Just One Dollar a Day....

Did you know that if you saved just one dollar per day, in 50 years you would almost have $700,000? Think about that.... most people could easily live off $700,000 in the bank at retirement. If at 18 years old, you started putting just $1 dollar a day away, you'd be sitting on almost $700k when you turn 68.

Financial illiteracy is the biggest issue facing our country. Most people are broke because they spend more than they make and do not prioritize investments/savings. It has nothing to do with income inequality, wealth redistribution, etc. It is lack of discipline and ignorance. I'd venture most people waste more than $1 dollar a day on bullsh*t. The biggest mistake people make is procrastinating. Every year you delay putting money away, cost you a ton.

A study was done with three options if someone were to save $1 dollar a day for up to 50 years.

1) Saving in a non-interest bearing account (typical checking account): $18,250 after 50 years
2) Money market or savings account earning about 1% interest: $23,646 after 50 years
3) An Exchange Traded Fund (ETF) tracking with the S&P 500: $698,450 after 50 years

How much you'd have if you saved $1 dollar a day

Amazing, huh? If you can put away more than $2/day you'd easily be a millionaire at retirement.

Tech is making it even easier. I have an Acorns account. You sign up and it links to your bank or credit card account. It rounds up every purchase you make to the next dollar and invests the spare change. For example, if you spend 85 cents on something. It will round it up to $1.00 and take the 15 cents and invest it. It does this on every purchase you make.

Over the course of a year, I have saved almost $3500 just from doing this.

The next time you hear someone whining about how they can't save, just call BS. There is no reason anyone should be entering retirement broke.

Just $1 a day...

Republicans should be pushing for comprehensive financial education. It would stop a lot of the ignorance coming from the left.

Imagine if government just put $365.00 a year into an ETF for each person once they start working. Just have it taken out of a check and put into an ETF. Each person had a "lock box" with their account. They'd have the money at retirement and then even be able to pass it on to their kids at death unlike social security.

Think how simple it would be to implement something like this...

originally posted by: Edumakated
3) An Exchange Traded Fund (ETF) tracking with the S&P 500: $698,450 after 50 years

Did you know that getting one of those isn't as simple as applying for it?

I don't know what you have to do but they're not offering a gain of $682,000 in interest over 50 years to anyone. You probably need a good credit score and a significant starting deposit.

a reply to: Edumakated

Republicans should be pushing for comprehensive financial education. It would stop a lot of the ignorance coming from the left.

Save 10% of your gross.

No matter what.

And you will be financially OK in 5 years.

Pay off ANYTHING in a loan, be it a credit card or a an auto loan. Have no credit debt at all.

THEN... save until you can at least put 20% down on where you want to live.. buy a house, a property.

Then pay it off as soon s you can.

Then you will find that you have gotten into the savings side of life... so you save 50% of your gross.

I went from homeless and jobless in 1999 to now having everything I ever wanted by following that.

To just today being called a GOP voter who didn't understand what it was to have no money.

I ate out of dumpsters once upon a time.

It starts with you.

a reply to: Edumakated

Financial illiteracy is the school curriculums fault, money management and the results of poor money management should be a primary feature of our youths grooming for adulthood.
So until the government gets the school curriculum correct and life appropriate - then they can continue to supply pensions and the likes of.
But you are correct that a $1 a day is something that we at minimal should be achieving but try to remember however that the accumulation of material wealth is not what we're here for but rather a bi product of our further ignorance.

originally posted by: r0xor

originally posted by: Edumakated
3) An Exchange Traded Fund (ETF) tracking with the S&P 500: $698,450 after 50 years

Did you know that getting one of those isn't as simple as applying for it?

I don't know what you have to do but they're not offering a gain of $682,000 in interest over 50 years to anyone. You probably need a good credit score and a significant starting deposit.

The assumption is that the return on investment tracks with the S&P 500 annual returns. Not really sure what else you are talking about. Anyone can open an account that is tracked to the market.

a reply to: Edumakated

I get at least a raise very year. If that raise is 3%, then I bump my 401k 3%. If it's 4% then I bump my pay-in 4%.

Been doing it for 5 years now.

Got a sweet nest egg.

Of course my wife and I took a long look at our finances a few years ago and decided that we could live on 1 income. So she stopped working, started home schooling, now is going back to college for classes to start our new business. (We're opening up a book store).

originally posted by: DBCowboy
a reply to: Edumakated

I get at least a raise very year. If that raise is 3%, then I bump my 401k 3%. If it's 4% then I bump my pay-in 4%.

Been doing it for 5 years now.

Got a sweet nest egg.

Of course my wife and I took a long look at our finances a few years ago and decided that we could live on 1 income. So she stopped working, started home schooling, now is going back to college for classes to start our new business. (We're opening up a book store).

Yeah, wife and i have have done very well from just maxing out 401ks from the time we started working at 22. Best decisions we ever made. We will be sitting a very nice nest egg and may even be able to retire early. While we don't live like paupers, we never really got caught up too much in keeping up with the Jones. Our house should be paid off in about five years or so. The kid's 529s are well funded already too.

My point of the thread was that it really isn't hard to accumulate a decent nest egg, even for average joes.

I just want to add, the economy is going so well that there are grants available for people to open their own businesses.

Literally FREE MONEY to start a company.

Classes are available (wife is taking) that describe the ins and outs and creating business plans and coaching start-ups.

Let me see if I understand this.

You save a dollar a day for 50 years, while living expenses all around you dramatically increase every 1 year beyond that one dollar saved.

Sounds legit. Would save again.

a reply to: Edumakated

I'm sure you know this, but if you make a house payment every 2 weeks instead of every month, you cut 9 years off a 30 year mortgage.

originally posted by: DBCowboy
a reply to: Edumakated

I'm sure you know this, but if you make a house payment every 2 weeks instead of every month, you cut 9 years off a 30 year mortgage.

Yup. Mortgage banker by profession. Technically there are 13 months in a year if you assume one month = 4 weeks. So paying every two weeks (or just making one extra payment annually towards principle) will significantly cut down on interest paid over the life of the loan.

With that said, you can also make an argument you are better off investing as interest rate are so low. You can get a much better return than paying off the mortgage. However, I am of the school that I want to eliminate the debt even if I could make a business case for keeping a big mortgage. I just don't want the payment anymore.

originally posted by: NarcolepticBuddha
Let me see if I understand this.

You save a dollar a day for 50 years, while living expenses all around you dramatically increase every 1 year beyond that one dollar saved.

Sounds legit. Would save again.

Yes, inflation is an issue but that is irrelevant as you can't do anything about it. $700k is $700k. Sure $700k TODAY is worth more than $700k 50 years from now, but it is still a lot of money.

Generally, investment returns will be much higher than inflation so you are still coming out way ahead.

a reply to: Edumakated

There are just so many ways to save and use your money better.

If you own 1 car and are making payments and have full coverage (because you have to) just buy a used second car and the insurance can actually drop @ 1,000/ year because you now have "fleet" insurance.

originally posted by: DBCowboy
a reply to: Edumakated
Of course my wife and I took a long look at our finances a few years ago and decided that we could live on 1 income. So she stopped working, started home schooling, now is going back to college for classes to start our new business. (We're opening up a book store).

Hobby businesses are fun and you enjoy it. Will it be a used bookstore where you get credits for used books that can be redeemed to buy other books? Or new books? The problem I've found with books is that hardly anyone reads them unless they need to. There's a sizable minority, but let's just say it declines each year and will continue to do so until it reaches a plateau of lowness on one of those stock value graphs. Earlier today a lady in her fifties was complaining to the cashier in small talk at Wawa that her tablet is messed up or broken and it had all of her books on it.

I have a collection of hard and soft back science fiction novels, engineering and quantum mechanics stuff, all kinds of strange cool books I inherited two years ago. I don't read them because it's above my understanding or especially my interest and attention but I can't get anything for them. Unless they're a true first edition or something rare. A lot are "book club" if you read the copyright making them monetarily worthless.

originally posted by: r0xor

originally posted by: DBCowboy
a reply to: Edumakated
Of course my wife and I took a long look at our finances a few years ago and decided that we could live on 1 income. So she stopped working, started home schooling, now is going back to college for classes to start our new business. (We're opening up a book store).

Hobby businesses are fun and you enjoy it. Will it be a used bookstore where you get credits for used books that can be redeemed to buy other books? Or new books? The problem I've found with books is that hardly anyone reads them unless they need to. There's a sizable minority, but let's just say it declines each year and will continue to do so until it reaches a plateau of lowness on one of those stock value graphs. Earlier today a lady in her fifties was complaining to the cashier in small talk at Wawa that she lost her phone or it broke and it had all of her books on it.

Niche book stores are doing well. My town's Borders closed, but the local book store on the same block just expanded.... Seems like every town around here has a children's book store.

a reply to: Edumakated
Niche book stores are doing well. My town's Borders closed, but the local book store on the same block just expanded.... Seems like every town around here has a children's book store.

There's a used bookstore near a big college here but it deals with mostly textbooks. I had the one antique book shop in the entire metro area look at half of them and he bought some encyclopedia sets that were old but that's it. It's mostly 1050s-1970s and 80s but he pointed things out in the copyrights and didnt want most.

Chain off-topic thread derailment. Trade backed investment accounts to books.

a reply to: r0xor

We're playing with some ideas, but with me being on the city council (pro tem) I have gotten much encouragement from those who have grants available.

When I was starting my business there was no way I could have saved one dollar a day and invested it in the markets. We have always had stock in the stock market, for the last thirty years, and we never got growth like they are talking about. We had low risk stocks too, like AT&T and a few others and they did all right, but we also had stocks that depreciated in value that we dumped. Those stocks that went down in value were supposed to be good solid investments.

I think that the information this article is based off of is a sales pitch, none of our supposedly secure investments went anywhere even after we sold them off. Prudential was supposed to be a good one, that never went anywhere, every downturn wiped out the profits. You could not get into some of those investments that paid great unless you frontloaded a bunch of cash, you could not just start at a buck a day with any I remember and get a return like they are saying. We have been investing in the markets since 1984, some of the mutual funds we got out of went belly up after we sold them and transferred our money, ones like EF Hutton and I can't off hand remember the other one that went belly up. We keep all of our records for stuff like that and I thought we were really lucky to get out of those when we did.

Sales promotion. I bet they fudged the figures, you needed at least fifty grand to start some of those accounts, they are not telling the whole story. We had thirty to forty grand in a mutual fund back in the eighties and they went nowhere, and that was not enough to get into the good stable high producing funds. Usually the companies front and rear loaded fees and the yearly overhead charges took away half of what you made. But when the market went down, you wound up with less than you started with some times.

originally posted by: Edumakated
Did you know that if you saved just one dollar per day, in 50 years you would almost have $700,000? Think about that.... most people could easily live off $700,000 in the bank at retirement. If at 18 years old, you started putting just $1 dollar a day away, you'd be sitting on almost $700k when you turn 68.

At the recommended 4% drawdown, $700k is $28,000 per year. Furthermore, at a fairly consistent 3.5% rate of inflation, $700k in todays dollars is worth $125,337, which at a 4% drawdown would be worth the same as just over $5000/year today.

That's not an awful return, but you're kidding yourself if you think that's money you could live on. For a fairly modest $70k/year (in todays dollars), which given the cost of insurance and medical care is a real stretch for someone who is older, you need to put away 14 times that, or $14/day which is $5110 per year from 18 to 68. That may not sound like much, but considering the median wage in the US is $30,000 before taxes, or about $24,000 after taxes, and that rent is almost unobtainable for under $1000, and other living expenses come to at least 400/month (food, car, etc), you're talking about someone only having $7000 a year for everything else. Asking for $5110 per year is effectively 5/7's of all available funds.

Asking for 5/7's of the average persons persons disposable income to try and meet retirement goals is not reasonable.