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Ask HN: What is your financial “setup”?

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51–60 of 146 posts

Re: Ask HN: What is your financial “setup”?

#51
post #16

The thing that really worked for me was I only ever buy in person with cash. I almost never use my debit card in person. This simple thing changed my relationship with what I buy. Obviously my mortgage and other monthly payments are direct debit but unless the purchase is several hundred Euros or more I will pay in cash. I always have €200 in cash on me which is enough to cover me at least a week. Then whatever I hav…

How do you feel paying in cash helps compared to cards? I honestly don’t get it. For me, withdrawing and paying cash simply adds unnecessary complexity, and on top of that, it destroys any paper trail you may need for tracking your individual budgets. How come people (mostly in Germany, from my experience) are so obsessed with cash?

I found I had a "poor relationship" with money due to always getting out my card and paying without even paying proper attention to how much I was spending. I am/was terrible at tracking what I spend when using my card.

So I tried the cash experiment by looking at what I spent each week then taking enough out in cash for it all. Having to do that quick calculation of how much to give the cashier made me realise just how much I spent on crap. I realised over time I had become blind to the prices of items as I picked them up. I would just grab what I was used to getting. So having to make sure when I got to the check out I had enough cash to pay for it made me look at the price as I picked up an item and keep a running total in my head.

It didn't take long before I shocked myself that I was spending €15-20 every day on lunch. Plus an additional €10 on a coffee. Plus lots of other random €5-15 purchases.

Carrying cash I realised how quickly I burned through it all. It helped me appreciate what you can get for a Euro.

From there I decided to change some of my habits to spend better. I was clearly over-eating (as I was fat and even with "healthy eating" I never lost more than a couple of kilos) so decided to plan my meals out of the home. Then I planned my meals at home to be healthier and cheaper.

Then it was just a good habit to actually check how much I was spending on things before I got to the check out. I read a few articles and skimmed books on how to better spend and save but to be honest it is just common sense and paying attention to what you are buying. Unless of course you are talking large amounts of money but then you should seek some professional advice IMHO which is what I have always done. But when it comes to your day-to-day spending common sense and knowing how much you're spending is key and for me cash helped with that.

Obviously this won't be the solution for everyone but it worked well for me. If you haven't tried it I suggest you commit to it for two months. It is scary to leave you debit card at home and just take cash (I kept my credit card on me but that is only used for emergencies anyway) but do it and see how using cash works for you.

Also just to clarify I don't get cash out every time I go to buy something. That would be a pain in the ass. Instead I take out €800 on pay day, keep 200 in my wallet for that week and put the rest in my office for the rest of the month. Not one week has come to an end with me being on zero. I think the lowest I have ever been was just under 20 remaining.

Then on Sunday night whatever is left over carries over to next week and I take the rest from the initial 800 (well 600 on the second week). Then at the end of the month whatever I have left rolls over to the next month and I get out 800 minus whatever that left over amount is. So if I have 100 left I take out 700 rather than 800 the following month then I transfer that 100 difference into savings right away.

Hope I have explained that in a way that makes sense? :)

Update: Forgot to mention that tracking my spending with cash also changed my relationship with the foods I ate. I have cut right back on meat for example as I realised I was eating processed meat every day so I reduced that to quality meat three times a week. Just that change alone and I lost almost 10KG in a couple of months of no other changes. I went to the doctor to get my bloods checked as at first I was worried something was wrong with me. The doctors response? "well you stopped eating shitty processed meats and started eating more greens, of course you will lose weight". My bloods came back perfect.

Re: Ask HN: What is your financial “setup”?

#52
post #40
post #39

Pay yourself first. Setup an auto transaction to move a set amount into a savings account on payday - that way at the end of the pay period when you run out of money, you've already saved how much you wanted to. If you wait till the end of the pay period to save, there will never be any left. My trick is to increase the amount going into savings every time - just a little. Eventually you'll find the point where you'r…

>Setup an auto transaction to move a set amount into a savings account on payday Better yet, go to payroll and have them split your check, $x or x% in savings and the rest in checking. If you do it by percentage then your savings will grow in proportion to your income.

I like the idea, though I personally prefer to have all the control.

Payroll will get mighty annoyed with me when I want to change the amount going into a savings account every couple of weeks.

Re: Ask HN: What is your financial “setup”?

#53
post #21

I mostly just have two accounts: a private and a shared account. The shared account is very simple: Every month me and my boyfriend tops it up to 5000 USD, we have a debit card to it each, and all shared expenses including rent come out of this account. By topping it off to a high number like this, we ensure we wont run out within a month, and we just use the debit card for things we need. For my private stuff I have…

> but I'm a poor student with savings, a personal and a additional 5k usd checking account... sry to burst your bubble but thats called wealthy for most ppl on earth.

Just because I have savings doesn't mean I have income.

Re: Ask HN: What is your financial “setup”?

#54

1. Consolidate all spending on a credit card that gives cash back. Autopay all bills that don’t levy fees with it. Pros: no need to worry about points or blackout dates; maximize cash back; facilitates budget tracking with annual summaries and integration with budgeting sites (otherwise you’ll have to do it manually). Examples: Double Cash 2% cash back, Apple Card 1-3% depending on payment method 2. Direct deposit yo…

> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account.

> Pros: saving/investing on autopilot; lower taxable income

Does it ever make sense to do Roth 401k instead of traditional 401k?

Re: Ask HN: What is your financial “setup”?

#56

1. Consolidate all spending on a credit card that gives cash back. Autopay all bills that don’t levy fees with it. Pros: no need to worry about points or blackout dates; maximize cash back; facilitates budget tracking with annual summaries and integration with budgeting sites (otherwise you’ll have to do it manually). Examples: Double Cash 2% cash back, Apple Card 1-3% depending on payment method 2. Direct deposit yo…

> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account. > Pros: saving/investing on autopilot; lower taxable income Does it ever make sense to do Roth 401k instead of traditional 401k?

If you are expecting to be in a higher tax bracket in retirement (counting traditional IRA/401K income) then Roth IRA/401K may be a better choice, since it is after tax when invested but tax-free when withdrawn. Most workers will have substantially higher income subject to income tax during working years than in retirement even with IRA/401K withdrawals as taxable income, but that's not always the case.

Re: Ask HN: What is your financial “setup”?

#57
post #29

Earlier quoted context omitted.

How do you feel paying in cash helps compared to cards? I honestly don’t get it. For me, withdrawing and paying cash simply adds unnecessary complexity, and on top of that, it destroys any paper trail you may need for tracking your individual budgets. How come people (mostly in Germany, from my experience) are so obsessed with cash?

This could easily be rephrased as “How come people are so obsessed with using payment systems with real-time warrantless government surveillance for all purchases?” I honestly don’t get it. Why would you pay a percent or two to be surveilled? It creates a time stamped track log, too, which can be easily cross-referenced with (also surveilled) cellphone position. https://www.wired.com/2010/12/realtime/

YMMV but I don’t mind payment processors knowing my location. I’d choose that anytime over touching physical money (or having people who process my food touch it).

Re: Ask HN: What is your financial “setup”?

#58
post #51

Earlier quoted context omitted.

How do you feel paying in cash helps compared to cards? I honestly don’t get it. For me, withdrawing and paying cash simply adds unnecessary complexity, and on top of that, it destroys any paper trail you may need for tracking your individual budgets. How come people (mostly in Germany, from my experience) are so obsessed with cash?

I found I had a "poor relationship" with money due to always getting out my card and paying without even paying proper attention to how much I was spending. I am/was terrible at tracking what I spend when using my card. So I tried the cash experiment by looking at what I spent each week then taking enough out in cash for it all. Having to do that quick calculation of how much to give the cashier made me realise just…

Thanks, that really helped. Good point about knowing-what-you-spend before checking out. I think I’m going to make that a habit too (albeit cashless).

Re: Ask HN: What is your financial “setup”?

#59
post #51

Earlier quoted context omitted.

I found I had a "poor relationship" with money due to always getting out my card and paying without even paying proper attention to how much I was spending. I am/was terrible at tracking what I spend when using my card. So I tried the cash experiment by looking at what I spent each week then taking enough out in cash for it all. Having to do that quick calculation of how much to give the cashier made me realise just…

Thanks, that really helped. Good point about knowing-what-you-spend before checking out. I think I’m going to make that a habit too (albeit cashless).

Yes it isn't so much cash vs card. It is just that with a card it is very easy to fall into the "I'm in a rush just grab what you know" trap. You get to the check out, you rush to pack the bag and just tap your card against the reader and leave. I didn't even check the amount as I didn't need to enter a PIN thanks to contactless.

So cash forced me to pay attention. There is no reason you can't do that with a card, I just needed the cash method to force me out of my bad habits.

Re: Ask HN: What is your financial “setup”?

#60

Earlier quoted context omitted.

> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account. > Pros: saving/investing on autopilot; lower taxable income Does it ever make sense to do Roth 401k instead of traditional 401k?

If you are expecting to be in a higher tax bracket in retirement (counting traditional IRA/401K income) then Roth IRA/401K may be a better choice, since it is after tax when invested but tax-free when withdrawn. Most workers will have substantially higher income subject to income tax during working years than in retirement even with IRA/401K withdrawals as taxable income, but that's not always the case.

For a roth IRA there are two other benefits (not familiar with Roth 401k, so won't speak to that).

* Hedge against different tax rates in the future. Even if now you think you'll be paying a lower rate when retired, there's no guarantees.

* You can withdraw your contributions, though not your earnings, without penalty before retirement. If you add 5k/year for a number of years, that starts to add up should you need to tap it for an emergency or other investment opportunity (real estate or bootstrapping).

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