Author Topic: Mustachian People Problems (just for fun)  (Read 3233640 times)

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #6850 on: November 03, 2019, 03:10:14 AM »

I also checked no to allowing them to pull my rent from my bank account.  Is this normal?  Do landlords insist on this?  My monthly spend is 2x the rent and my monthly income gross is 6.5x rent.  I have a 800+ FICO.  Why should I be treated like a slug and allow strangers access to my account?

I would prefer to do it that way. I'd just have an extra (I have 4 now) savings account at Ally that I put enough in to cover the rent. They would have access to that account but no other.
In Germany it is totally normal that rent is taken from your account. Why not? If that guy takes out too much, you just click the box to take it back.
It is totally strange that a country that uses so much plastic to pay still uses cheques (I never have used a single one) and pays rent in cash. (Not least that would mean you have to go to your landlord each month?? Way too much trouble, they are 400m away ;) )

Yes, that would be totally normal in NL as well. I don't pay rent but my mortgage is on direct debit and so are all of my regular bills (phone, health insurance, energy, water, internet). I think it's extremely convenient, I just put a set amount of money in my bill-paying account every month and all my bills pay themselves automatically. Even my monthly investments are on direct debit. The only thing I actively do with my bank account is buying groceries and at the end of the month, transferring leftover spending money to savings and investments account.

You can always take the money back if you disagree and there's a big incentive for companies to follow the rules: if they keep sending in incorrect direct debits the bank may cancel their direct debit contract completely and that would be a very big inconvenience for the company.

From a business perspective direct debit is also way easier. I used to do bookkeeping for a company that had most invoices paid by direct debits and it's a bliss not to have to match every single payment to every single invoice (because so many people don't use the correct description with their payment).

RetiredAt63

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Re: Mustachian People Problems (just for fun)
« Reply #6851 on: November 03, 2019, 07:23:28 AM »
I used direct debit for my mortgage. My last apartment took cheques. This one does direct debit, so much easier. And with online banking it is easy to check and make sure the transfer went through correctly.

Raenia

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Re: Mustachian People Problems (just for fun)
« Reply #6852 on: November 03, 2019, 07:50:59 AM »

I also checked no to allowing them to pull my rent from my bank account.  Is this normal?  Do landlords insist on this?  My monthly spend is 2x the rent and my monthly income gross is 6.5x rent.  I have a 800+ FICO.  Why should I be treated like a slug and allow strangers access to my account?

I would prefer to do it that way. I'd just have an extra (I have 4 now) savings account at Ally that I put enough in to cover the rent. They would have access to that account but no other.
In Germany it is totally normal that rent is taken from your account. Why not? If that guy takes out too much, you just click the box to take it back.
It is totally strange that a country that uses so much plastic to pay still uses cheques (I never have used a single one) and pays rent in cash. (Not least that would mean you have to go to your landlord each month?? Way too much trouble, they are 400m away ;) )

Yes, that would be totally normal in NL as well. I don't pay rent but my mortgage is on direct debit and so are all of my regular bills (phone, health insurance, energy, water, internet). I think it's extremely convenient, I just put a set amount of money in my bill-paying account every month and all my bills pay themselves automatically. Even my monthly investments are on direct debit. The only thing I actively do with my bank account is buying groceries and at the end of the month, transferring leftover spending money to savings and investments account.

You can always take the money back if you disagree and there's a big incentive for companies to follow the rules: if they keep sending in incorrect direct debits the bank may cancel their direct debit contract completely and that would be a very big inconvenience for the company.

From a business perspective direct debit is also way easier. I used to do bookkeeping for a company that had most invoices paid by direct debits and it's a bliss not to have to match every single payment to every single invoice (because so many people don't use the correct description with their payment).

I think this may be a EU vs US thing - here, it is not at all easy to get back the money if too much was debited.  The bank views it as you gave this company access and therefore it is your responsibility, not theirs.  There is no "click the box to take it back."  You have to dispute it with the company (not the bank, who will not help), and persuade them to refund you.

For this reason, I've always been told to use the 'push' method, where you set up an auto-pay on your end which you can cancel, rather than give the company direct-debit access, where they 'pull' the payment from their end.  It is easier to correct errors when you control the auto-pay than when the company does (you can stop payment on the check through your bank), as they have no incentive to fix their errors promptly if they take too much by direct debit.

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #6853 on: November 03, 2019, 07:59:54 AM »

I also checked no to allowing them to pull my rent from my bank account.  Is this normal?  Do landlords insist on this?  My monthly spend is 2x the rent and my monthly income gross is 6.5x rent.  I have a 800+ FICO.  Why should I be treated like a slug and allow strangers access to my account?

I would prefer to do it that way. I'd just have an extra (I have 4 now) savings account at Ally that I put enough in to cover the rent. They would have access to that account but no other.
In Germany it is totally normal that rent is taken from your account. Why not? If that guy takes out too much, you just click the box to take it back.
It is totally strange that a country that uses so much plastic to pay still uses cheques (I never have used a single one) and pays rent in cash. (Not least that would mean you have to go to your landlord each month?? Way too much trouble, they are 400m away ;) )

Yes, that would be totally normal in NL as well. I don't pay rent but my mortgage is on direct debit and so are all of my regular bills (phone, health insurance, energy, water, internet). I think it's extremely convenient, I just put a set amount of money in my bill-paying account every month and all my bills pay themselves automatically. Even my monthly investments are on direct debit. The only thing I actively do with my bank account is buying groceries and at the end of the month, transferring leftover spending money to savings and investments account.

You can always take the money back if you disagree and there's a big incentive for companies to follow the rules: if they keep sending in incorrect direct debits the bank may cancel their direct debit contract completely and that would be a very big inconvenience for the company.

From a business perspective direct debit is also way easier. I used to do bookkeeping for a company that had most invoices paid by direct debits and it's a bliss not to have to match every single payment to every single invoice (because so many people don't use the correct description with their payment).

I think this may be a EU vs US thing - here, it is not at all easy to get back the money if too much was debited.  The bank views it as you gave this company access and therefore it is your responsibility, not theirs.  There is no "click the box to take it back."  You have to dispute it with the company (not the bank, who will not help), and persuade them to refund you.

For this reason, I've always been told to use the 'push' method, where you set up an auto-pay on your end which you can cancel, rather than give the company direct-debit access, where they 'pull' the payment from their end.  It is easier to correct errors when you control the auto-pay than when the company does (you can stop payment on the check through your bank), as they have no incentive to fix their errors promptly if they take too much by direct debit.

Yeah that sounds like a good reason to avoid direct debits over there! I can just open my internet banking app on my phone and undo any direct debit that was debited from my account in the last 60 or 90 days (not sure which) and I will get the money back immediately. Of course if I do that without a valid reason, I still owe that money to the company and they'll go after me for the payment, but at least I'll have my money back. A bank doesn't want the reputation damage from a rogue direct debit customer so they will certainly take measures when there's a suspicion of abuse by a company. I have set up auto-pay to some of my own accounts but it's not convenient to pay bills from big companies, because every bill has a unique invoice # so you'd have to update your auto-pay every month or risk them not being able to process the payment.

In a previous job I did a lot of international money transfers, and transfers within the EU all went perfectly, Australia was no big deal, but the American banking system is really a lot different than ours - it takes a long time for payments to arrrive and sometimes they don't arrive at all even if you've entered the correct details for the recipient into the system.

LennStar

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Re: Mustachian People Problems (just for fun)
« Reply #6854 on: November 03, 2019, 12:22:56 PM »
Quote
I think this may be a EU vs US thing
Yeah, fucking nobody-wants socialism or superior free market capitalism ;)

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Re: Mustachian People Problems (just for fun)
« Reply #6855 on: November 03, 2019, 03:28:10 PM »
I know someone who's a landlord, and they have a very strong preference for direct debit (or some other sort of auto-pay), because it dramatically reduces the risk of non-payment.  There are all manner and sorts of situations where the tenant might forget (or "forget") to pay their rent, or spend their paycheck too quickly (they set it up so that rent goes out of the account on pay day), or something else.  There's no desire on my landlord-acquaintance's part to treat their tenants unfairly, it's simply a risk-mitigation strategy in a world where eviction is a long and expensive process, and a certain subset of the population knows how to exploit the system for as much free rent as possible.

nancyfrank232

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Mustachian People Problems (just for fun)
« Reply #6856 on: November 03, 2019, 06:01:35 PM »
I know someone who's a landlord, and they have a very strong preference for direct debit (or some other sort of auto-pay), because it dramatically reduces the risk of non-payment.  There are all manner and sorts of situations where the tenant might forget (or "forget") to pay their rent, or spend their paycheck too quickly (they set it up so that rent goes out of the account on pay day), or something else.  There's no desire on my landlord-acquaintance's part to treat their tenants unfairly, it's simply a risk-mitigation strategy in a world where eviction is a long and expensive process, and a certain subset of the population knows how to exploit the system for as much free rent as possible.

The landlord is lucky that their tenants didn’t realize that this is illegal. Landlords are not allowed to refuse rent payments by check
« Last Edit: November 03, 2019, 06:04:10 PM by nancyfrank232 »

TomTX

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Re: Mustachian People Problems (just for fun)
« Reply #6857 on: November 03, 2019, 07:09:03 PM »

The landlord is lucky that their tenants didn’t realize that this is illegal. Landlords are not allowed to refuse rent payments by check

Your local laws are not universal.

nancyfrank232

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Mustachian People Problems (just for fun)
« Reply #6858 on: November 03, 2019, 07:11:45 PM »
Your local laws are not universal.

True. Post the state that your landlord is in and we can do a quick check
« Last Edit: November 03, 2019, 07:17:00 PM by nancyfrank232 »

Step37

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Re: Mustachian People Problems (just for fun)
« Reply #6859 on: November 03, 2019, 09:27:22 PM »

The landlord is lucky that their tenants didn’t realize that this is illegal. Landlords are not allowed to refuse rent payments by check

Your local laws are not universal.

Also, he said “they have a very strong preference for direct debit,” not that checks are refused...

nancyfrank232

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Re: Mustachian People Problems (just for fun)
« Reply #6860 on: November 04, 2019, 01:18:46 AM »
Also, he said “they have a very strong preference for direct debit,” not that checks are refused...

True. Thankfully the landlord’s preference for direct debit is meaningless to tenants who know better

LennStar

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Re: Mustachian People Problems (just for fun)
« Reply #6861 on: November 04, 2019, 11:33:13 AM »
Your local laws are not universal.

True. Post the state that your landlord is in and we can do a quick check
Please post the state where you are required to accept other stuff than official money please.

Alfred J Quack

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Re: Mustachian People Problems (just for fun)
« Reply #6862 on: November 04, 2019, 11:52:35 AM »
Also, he said “they have a very strong preference for direct debit,” not that checks are refused...

True. Thankfully the landlord’s preference for direct debit is meaningless to tenants who know better
This may be true but as a private landlord I would seriously ask myself whether I would want to have a renter that is vehemently opposed to direct debit.

I also work for a professional renter (10k+ units) and we don't even accept cash payments but appearently it has happened in the past that we accepted false cash, fraudulent cash or were heisted afterwards. You pay with your bankcard in our premises or by direct debit or you can rent somewhere else.

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Re: Mustachian People Problems (just for fun)
« Reply #6863 on: November 04, 2019, 12:00:35 PM »
This may be true but as a private landlord I would seriously ask myself whether I would want to have a renter that is vehemently opposed to direct debit.

My reluctance is I had a business double debit and it took months to get my money back. I just don't like the idea of someone else having access to my money. 

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Re: Mustachian People Problems (just for fun)
« Reply #6864 on: November 04, 2019, 01:40:30 PM »
In the UK for regular payments we have direct debit, where you authorise the recipient to pull money from your account, and standing order, where you push money out of your account. One could pay rent via standing order automatically each money and (unless there were a major bank error which it would be on the bank to fix ASAP) retain total control over how much went out and when. Having to pay by cheque or cash sounds bizarre to me.

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #6865 on: November 05, 2019, 04:35:44 AM »
This may be true but as a private landlord I would seriously ask myself whether I would want to have a renter that is vehemently opposed to direct debit.

My reluctance is I had a business double debit and it took months to get my money back. I just don't like the idea of someone else having access to my money.

In the Netherlands (and I assume in the entire EU since these type of rules usually come from Brussels) as a consumer you get back the money the next business day. Even if the company who issued the direct debit doesn't have the money in its account anymore - you get the money back from the bank and they go after the company. B2B rules are different, but consumers are protected very well in the EU.

The banking system is so reliable that no one uses cheques or cash for any major payment. I am nearly 30 and I literally haven't seen a cheque in my whole life. A neighbour bought some leftover DIY supplies from us and they paid us by transferring the money to us through their internet banking app while we were all standing in our shed. That's not considered odd at all anymore.

It's actually quite risky for the renter to pay by cash, I've heard stories about asshole landlords who receive rent in cash and then go after the renter for unpaid rent - the renter can't prove they paid as there's no paper trail and they get evicted and have to pay twice.

SansSkill

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Re: Mustachian People Problems (just for fun)
« Reply #6866 on: November 05, 2019, 05:27:20 AM »
This may be true but as a private landlord I would seriously ask myself whether I would want to have a renter that is vehemently opposed to direct debit.

My reluctance is I had a business double debit and it took months to get my money back. I just don't like the idea of someone else having access to my money.

In the Netherlands (and I assume in the entire EU since these type of rules usually come from Brussels) as a consumer you get back the money the next business day. Even if the company who issued the direct debit doesn't have the money in its account anymore - you get the money back from the bank and they go after the company. B2B rules are different, but consumers are protected very well in the EU.

The banking system is so reliable that no one uses cheques or cash for any major payment. I am nearly 30 and I literally haven't seen a cheque in my whole life. A neighbour bought some leftover DIY supplies from us and they paid us by transferring the money to us through their internet banking app while we were all standing in our shed. That's not considered odd at all anymore.

It's actually quite risky for the renter to pay by cash, I've heard stories about asshole landlords who receive rent in cash and then go after the renter for unpaid rent - the renter can't prove they paid as there's no paper trail and they get evicted and have to pay twice.

Yup it's great having consumer protection, I actually used it recently.
My ex-landlord's administration system thought I hadn't paid rent in a specific month of 2017 and rectified it by collecting it.
They noticed and sent me an email telling me to transfer it back myself as it is the fastest option.
I opened my mobile banking app and pressed literally one button and the money was back.

AerynLee

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Re: Mustachian People Problems (just for fun)
« Reply #6867 on: November 06, 2019, 04:56:18 PM »
I want to take advantage of my ridiculous amounts of home equity from my house appreciating about 50% since we bought it 4 years ago, but my current interest rate is 2.75% which makes a cash-out refinance (at 3.8%) or a HELOC (at 5%+) unappealing

Brother Esau

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Re: Mustachian People Problems (just for fun)
« Reply #6868 on: November 06, 2019, 05:11:05 PM »
I want to take advantage of my ridiculous amounts of home equity from my house appreciating about 50% since we bought it 4 years ago, but my current interest rate is 2.75% which makes a cash-out refinance (at 3.8%) or a HELOC (at 5%+) unappealing

first world problems :-(

Step37

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Re: Mustachian People Problems (just for fun)
« Reply #6869 on: November 06, 2019, 07:25:54 PM »
This week’s MPP is trying to not show obvious delight when telling others that my husband got laid off from his job on Monday. People have a really hard time wrapping their head around a 49-year-old who’s fine with it and was more than likely going pull the pin in the new year anyway. Now, he’s paid for the next two months AND retired early. I may have to revisit the threads about this particular “problem” and figure out how best to convey that it really IS okay (more than okay). I’m glad to have this Mustachian Place of Understanding.

SwordGuy

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Re: Mustachian People Problems (just for fun)
« Reply #6870 on: November 06, 2019, 09:31:21 PM »
This week’s MPP is trying to not show obvious delight when telling others that my husband got laid off from his job on Monday. People have a really hard time wrapping their head around a 49-year-old who’s fine with it and was more than likely going pull the pin in the new year anyway. Now, he’s paid for the next two months AND retired early. I may have to revisit the threads about this particular “problem” and figure out how best to convey that it really IS okay (more than okay). I’m glad to have this Mustachian Place of Understanding.

"My husband was going about to turn in his notice to retire, but then his employer laid him off and PAID HIM NOT TO COME TO WORK ANYMORE!    Is this a great country or WHAT!!??"

pdxmonkey

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Re: Mustachian People Problems (just for fun)
« Reply #6871 on: November 07, 2019, 12:04:55 AM »
This week’s MPP is trying to not show obvious delight when telling others that my husband got laid off from his job on Monday. People have a really hard time wrapping their head around a 49-year-old who’s fine with it and was more than likely going pull the pin in the new year anyway. Now, he’s paid for the next two months AND retired early. I may have to revisit the threads about this particular “problem” and figure out how best to convey that it really IS okay (more than okay). I’m glad to have this Mustachian Place of Understanding.

"My husband was going about to turn in his notice to retire, but then his employer laid him off and PAID HIM NOT TO COME TO WORK ANYMORE!    Is this a great country or WHAT!!??"
I dream of getting laid off with a nice severance. My employer doesn't give nice severance historically though so it seems unlikely. I'm probably on the several more years plan in any case while I figure the health care situation out. Spent under 4% last year. Now I'm in the lifestyle inflation phase, but still under 4% this year. I'm allowed to buy absolutely anything at the thrift store... All the things. Even if they're silly. Letting myself spend a minor amount more at the regular store, but still pretty frugal there. No longer what many people would consider painfully so.

I plan to spend more traveling in retirement, otherwise it's likely I could stay at home retire in a year and cover healthcare as well. Assuming I can find healthcare for$300/month or so.

Linea_Norway

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Re: Mustachian People Problems (just for fun)
« Reply #6872 on: November 07, 2019, 03:56:48 AM »
This week’s MPP is trying to not show obvious delight when telling others that my husband got laid off from his job on Monday. People have a really hard time wrapping their head around a 49-year-old who’s fine with it and was more than likely going pull the pin in the new year anyway. Now, he’s paid for the next two months AND retired early. I may have to revisit the threads about this particular “problem” and figure out how best to convey that it really IS okay (more than okay). I’m glad to have this Mustachian Place of Understanding.

"My husband was going about to turn in his notice to retire, but then his employer laid him off and PAID HIM NOT TO COME TO WORK ANYMORE!    Is this a great country or WHAT!!??"
I dream of getting laid off with a nice severance. My employer doesn't give nice severance historically though so it seems unlikely. I'm probably on the several more years plan in any case while I figure the health care situation out. Spent under 4% last year. Now I'm in the lifestyle inflation phase, but still under 4% this year. I'm allowed to buy absolutely anything at the thrift store... All the things. Even if they're silly. Letting myself spend a minor amount more at the regular store, but still pretty frugal there. No longer what many people would consider painfully so.

I plan to spend more traveling in retirement, otherwise it's likely I could stay at home retire in a year and cover healthcare as well. Assuming I can find healthcare for$300/month or so.

My company is offering people nice packages to quit voluntarily. But unfortunately it isn't offered to people in my department, as we are only hiring new people because we have so much to do. So no package for me. :-(

DadJokes

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Re: Mustachian People Problems (just for fun)
« Reply #6873 on: November 07, 2019, 06:08:22 AM »
It'd be great if you could get yourself let go with a nice severance instead of retiring. It looks like Financial Samurai did an article on that. That might also fall under the category of unethical ways to save money if you are able to actually engineer the situation.

Roadrunner53

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Re: Mustachian People Problems (just for fun)
« Reply #6874 on: November 07, 2019, 08:06:43 AM »
At my last job in 2011 I was laid off and given a small severance package. That was when unemployment was at an all time high and the Federal Government extended unemployment. I collected for 73 weeks! Prior to that it was as high as 99 weeks but by the time I reached 73 weeks, that was it. I would have rather worked and kept my job but it wasn't meant to be.

gaja

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Re: Mustachian People Problems (just for fun)
« Reply #6875 on: November 07, 2019, 04:22:20 PM »
The car suddenly stopped, and we had to pay $1800 to get it back on the road. So my plans to save 5 figures this month are down the drain. Will still be able to save many times as much as normal, but I was looking forward to the big number.

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Re: Mustachian People Problems (just for fun)
« Reply #6876 on: November 07, 2019, 05:39:10 PM »
The car suddenly stopped, and we had to pay $1800 to get it back on the road. So my plans to save 5 figures this month are down the drain. Will still be able to save many times as much as normal, but I was looking forward to the big number.

Just to put things in perspective:

"Net Worth Percentile Rank : A net worth of $10,000 for ages 18 to 100 ranks at the 24.88th percentile"

Think about that.   What you almost saved in one month is more than 24.88% of American households have as a total net worth.

Source:

https://personalfinancedata.com/networth-percentile-calculator/?min_age=18&max_age=100&networth=10000#results

gaja

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Re: Mustachian People Problems (just for fun)
« Reply #6877 on: November 07, 2019, 10:41:04 PM »
The car suddenly stopped, and we had to pay $1800 to get it back on the road. So my plans to save 5 figures this month are down the drain. Will still be able to save many times as much as normal, but I was looking forward to the big number.

Just to put things in perspective:

"Net Worth Percentile Rank : A net worth of $10,000 for ages 18 to 100 ranks at the 24.88th percentile"

Think about that.   What you almost saved in one month is more than 24.88% of American households have as a total net worth.

Source:

https://personalfinancedata.com/networth-percentile-calculator/?min_age=18&max_age=100&networth=10000#results


Yes, and that is why this is a MPP :)

Five figures in one month is not normal for us. It is because I finally took time to send inn travel expenses, pto, and overtime for the last year. It will be a long time before we can see that type of number again.
« Last Edit: November 07, 2019, 10:45:14 PM by gaja »

Alternatepriorities

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Re: Mustachian People Problems (just for fun)
« Reply #6878 on: November 08, 2019, 11:33:53 AM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #6879 on: November 08, 2019, 01:42:57 PM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Yeah that's what I've always done too. Sure I van  give you average past spending per category because I have an app for that (I mainly use it to keep track of my fluctuating income) but I never plan ahead. I pay my bills, invest a set amount, and then spend as much of the remainder as is necessary that month. I don't seem to need a whole lot and what's left at the end of the month is then also transferred to savings/investments. But there's really no planning ahead in the sense of having an pre-determined eating out budget or a clothing budget that some of my friends have.

ysette9

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Re: Mustachian People Problems (just for fun)
« Reply #6880 on: November 08, 2019, 04:59:14 PM »
I love the word “fudget”. Nicely done.

Poundwise

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Re: Mustachian People Problems (just for fun)
« Reply #6881 on: November 08, 2019, 08:37:59 PM »
MPP: I keep running out of dry beans.

TomTX

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Re: Mustachian People Problems (just for fun)
« Reply #6882 on: November 09, 2019, 12:42:46 PM »
With the impending cashout refi and partner back to work at a good-paying job, I'm going to have to start thinking about 6 figures of investments which generate capital gains.

Plus, we finished the last batch of beans with lunch and I've only got 1 lb of dry beans left. Once I go set up the Instant Pot, I too will have run out of dry beans.

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solon

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Re: Mustachian People Problems (just for fun)
« Reply #6884 on: November 09, 2019, 03:59:53 PM »
MPP: I keep running out of dry beans.

https://www.phrases.org.uk/meanings/bean-counter.html

Are you saying you have invested all your money and now there is no more money to invest? I feel your pain.

dragoncar

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Re: Mustachian People Problems (just for fun)
« Reply #6885 on: November 09, 2019, 10:41:59 PM »
https://www.phrases.org.uk/meanings/bean-counter.html

Seems like neither of you actually know how many individual beans you have vs general weight.   Such accuracy is better used on lentils.

Hirondelle

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Re: Mustachian People Problems (just for fun)
« Reply #6886 on: November 10, 2019, 03:19:19 AM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Similar to your problem:

A friend asked me how much my budget was for a trip I was gonna take, as it was a long trip to an expensive country and she knows I'm cheap/frugal/good with money (depending on your definition). I had to admit I had no budget.. I always check what price levels I can expect and have a maximum number in my head, but in the end I'm always way, way under that 'budget'.

LennStar

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Re: Mustachian People Problems (just for fun)
« Reply #6887 on: November 10, 2019, 05:36:01 AM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Similar to your problem:

A friend asked me how much my budget was for a trip I was gonna take, as it was a long trip to an expensive country and she knows I'm cheap/frugal/good with money (depending on your definition). I had to admit I had no budget.. I always check what price levels I can expect and have a maximum number in my head, but in the end I'm always way, way under that 'budget'.

I have never understood all that budget stuff.

I have my "stone set" expenses like rent and electricity. It is the same, every single month, it may only change once a year. You don't need a budget, because you cannot increase this (not without knowing it very well).

After that I buy food. I don't have a budget here. I just buy what I need and want to eat, and no budget is changing that. I surely am not gonna starve.
Eating out? I'm not a fan of this anyway. If it happens, it happens. No budget is making me say "Ah, no, I can't come to your birthday" (or whatever event there is).

Anything else? I am too much a perfectionst (hm... I admit so far it does not sound like it :D) to buy stuff I have not informed myself before, often extensivly.
I am not going through this hassle if I don't need X.

The only thing I spend money without thinking about it (or it being a regular necessity) is books.
And even with all the time of the day and the most ferocious reader, you can only buy so much books. (Of course I still have an unread books pile. But then again, the bigger it gets, the less inclined I am to buy new books, so it evens out eventually.)

Taran Wanderer

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Re: Mustachian People Problems (just for fun)
« Reply #6888 on: November 10, 2019, 09:48:05 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.

Alternatepriorities

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Re: Mustachian People Problems (just for fun)
« Reply #6889 on: November 10, 2019, 09:54:16 AM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Similar to your problem:

A friend asked me how much my budget was for a trip I was gonna take, as it was a long trip to an expensive country and she knows I'm cheap/frugal/good with money (depending on your definition). I had to admit I had no budget.. I always check what price levels I can expect and have a maximum number in my head, but in the end I'm always way, way under that 'budget'.

Before getting married that method worked really well for me. Now I double what I would have used as a maximum when single and we usually spend about that much instead of coming in way under. Estimating a monthly travel budget based on what we've spent on travel the past year was probably the most interesting/insightful part of creating our fudget.

Alternatepriorities

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Re: Mustachian People Problems (just for fun)
« Reply #6890 on: November 10, 2019, 10:00:34 AM »
I've been helping a group of friends understand their finances and had to lead a budgeting discussion last night...

MPP: We don't budget, we just spend as little as practical, earn more than we spend and invest the surplus... So we had to invent a budget. I named it our "fudget".

Similar to your problem:

A friend asked me how much my budget was for a trip I was gonna take, as it was a long trip to an expensive country and she knows I'm cheap/frugal/good with money (depending on your definition). I had to admit I had no budget.. I always check what price levels I can expect and have a maximum number in my head, but in the end I'm always way, way under that 'budget'.

I have never understood all that budget stuff.

I have my "stone set" expenses like rent and electricity. It is the same, every single month, it may only change once a year. You don't need a budget, because you cannot increase this (not without knowing it very well).

After that I buy food. I don't have a budget here. I just buy what I need and want to eat, and no budget is changing that. I surely am not gonna starve.
Eating out? I'm not a fan of this anyway. If it happens, it happens. No budget is making me say "Ah, no, I can't come to your birthday" (or whatever event there is).

Anything else? I am too much a perfectionst (hm... I admit so far it does not sound like it :D) to buy stuff I have not informed myself before, often extensivly.
I am not going through this hassle if I don't need X.

The only thing I spend money without thinking about it (or it being a regular necessity) is books.
And even with all the time of the day and the most ferocious reader, you can only buy so much books. (Of course I still have an unread books pile. But then again, the bigger it gets, the less inclined I am to buy new books, so it evens out eventually.)

If you replace "books" with "outdoor gear from REI" that's almost exactly how my spending worked during the first phase of life after university. I've learned since that having goals to work toward, like spend less that $75 per month eating out, really help some people spend less. It doesn't seem to matter for me though.

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #6891 on: November 10, 2019, 10:00:52 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.

And at work there's even an incentive to spend money: if you don't spend your X budget this year because of Y, chances are your budget for next year will be cut because apparantly you don't need that much. This was really visible when I worked in software, the 2nd half of december was always really busy because companies are suddenly on a spending spree. Sure you may not really need this or that but it may be useful for this one thing someday, but next year you really need to buy some other tool so you can't afford to have your budget slashed. It's extremely inefficient but it's how many megacorps work.
« Last Edit: November 10, 2019, 10:08:31 AM by Imma »

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Re: Mustachian People Problems (just for fun)
« Reply #6892 on: November 10, 2019, 10:06:50 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too. It drives me nuts.

Me too! I know a family who followed a Dave Ramsey style budget but spent more than $1k on a new couch simply because the furniture budget had accumulated enough money to do so... Meanwhile their savings rate is 10% because that's what the budget says to save. My mind is still blown.

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Re: Mustachian People Problems (just for fun)
« Reply #6893 on: November 10, 2019, 10:49:15 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.

And at work there's even an incentive to spend money: if you don't spend your X budget this year because of Y, chances are your budget for next year will be cut because apparantly you don't need that much. This was really visible when I worked in software, the 2nd half of december was always really busy because companies are suddenly on a spending spree. Sure you may not really need this or that but it may be useful for this one thing someday, but next year you really need to buy some other tool so you can't afford to have your budget slashed. It's extremely inefficient but it's how many megacorps work.

Even in academia lots of things work like that. I have a yearly budget for courses and conferences and if I don't spend it before the end of the year it just disappears rather than that it builds up. Highly annoying, as last year I had budget leftover that I couldn't put towards a more expensive conference/course this year.. Some things just don't start in January and end in December.

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Re: Mustachian People Problems (just for fun)
« Reply #6894 on: November 10, 2019, 10:59:30 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.

And at work there's even an incentive to spend money: if you don't spend your X budget this year because of Y, chances are your budget for next year will be cut because apparantly you don't need that much. This was really visible when I worked in software, the 2nd half of december was always really busy because companies are suddenly on a spending spree. Sure you may not really need this or that but it may be useful for this one thing someday, but next year you really need to buy some other tool so you can't afford to have your budget slashed. It's extremely inefficient but it's how many megacorps work.

Even in academia lots of things work like that. I have a yearly budget for courses and conferences and if I don't spend it before the end of the year it just disappears rather than that it builds up. Highly annoying, as last year I had budget leftover that I couldn't put towards a more expensive conference/course this year.. Some things just don't start in January and end in December.

There are lots of companies, actually most of them, that make budgets. They guess how much revenue they will make and guess their cost. But I once read a book about not having a budget for a company. Every investment plan should be discussed and accepted or not, based on what it's prospects are. Budgetting for a whole year ahead is very limiting.

bluebelle

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Re: Mustachian People Problems (just for fun)
« Reply #6895 on: November 10, 2019, 11:04:44 AM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.
I think budgets are very useful to help evaluate what spending is important to you.  What is frivolous to you may have value to someone else.   A thoughtful budget isn't going to have frivolous spending in it, but it should have some discretionary spending in it.   It should have some 'fun' money in it.   We all need fun.  (I'm working on the assumption that the debt situation isn't a hair on fire, wolf at the door scenario).   Just like it's important to save for a rainy day, it's important to enjoy the shine while is shines now.   Money, in and of itself holds no value.  Its value comes from the joy and security it brings your family.  When I bought my first house, I explained the power of compound interest to my ex and he tried to draw up a budget that was so tight, living would have been deary, no pizza or a movie for the foreseeable future (every spare cent would go to paying down the mortgage, back in the day when interest rates were 14%)....

full disclosure - I come from a position of privilege; I was born with a fairly high IQ, I went to university when it was affordable, got a computer science degree, graduated when companies were hiring in droves,  I've never been without a job, I have an income well above median, I've never had a serious health crisis, and come from conservative blue collar roots so my wants are pretty pedestrian.   I've been thinking about privilege a lot lately.  While I wasn't born into wealth and all the connections that comes with that, I also wasn't born with strikes against me.    While I've worked hard and earned what I have, I also remind myself that there's been a lot of luck too.

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Re: Mustachian People Problems (just for fun)
« Reply #6896 on: November 10, 2019, 11:20:25 AM »
We have an annual travel budget because it's something we actually do need to rein in a bit, since the possibilities with travel are really endless and we have good imaginations. But for individual trips, no - if one trip is pricier than expected, we just go somewhere cheaper for any remaining trips that year.

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Re: Mustachian People Problems (just for fun)
« Reply #6897 on: November 10, 2019, 10:08:00 PM »
Budgets can be useful for strategic planning.  We use them to help us to plan major purchases, investment strategies, and to understand our overall financial picture looking forward.  But month to month, we just buy what we need.

I think a lot of people use budgets as a way to justify frivolous purchases.  "Well, it's in the budget, so why not?"  I see that at work, too.  It drives me nuts.

And at work there's even an incentive to spend money: if you don't spend your X budget this year because of Y, chances are your budget for next year will be cut because apparantly you don't need that much. This was really visible when I worked in software, the 2nd half of december was always really busy because companies are suddenly on a spending spree. Sure you may not really need this or that but it may be useful for this one thing someday, but next year you really need to buy some other tool so you can't afford to have your budget slashed. It's extremely inefficient but it's how many megacorps work.

Even in academia lots of things work like that. I have a yearly budget for courses and conferences and if I don't spend it before the end of the year it just disappears rather than that it builds up. Highly annoying, as last year I had budget leftover that I couldn't put towards a more expensive conference/course this year.. Some things just don't start in January and end in December.

Works this way in my family, too.  I wanted to spend an extra $1000 this year on glass figurines, but my wife said no because I didn't spend my entire 2018 glass figurine budget.

Taran Wanderer

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Re: Mustachian People Problems (just for fun)
« Reply #6898 on: November 11, 2019, 07:23:43 PM »

Alternatepriorities

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Re: Mustachian People Problems (just for fun)
« Reply #6899 on: November 18, 2019, 07:40:22 PM »
We have an annual travel budget because it's something we actually do need to rein in a bit, since the possibilities with travel are really endless and we have good imaginations. But for individual trips, no - if one trip is pricier than expected, we just go somewhere cheaper for any remaining trips that year.

This seems like a good idea... I'm not sure how to sell it though.

Especially since we've definitely blown any reasonable travel budget this year, but I was running some numbers today and realized that using MAAP (Mustachian Accepted Accounting Practices - ie counting debt/principle payment as savings) we will very likely save more than our AGI this year...