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comment by b_b
b_b  ·  4026 days ago  ·  link  ·    ·  parent  ·  post: How can I save money when I'm already in debt?

All you need to worry about is math. Nothing else. Don't worry about saving just because it feels good. For example, if you assume an average rate of return of 7% (which isn't unreasonable when growth and dividends are accounted for; in fact, it may be a bit modest), then if you don't start saving until you are 30, start with nothing, put $1200 aside each month after that, and retire at 65, you will have $2.1M in assets. I think one can retire on that, especially when combined with social security, assuming it still exists when you are retirement age. The point is, don't rely on moralisms or shame when it comes to money; rely only on mathematics.





Neosmith  ·  4021 days ago  ·  link  ·  

This seems to be on the rather high end of the saving scale o.O.

b_b  ·  4021 days ago  ·  link  ·  

Perhaps. But the reason I suggested starting at age 30 is that many people will have decent incomes by that age, and perhaps be married, as well. Also, I'm counting total assets, not just cash. For example, many employers have savings match plans, which it's probably a good idea to max out, since it's extra money for nothing. Anyway, the broader point isn't to have $2M to retire on; it's that it's a good idea to define early what you think you need to retire on, and to then make a plan to have that much money. The specific number is arbitrary.

Neosmith  ·  4018 days ago  ·  link  ·  

Fantastic. Thank you for the reply. Love the insightful people in this community =D.

OftenBen  ·  4026 days ago  ·  link  ·  

This helps a lot. Honestly, I'm just terrified of ending up like my parents, and other extended family (With one notable exception) with a bunch of children, no way to adequately prepare them for the future, a marriage that I tolerate because my religion tells me to, unsatisfied with my life.

sounds_sound  ·  4026 days ago  ·  link  ·  

    I'm just terrified of ending up like my parents

Do yourself a favor - every once in a while - by remembering that YOU ARE NOT YOUR PARENTS. That little acknowledgement will make it easier for you to realize that the life you decide to lead is of your own design, not inherited. The fact that you say you're terrified is already enough to tell me that you're on the right track :) Now then, about the debt. I think pseydtonne hit the nail on the head with the whole pay down on the interest while your loan is still in deferment thing because the juice is flowing on that money right now, and it's compounding right now. If there is any ONE thing that I can recommend, it'd be that. A savings account would draw what, 2-3% max earned interest? While your student loan is costing probably 6.8%, and your credit card is... gulp ....11-15%? There's the math right there. Which costs the most? Knock out that credit and then start paying regular monthly on the student stuff. Focus on the principle amount and try to get that down, because interest doesn't build on principle that isn't there. The added benefit of paying monthly on the student debt while simultaneously living off of that loan is that you're closer to that money. Meaning you'll become more aware of your current spending habits and how they are directly affecting your future. Good luck. And don't let money control your life.