10/31/2006
Financial Talk in Gentoo
So every now and then it sparks up and people start talking financial stuff in #gentoo-dev, John and I will usually pipe in with a comment like “Go read http://www.mymoneyblog.com, get yourself an HSBC savings account, get yourself an IRA, contribute as much as you can to your IRA and squirrel away at least 2 months worth of living expenses in your HSBC account.” or something to that effect. Why do we say this? Because many of the Gentoo developers are youngins, I can’t really talk since I just recently turned 24 but there’s lots of people younger then me in Gentoo. People my age and younger tend to be compulsive spenders and hold down a job during college just enough to pay the rising minimums on that credit card some blonde girl working for the credit card company convinced them to get for a t-shirt.
So why is that our constant advice? Well it’s never too early to start saving away for those Golden Years (hey, devs… you need to be able to retire early and dedicate yourselves to purely Gentoo work in ~30 - 35 years). Plus, you can always use that money towards a home purchase since first time buyers are exempt from most early withdrawl taxes and fees associated with IRA accounts, I say most because there are some situations where you can still get dinged. Some more good info is available, at The Motley Fool. And lastly the savings account is always a smart idea because you never know what can happen or what can come along. It’s best to be prepared. You can loose your job at any point, if you’re in college you might find that your work schedule is too demanding and hurting your grades and find yourself in the position that you have to quit.
Or the best example is my landlord one year in college swung by the house we were renting from him and he offered us a 25% discount on our rent if we could prepay 6 months in advance out of the 7 we had remaining. Since I wasn’t too sure of his financial situation, we worked it out that our lease would also be amended that the last months rent would be the security deposit (plus the difference we still owed since the deposit was 1/2 a month) and we’d take care of anything that needed to be fixed up. Because one of my roommates and I had saved up enough we were able to accept the deal and our third roommate paid us back each for the next 3 months. But it was definitely nice not to have to worry about a rent payment the rest of that year. As an added bonus, when I sent him the fractional rent payment in the last month, the check got returned to me in the mail and he never came to get our keys from us or inquire if we were moving out. 3 months later I saw him in an ad on TV for his real estate business on TV. No idea what happened to him during that time period or why he needed the cash so quick, but it worked out to our benefit.
Moral of the story. Start saving away for retirement kids. Do this wisely, don’t be like your other peers and start educating yourself early and read about financial topics. And always have a little bit of cash saved away, don’t be like the rest of the college kids and constantly hit that overdraft mark and have to live off of Ramen for two weeks because your next paycheck went to pay the overdraft fees.
Oh, what prompted this post was Josh Jackson was asking me about some stuff in #gentoo-dev and I remembered Seemant’s blog post from a while back.
Filed under: Financial, General, Linux
3 Responses to “Financial Talk in Gentoo”
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October 31st, 2006 at 3:41 am
I would say rather than a Traditional IRA to open a Roth IRA, then all your earnings (hopefully) will be tax free when you retire. Speaking of Motley Fool, they have several good news letters you can subscribe to to help you pick stocks, they do cost though. IRA’s don’t have to be mutual funds either, you can open one and buy/sell stocks if you get your IRA with a broker. Use one of the discount brokers like Scott’s Trade, TDAmeritrade,….
Totally agree with the saving several months worth of money you don’t touch unless it’s an emergency. Better than a regular savings account, see if your bank has a money market account, you’ll earn more interest on the deposits.
October 31st, 2006 at 3:20 pm
Decibels:
I totally agree. Roth IRAs are generally the way to go, there are some tax situations where Traditional IRAs do make more sense. Didn’t realize my article sounded biased towards Traditional IRAs. Good tips about the type of investments in IRAs. Now that you mention TDAmeritrade, if you hold out, they always seem to offer no-fee for life Roth IRAs sometime every year (I forget when) but I signed up for one a while back. One of the real popular IRA administrators is Vanguard, however unless you have $10,000 to initially plunk down, they will be expensive.
WRT the money market accounts vs savings accounts. The reason I push HSBC is because their savings account is comparable or better then most money market account. Check out the info on them from MyMoneyBlog.com
October 31st, 2006 at 5:44 pm
Not that it seemed biased toward Traditional IRAs, just wasn’t mentioned. I have one, just can’t get any tax advantage out of it anymore. Unless I have been doing my taxes wrong. After a certain income level or because your company matches/contributes to your 401K, you can’t deduct unless your income is pretty low. Also right now for most people Roth IRAs have a max contribution of $4000 yr. unless your married or over a certain age. So they need to look at their situation. Which might be best for them.
TDAmeritrade: Unless I got in by accident at the right time, I wasn’t aware of a fee. I’ve never paid a fee on it. It does earn interest also, but the amount it so so so so small. It’s laughable.
I also agree with you on using Motley Fool. They generally take a long term, don’t try and time the market and look at the value of the company approach. Even if you can’t afford one of their newletters, if you read some of the articles you will see them mention stock as a certain newletter pick. And a lot of times in the letters they rerecommend buying some more of a stock they picked again. In the short, you can still get a lot of great information without even subscribing to a news letter and they have free discussion boards for most stocks also. All you need is a email address and register.
I’ll have to look into the HSBC. Thanks for the info.
Oh, one other tip I have been doing. People need to try and stop the ‘I have to have it now’ mentality. I usually put the money in ’savings’ and earmark it for whatever (ie. car repair, trip, new clothes,…), then when the amount gets near the goal can purchase it. Not that I always follow it, but try to.
And the biggest tip of all. Pay off those damn credit cards. Don’t get caught in the revolving balance, where you pay a little each month. It’s a losing battle. If you balance it more than you can pay off each month. Try, try and try again to pay way more than the minimum each month and get them paid off. Then when they are $0 balance, try and pay them off each month in total. Credit cards are useful, but they are also like Casino’s: only after your money.
Thanks for putting this info out there Doug!