Comments on: Three Easy Steps to Determine Your Financial Priorities

By: Andrew @ Financial Services

Andrew @ Financial Services — Thu, 05 Nov 2009 14:19:45 +0000

I purchased a lot of equipment some time ago which cost a lot (to think I even took a cash loan for those!) and I ended up just selling everything recently because I desperately needed the money. It's undeniable that people's priorities change and you can't keep on the same path just because you feel that your past decisions (purchases) would go to waste. Even up to now I am not so sure but I think that we should just make the wisest financial decision we can as of the moment so if things do change, we can safely look back and not regret the things that we did.

By: LeanLifeCoach

LeanLifeCoach — Thu, 05 Nov 2009 06:11:53 +0000

@Daniel: Keep in that the money you have accumulated on the day you retire will not all be needed on the first day. A portion of your money will still be invested in real estate, bonds or stocks possibly. These investments will continue to grow.

Also, you may want to recalculate how much you need. If your number is $8 million you must really want much more than $4000/month or you are planning on living a really long retired life. $8 million divided by $4,000/month is 2000 months or 166 years of income.

Either way… if you think you can, you will, if you think you can’t your right.

By: Daniel

Daniel — Wed, 04 Nov 2009 18:55:18 +0000

Good point, but I’m very wary of counting on additional income streams. Will social security still be around when I retire? Probably, but I guess I want to take a very conservative approach.

@Moneyning, I guess there’s no way to avoid working hard…o well

By: MoneyNing

MoneyNing — Wed, 04 Nov 2009 18:21:55 +0000

It might sound impossible but remember that inflation goes both ways. Things cost more but your income also increases due to inflation. $1.25 million was an impossible goal for many 44 years ago, but there are many millionaires in the United States today. Be optimistic and do your best, because you will often surprise yourself with hard work and dedication.

By: Miranda

Miranda — Wed, 04 Nov 2009 18:09:20 +0000

Thanks for stopping by, all, and sharing your thoughts. I also think it is worth noting, @Daniel, that figuring how much you need to generate doesn’t mean that you necessarily need to have a huge chunk saved up. There are things you can do now to start earning a regular income, such as using residual income online, looking for good dividend stocks and protecting some of your assets with TIPS. Retirement income doesn’t just have to come from a large chunk of money that you’ve managed to accumulate over the years; it can also be supplemented by income streams you start cultivating now.

By: Daniel

Daniel — Wed, 04 Nov 2009 18:02:03 +0000

Right, but looking at the past 44 years leads me to looking at the future 44 years…and by those standards, I’d need over $8 million in 44 years to have what today feels like $1.25 million. That seems like an impossible goal. Sure, the rate of inflation was high in the 70s, but who’s to say it won’t be that way in the next 30 years (or 5!)?

By: MoneyNing

MoneyNing — Wed, 04 Nov 2009 17:25:10 +0000

I don’t think there’s really an exact way to figure out how inflation is going to play out. You can use the past as an approximation to bridge some of the differences though. For example, use the last 20 years to determine the next 20 and so on. Also, being conservative for retirement has never hurt anyone either.

By: Daniel

Daniel — Wed, 04 Nov 2009 16:23:23 +0000

Nice post, Miranda. I struggle with creating concrete goals and at times, look too far into the future.

If my goal is to: “save enough to generate $4,000 a month after I retire,” how do I know how much $4,000 will be down 20, 30, or 40 years down the line? I feel like this is a dangerous path to take because you may have a higher dollar amount of a smaller relative amount. This could lead to big trouble.

By: Craig

Craig — Wed, 04 Nov 2009 16:17:59 +0000

Creating a plan and determining what is important will help you plan out. Then you may be able to separate accounts and plan accordingly. I love to travel and have set up a travel fund and slowly put some money in for my next trip.

By: kenyantykoon

kenyantykoon — Wed, 04 Nov 2009 16:14:33 +0000

Before splurging, I always ask myself this question… Do I need it or do I just really want it? Most of the things that I would normally overspend on are on the really want it list. Needless to say, this has prevented me from buying a lot of useless crap that would bring buyers remorse- Stuff like the play station 3 or smart phones or very expensive computers and clothes that are too expensive. FRUGALITY RULES