

hoffse said:

vlagrl29 said:

so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

Your assets don't normally include insurance policies, unless one of them is in the process of paying out. Typically your assets include houses, cars, liquid accounts, retirement accounts... things that you could liquidate and/or raid for their value while you are alive.

no they aren't paying out thank god so I would subtract $500,000 from that, but we are still in the positive. I feel like we are always living so tight and need more money but I guess it could be worse.

vlagrl29 · February 2015

Xstatic3333 said:

so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.
That's really good! A few more years in the negative for us until the SLs are done. A little equity in our home but the cars balance it out.

I came to the conclusion that my SL's are no big deal now. There are just so many other things I want to save $$ on instead of going gazelle intense on the SL's

hoffse · February 2015

hoffse said:

vlagrl29 said:

so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

Your assets don't normally include insurance policies, unless one of them is in the process of paying out. Typically your assets include houses, cars, liquid accounts, retirement accounts... things that you could liquidate and/or raid for their value while you are alive.

Let me rephrase that... your assets when calculating net worth don't include insurance policies. If you die and own an insurance policy on your life, then that will be included in the assets of your estate, since you were the owner and the proceeds are being paid out.

vlagrl29 said:

hoffse said:

vlagrl29 said:

so i'm worth more dead than alive huh? I just did a quick calculation but I only included life ins policies, cars, house, IRA (not DH's, just mine) and subtracted our debt and came out 800,000 ahead which is good right? I feel better now.

Your assets don't normally include insurance policies, unless one of them is in the process of paying out. Typically your assets include houses, cars, liquid accounts, retirement accounts... things that you could liquidate and/or raid for their value while you are alive.

no they aren't paying out thank god so I would subtract $500,000 from that, but we are still in the positive. I feel like we are always living so tight and need more money but I guess it could be worse.

Hey being positive is great!

We're going to be negative until partway through 2016. I have a net worth chart that I use to track ours...

als1982 · February 2015

We were beyond pumped when we hit even!

simplyelise · February 2015

Interesting! We're about 26k down at the moment, but that doesn't include my pension. I didn't factor it in because I still have 3 more years before I vest. Fingers crossed I make it that long!

bmo88 · February 2015

Living below our means, having an emergency fund and saving for retirement. As the minimums.

In an ideal world, financial security would be no debt. But for us it is having enough money to comfortably pay off our debts at a fast rate (i.e., more than the minimums) and still save money.

GTKY: Financial Security

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