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Joe Woodbury wrote: Thus, using things like cash back credit cards and coupons is exactly what they do-
The studies I've seen show they use cash. No cards.
There are two kinds of people in the world: those who can extrapolate from incomplete data.
There are only 10 types of people in the world, those who understand binary and those who don't.
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Like others have mentioned - early in my life / career I earned less and spent more (house, kids, etc...). Reserves were at a minimum.
Now I'm 50+ years old and totally debt free (no mortgage, no car loans, no revolving credit card debt, etc...) and reserves are building rapidly despite my lifestyle improving as well. My wife and I both drive new-ish vehicles, we take regular vacations, we're always making improvements around the house. Buying a new fridge is never a problem. If I lost my job, I can easily go 2-3 years without starving or becoming homeless.
P.S. While I could have chosen to buy a Mercedes with cash - I bought the Honda Accord (with cash) instead. 
Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain
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Mercedes are quite expensive where I live, they're considered a luxury. I cannot buy a Merc, but I can buy a decent sedan paid in cash, but I wouldn't. I own my third car now (a VW Jetta) and all three are pre-owned cars bought in cash. I bought a large fridge a couple of months ago and that too paid in cash. I have enough savings to spend a year comfortably without a job.
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Central Europe -> 20.000 euro.
+10.000 if you have a SO.
+10.000 per kid.
So around 40k euro (47k USD) total, typically.
I find this to be the normal buffer in Europe.
Some variations between EU members exist, but everyone in my extended family (~150 people) has at least 10k in the bank.
All middle class, about 50% blue collar 50% white collar.
Sometimes it bothers me that having debt is somewhat normal in the US.
It irks me how the term "middle class" can apply to people with debt.
We just call people with no money poor.
No offence implied; the worth of a person does not correlate with money in the bank.
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In my country (Norway), authorities think people should own their own homes, so spending your money on a reasonable - I am not saying 'luxurious' - home is a much better idea than piling up bank notes.
Right now, I have got a huge pile of bank notes, but within a year, I will spend it on my house, with two main goals: Upgrade it to 'Universal Access' standard, such as making sure that I can continue living there even if I end up in a wheelchair or loose my eyesight when I get old.
Second, I want to make it cheap to run the house. The day that I retire, I would like to spend my pension on pleasures, not on keeping the house warm. Even though energy (electricity in particular) is cheap in this country (in the range of 0.08 to 0.10 USD per kWh), a typical detached house requires 20-30.000 kWh/year, most of it for heating. Installing solar heat collectors, heat pump, improving insulation etc. can reduce the heating costs to a third.
Sure enough: The investments will be so large that they are not recovered until my grandchildren takes over the house. But I've got the money now: If I don't invest them in my house, I certainly will not be saving them to pay my power bills when I retire; I'd be left with high heating costs and less comfort.
Investing your money in your house is quite common here. If you really need to buy a Mercedes but haven't go all the money required, your bank will probably accept your house as a collateral for the loan to buy that car. (Actually, that is quite common here - the interest rate is much lower for a house loan than for a plain car loan.)
Advisors around here say that you should strive for maintaining a buffer the size of one month of income - by the end of the month, of course. So the day after payday, you have two months of income in you account (or pile of banknotes). Not very many people have that, though. They rather invest their surplus money in their house. The only reason for not doing that is if you consider your house to be perfect; there is nothing money can do to make it more valuable (to yourself, and/or if you plan on selling it some day).
I bought my house more than 30 years ago, when interest rates were in the 11-14% range. So I learned to pay back my loan as quickly as possible. I still do. A pile of money is worth nothing - the valuable stuff is what you can buy for the money. So go out and get yourself some valuable stuff!
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Is geothermal a viable option? In Ohio/US it looks like the breakeven point is reached relatively quickly, and it can also be used for cooling if you need it.
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Definitely - in the context of heat pumps. Norway has no geothermal heat that can be used directly (the way the do in Iceland).
The "problem" is that heat pumps for geothermal energy are high quality, durable ... and at least 4-5 times as large investment for the heat pump alone as for the air-to-air heatpumps. And then you must drill a well, usually around 500 ft deep. As long as you built your house on rock, it isn't too expensive, but if it is build on sand, you cannot just drill, you must brace the hole to keep it from collapsing, which raises the cost significantly.
If you make the investment, your heatpump will have the same efficiency year round. An air-to-air heat pump doesn't give you much energy "for free" when it is -20F (or -30C) outdoors, when you need the heating the most. As you point out: Summertime, you can use the well for cooling (the Icelanders cannot do that!), and that is another significant reason why people choose a ground heat variant, rather than air-to-air.
Under my house, I would have to drill at least 150 ft, maybe more, before reaching solid rock. But I will remodel my garden, raising the level of the lawn by almost 4 ft. So I scrape off the old top soil, lay out a zig-zagging cooling pipe of 1200 ft length, fill 4 ft of soil on top and put the topsoil back. This moving of soil would have been done in any case, so the extra cost is limited to the cooling pipe (and a little work).
Another option used by some people is to throw the cooling pipe out in the river, into the bay or into a lake. But then it should be anchored well, weighed down, and lay so deep that water won't freeze around it. And you should make very sure that no boat is throwing out their anchor where you locate it.
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150 ft of sand? Wow. I have four to six inches of soil before I hit limestone bedrock, so making a ground loop would require expensive trenching in solid rock. When they installed the farm drainage tile in the 1930's, they used dynamite, and I'm told the barn was filled with dynamite for several months. They used dynamite to excavate a basement in the 1950's too.
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Not sand, more like moraine gravel. Nevertheless, it would collapse without bracing.
After drilling the hole, they insert an inner pipe where water in pumped down to the bottom of the hole. The water flows up along the outside, being heated by the rock on the way up. The heat pump can cool down the fluid to, say, -12C (or 10F), if needed to pick up enough heat for your house (but to keep the efficiency, or COP, at maximum, the heat pump cools it down this much only if really needed - it is more efficient to increase the flow at a higher temperature, if there still is room for that).
I grew up in a mountain town myself, and when I moved out, I was shocked to see that people would ever take the risk of building a house diretcly on sand/gravel. In my boyhood, I always thought that houses were built on rock, period! (So when we read in that book about the man who build his house on sand ... We immediately saw the sillyness of it, noone would build their house on sand, would they?)
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My wife and I keep a reserve of about $150K. We also have several other accounts we could tap into if we needed, IRAs, an annuity account, CDs that we'd lose money to taxes if we tapped into them, but they're there as a secondary reserve if we lost our jobs and everything seriously went to crud. This does not include our 401k/retirement accounts that we would not touch for anything except retirement.
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Using credit is not a sign of being, as you say, "on the wrong side of the savings limit."
Many credit cards offer things like cash back or points or something. As long as you pay the balance in full, it would actually be foolish not to take advantage of that (in my case) 1.5% cash rebate on the fridge. There are good and bad uses of credit, like anything else.
That being said, it seems like you and I are close in our approach to finances. Don't buy a new car just to have a new car; have an actual need, not a want.
Here in the US, we have a phrase, "<expletive> you money". It means, having enough reserves so that, should your employer upset you, you can walk away, saying "<expletive> you".
It's pretty nice. Everyone should have the good fortune to get to that point.
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As a rule of thumb: Three month "prudent reserve."
Ensure it is sufficient to get through three months if all income completely stopped.
The rest is invested.
The three months provides time to access investments if income doesn't resume in a timely manner.
Damn tough when you have children, but it protects them also.
Cheers,
Mike Fidler
"I intend to live forever - so far, so good." Steven Wright
"I almost had a psychic girlfriend but she left me before we met." Also Steven Wright
"I'm addicted to placebos. I could quit, but it wouldn't matter." Steven Wright yet again.
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There's a smart financial advisor on the radio here in my part of America who advise you keep 3 to 6 times your monthly expenses in liquid form (e.g., a savings account). That way you can use cash for those emergency car repairs or appliance purchases, or stay afloat if you lose your job until you can find another.
If you think 'goto' is evil, try writing an Assembly program without JMP.
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By the time you reach retirement age, you should have accumulated enough savings for 20 years of whatever lifestyle you like. That's a couple million dollars for a developer in the united states.
Let that number sink in for just a minute. You can't save that much money in the last 5 years before you retire. You have to build it up and compound it over time.
A senior software developer can be out of work for six months waiting for a good opportunity, and that's if the economy is robust. If there's a recession on, you might have to wait several months before you can begin to find work. Since it's hard to ratchet down your spending rate overnight (like by selling your house to get rid of mortgage costs), having a cushion of around one year's take-home is appropriate.
And it depends upon how much disaster you want to prepare for. My wife was paralyzed in a fail. Now she needs to replace 15 years income plus 20 years retirement. Fortunately we were good savers.
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A half a year of cash, at least. A year, preferably.
Learned that from my folks when they had 4 boys going to $ school. That cushion seemed reasonable. Still seems so, 50 years later.
You have your head screwed on straight. Yes, TV says otherwise, but consider the source.
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Thanks to all for the suggestions.
Alas, I bought a new radiator for the car instead. 
Maybe next month.
Arguing with a woman is like reading the Software License Agreement. In the end, you ignore everything and click "I agree".
Anonymous
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How do you type with that?
Bad command or file name. Bad, bad command! Sit! Stay! Staaaay...
AntiTwitter: @DalekDave is now a follower!
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OriginalGriff wrote: How do you type with that?
Typing isn't required with that, it is strongly typed.
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simple: Javascript, no typing needed.
Arguing with a woman is like reading the Software License Agreement. In the end, you ignore everything and click "I agree".
Anonymous
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If a pig is enjoying itself, is it having a swill time?
| Ravings en masse^ |
|---|
| "The difference between genius and stupidity is that genius has its limits." - Albert Einstein | | "If you are searching for perfection in others, then you seek disappointment. If you are seek perfection in yourself, then you will find failure." - Balboos HaGadol Mar 2010 |
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If it is not being picked by a vulture !
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I'm gonna sty away from this one.
"the debugger doesn't tell me anything because this code compiles just fine" - random QA comment
"Facebook is where you tell lies to your friends. Twitter is where you tell the truth to strangers." - chriselst
"I don't drink any more... then again, I don't drink any less." - Mike Mullikins uncle
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You just want to hog all the attention.
The difficult we do right away...
...the impossible takes slightly longer.
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I should have porcine that response coming.
"the debugger doesn't tell me anything because this code compiles just fine" - random QA comment
"Facebook is where you tell lies to your friends. Twitter is where you tell the truth to strangers." - chriselst
"I don't drink any more... then again, I don't drink any less." - Mike Mullikins uncle
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No dirty stuff in the Lounge, if you don't mind...
If you have an important point to make, don't try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time - a tremendous whack.
--Winston Churchill
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