Author Topic: How to start from scratch?  (Read 2824 times)

Valibert

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How to start from scratch?
« on: January 06, 2017, 06:35:50 AM »
Hi, we already got an idea of Fire, how to save and think.
Now we need your help to start taking action :)
We have no debt no asset and we're still renting our apartment.
What do you advise to do with the small amount of savings we have and that is growing?

Thanks for your advice :)

PhoenixHeat

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Re: How to start from scratch?
« Reply #1 on: January 06, 2017, 06:42:04 AM »
Hi, we already got an idea of Fire, how to save and think.
Now we need your help to start taking action :)
We have no debt no asset and we're still renting our apartment.
What do you advise to do with the small amount of savings we have and that is growing?

Thanks for your advice :)

Build an emergency find you are comfortable with. Maybe a few months of expenses.

Incorporate ways to increase savings rate and buy your freedom ad soon as possible?

WildJager

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Re: How to start from scratch?
« Reply #2 on: January 06, 2017, 10:27:42 AM »
Read through the blog for generic advice.

For specifics, post a case study (sticky at the top of this forum section) and the community will be happy to help.

Bracken_Joy

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Re: How to start from scratch?
« Reply #3 on: January 06, 2017, 10:30:19 AM »
Do this for specific advice:
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/

Or just use the spreadsheet yourself. Of note is the investing order tab.
Quote
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Roth or Traditional IRA based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)
6. Fund mega backdoor Roth if applicable
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.

WHY
0. Give yourself at least enough buffer to avoid worries about bouncing checks
1. Company match rates are likely the highest percent return you can get on your money
2. When the guaranteed return is this high, take it.
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.
4. Rule of thumb: trad if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between
5. See #4 for choice of traditional or Roth for 401k
6. Applicability depends on the rules for the specific 401k
7. Again, take the risk-free return if high enough
8. Because earnings, even if taxed, are beneficial

Valibert

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Re: How to start from scratch?
« Reply #4 on: January 07, 2017, 08:55:53 AM »
Thank you @WildJager and @Braken_joy!
Writing a case study sounds the best indeed. The only thing is that we live in Europe (the Netherlands) and 401k for example don't apply to us. Do you know if there is any equivalent of the case study for Europeans?
Thanks again for your help! :)

Bracken_Joy

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Re: How to start from scratch?
« Reply #5 on: January 07, 2017, 09:09:30 AM »
Thank you @WildJager and @Braken_joy!
Writing a case study sounds the best indeed. The only thing is that we live in Europe (the Netherlands) and 401k for example don't apply to us. Do you know if there is any equivalent of the case study for Europeans?
Thanks again for your help! :)

Excellent question! I'm not sure, unfortunately. The approach I would take is title it clearly: "Netherlands, need help investing/saving" or something. (Either change the title here, or start a new thread and title it that way). We have a lot of members who live in the Netherlands on here, I can think of at least 3 very active posters off the top of my head, and I know there are more. As for the post itself, I would use the case study format for all the universal stuff, like expenses and debts, and just substitute any types of accounts you have for retirement or housing, as applicable.

Best of luck!

Valibert

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Re: How to start from scratch?
« Reply #6 on: January 10, 2017, 01:30:20 AM »
Thanks @Bracken_Joy! We found an existing thread for Dutch people but unfortunately in Dutch - yeah, we live in the Netherlands but are French...ahah Good news is that we found a little gem blog in there, specifically applicable for the Netherlands and in English!! http://www.cheesyfinance.nl/wp/ Couldn't have asked for more :) Of course, if the names of the active posters you were thinking of come back to your mind, please don't hesitate to share! Thank you again!