After I get paid I split my money into two accounts - the first account is a discretionary account that I will use to live off for two weeks. I can spend this money on whatever and it is meant to be exhausted. The second account I keep a buffer (for me that means $2000) and I pay any bills I have. Any excess over $2000 goes into index funds.
Ask HN: What is your financial “setup”?
61–70 of 146 posts
Re: Ask HN: What is your financial “setup”?
#62I know I'm late to the party, but I can highly recommend the Bogleheads philosophy [1] and community/forum. They have a wonderful set of videos that explain how to build an emergency fund, and how to invest in a tax efficient manner.
I've been following their philosophy for a while and it's been nothing but positive and very hands off:
- Emergency fund in a BofA account
- Schwab account with a lazy 4 fund portfolio [2]
- 401k with company match
- I am also working towards financial independence (FIRE), see [3]
[1] https://www.bogleheads.org/wiki/Getting_started
Re: Ask HN: What is your financial “setup”?
#63This is my non-business (personal) finance setup.
I have a checking account, vanguard account, and fidelity account. The checking account is used for business to pay me. The vanguard account is 100% VTSAX as is the fidelity has account. I’ve just been keeping a couple thousand I the checking and rolling into VTSAX. Should be enough, if VTSAX tanks we need to be buying ammo if anything.
I also churn credit cards. Chase sapphire/capitol one savor/Amex platinum should all get you $500 or more. But if you are making >100k like it seems most people in here are then this is not such a large concern.
Re: Ask HN: What is your financial “setup”?
#64Pay 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…
I’m not sure if vanguard would be able to get payroll deposits.
Re: Ask HN: What is your financial “setup”?
#65The 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…
I might have recommended this for someone in college in 2000 but this is unrealistic for any reasonable person. Paying cash for a TV at a physical store?!
Re: Ask HN: What is your financial “setup”?
#66The 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…
I might have recommended this for someone in college in 2000 but this is unrealistic for any reasonable person. Paying cash for a TV at a physical store?!
The parent comment covers cases like your example, so why try to twist that into not being for "any reasonable person"?
Re: Ask HN: What is your financial “setup”?
#67The 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…
I find this fascinating because in Spain we are in a quick restrict-access-to-cash spiral with banks shouting down offices every.month and getting an ATM nearby is increasingly hard unless you live or work in the center of a big city.
If you actually touch the money, you can feel easily how much is going out.
Plus, I guess having to go to an ATM to get money out makes it more valuable because you pay everything with both money and time. Good trick
Re: Ask HN: What is your financial “setup”?
#68Earlier 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.
I was under the impression that if you contribute the annual limit (currently $19k) every year for 40 years (25 - 65), then pull 1/20th the account value per year once you retire (65 - 85), Roth makes more sense because the amount you will be pulling will be $4.15m, which would be $17.3k/mo before any additional investments (like a maxed out Roth IRA every year). That's $207.5k/yr in income at retirement from just the 401k alone, which would suck to get taxed on I'm sure.
Re: Ask HN: What is your financial “setup”?
#69My radically simple approach to finances is a result of simple living. I spend maybe 1-2 hours a month thinking about money and finances.
- I don’t budget.
- I don’t use spreadsheets or finance apps.
- I don’t have any credit cards, loans, or debt. I don’t care about my credit score because I’m not ever going to get a car loan, electronics lease, or mortgage.
- I don’t own a car. If I did I would buy it with cash and purchase only what was necessary to get from point A to point B safely, with the best gas mileage.
- I have reduced expenses as much as possible, and only buy essentials: Rent, utilities, health insurance, and groceries. I don’t spend money on new gadgets, entertainment, or other things. I read books from the library, I go to the park instead of the movies, etc. I don’t go “shopping” whether online or offline. I don’t buy a new laptop or phone unless my old one breaks and cannot be easily and cheaply repaired (still using MacBook from 2014).
- At the beginning of the week I go to my bank and withdraw cash, and only buy things with this cash. I don’t buy much online except toiletries and cooking oil.
- Instead of budgeting food, I have a simple rule that if I’ve eaten out already in that week, I avoid eating out until the next week. I avoid buying groceries until I’ve eaten most of what’s in the kitchen.
- At the end of every month I log into my bank, check how much money came in, and subtract how much went out. I then invest whatever I feel like out of that month’s profit into a mutual fund. I choose mutual funds as my method of saving because they are liquid, free of management, and simply taxed (capital gains). I have them setup to automatically reinvest earnings. I don’t use IRAs.
- I’m happy with my income now, but in the past when I felt like I didn’t have enough money, I simply focused on the easiest way to earn more money (changing jobs, learning a new skill to change jobs, taking another job, etc.).
Re: Ask HN: What is your financial “setup”?
#70My radically simple approach to finances is a result of simple living. I spend maybe 1-2 hours a month thinking about money and finances. - I don’t budget. - I don’t use spreadsheets or finance apps. - I don’t have any credit cards, loans, or debt. I don’t care about my credit score because I’m not ever going to get a car loan, electronics lease, or mortgage. - I don’t own a car. If I did I would buy it with cash and…
I was with you until you mentioned you don't use IRAs. Tax advantage is important!