What does “financially stable” mean to you?

[QueenIsabella]

I agree with most of that except for the part about putting a vacation on a credit card unless you mean the money has been saved and the vaca (card) is immediately paid off.

What I was specifically thinking of is, my DH gets RMDs from an inherited IRA. His mother, bless her, put a high value on education and travel. We use the main inheritance, in part, to pay for our children's education, and we earmark the RMDs for family travel. I would be perfectly comfortable charging a vacation, knowing the RMDs were landing the following month to pay off the bill. You pick the date the RMDs are taken--we chose our FIL's birthday--and you know on the first of the year exactly how much you'll be getting. So, it's not even some nebulous, "I think I'm getting a bonus next month" thing, it's a specific amount arriving on a specific day. Personally, I wouldn't do that with a bonus, unless I knew the amount and when it would be arriving. Nothing wrong with thinking, "Ooh, we'll use the bonus to go to WDW!", but until you know how much, don't actually book anything. You may be staying Grand Floridian concierge, or you may be at the Motel 6 up the road. It would suck to book GF and have to cancel, or end up going in major debt because the bonus didn't materialize.

 

[tguz]

What I was specifically thinking of is, my DH gets RMDs from an inherited IRA. His mother, bless her, put a high value on education and travel. We use the main inheritance, in part, to pay for our children's education, and we earmark the RMDs for family travel. I would be perfectly comfortable charging a vacation, knowing the RMDs were landing the following month to pay off the bill. You pick the date the RMDs are taken--we chose our FIL's birthday--and you know on the first of the year exactly how much you'll be getting. So, it's not even some nebulous, "I think I'm getting a bonus next month" thing, it's a specific amount arriving on a specific day. Personally, I wouldn't do that with a bonus, unless I knew the amount and when it would be arriving. Nothing wrong with thinking, "Ooh, we'll use the bonus to go to WDW!", but until you know how much, don't actually book anything. You may be staying Grand Floridian concierge, or you may be at the Motel 6 up the road. It would suck to book GF and have to cancel, or end up going in major debt because the bonus didn't materialize.

Agreed, earmarked known distributions is pretty much like saved money in my book.

 

[tvguy]

I don't remember what we paid for our Sub Zero freezer in 1999 when we built the house, but I just looked up the model we had and they're $12,000 now. That's decimate my IRA!

Wow, that would. Hard to spend more than $900 at the big box stores for a freezer. Most are in the $200-$500 range. I was surprised that my daughter was able to buy a new refrigerator yesterday for $800.

 

[Dakota731]

Some people just have the mindset of "all debt bad!", without considering that some people make different choices. My personal favorite is, "always pay off your mortgage as fast as possible!" There's absolutely nothing wrong with having that goal...but, some of us have a really low interest rate, and can make more in the stock market, rather than selling off stuff to pay off the mortgage. That doesn't make others wrong on mortgages (or not wanting to pay any interest, ever), it just means that I've considered the options and do what's right FOR ME. Just like you do what's right FOR YOU.

There are plenty of other money decisions that are not one size fits all. Another of my favorites is "nobody has a pension anymore!" Um, yeah, they may be rarer, but some people have them. I can also see the case for some student loans (depending on circumstances and major), or even putting a vacation on a credit card.

According to CNN the percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. So unless you work for the government, teacher etc, yes they are pretty rare. And if you are a taxpayer, you pay for those pensions plus your own 401k. So I certainly don’t want to be paying interest for stuff that I can afford to pay cash for on top of all that!

 

[tvguy]

According to CNN the percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. So unless you work for the government, teacher etc, yes they are pretty rare. And if you are a taxpayer, you pay for those pensions plus your own 401k. So I certainly don’t want to be paying interest for stuff that I can afford to pay cash for on top of all that!

LOL, private pension. I discovered when I retired I was entitled to one....$28 a month!

 

[gmi3804]

My mom worked for the Chicago Park District from 1950 until she got married in 1963, and then never worked another day in her life. She still got her meager pension, which she was quite proud of when it started paying off.

 

[QueenIsabella]

According to CNN the percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. So unless you work for the government, teacher etc, yes they are pretty rare. And if you are a taxpayer, you pay for those pensions plus your own 401k. So I certainly don’t want to be paying interest for stuff that I can afford to pay cash for on top of all that!

Okay. My husband has 6! We thought it was 5, but then he got a mailing for the sixth one a few weeks back. One of them IS a federal pension--he currently works for the Army corps of Engineers. The others are from various companies he's worked for (Entergy, Bechtel, General Dynamics, etc.). His brother has one from GE. Maybe we're a weird family? And they're not our only retirement account--DH has had 401ks , everywhere he's worked.

The issue may also be "defined benefit pension plan". Some are "defined contribution" plans.

 

[808blessing]

Yes, I have sacrificed to contribute to state pension plan as an educator. It was a life rewarding career decision but not financially rewarding at first. Patience with kids and rewards is finally paying off! I am grateful for all of the above.

 

[firefly_ris]

My dad is the only person I know currently collecting a pension and the only people I know my age (40) that will get one when they retire are employed by the state.

 

[WDW_fan_in_TX]

Means being able to pay for stuff without having to take out loans. Wife had a wreck Friday. Didn't total the car, so we will have to pay for the repairs out of pocket. Probably $4k-$5k. Financially stable would be having the ability to pay for that without a loan of some sort.

 

[cvjw]

Means being able to pay for stuff without having to take out loans. Wife had a wreck Friday. Didn't total the car, so we will have to pay for the repairs out of pocket. Probably $4k-$5k. Financially stable would be having the ability to pay for that without a loan of some sort.

Do you not have car insurance? Why are you paying out of pocket?

 

[Twilghtsprkle]

Do you not have car insurance? Why are you paying out of pocket?

Some people drop collision to save money after the car gets to certain age. Or some people only pay the minimum liability insurance require by their state. Collision is not a state requirement.

 

[QueenIsabella]

Do you not have car insurance? Why are you paying out of pocket?

New Hampshire doesn't require car insurance--it's the "Live Free or Die" state, the laws are sometimes very libertarian, for better or worse. As a result, car insurance is expensive, because a lot of people don't buy it. Also, Vermont next door is very big on pulling over a car with NH plates, then fining them for not having insurance (which is required in VT).

New Hampshire also doesn't require seatbelts for adults, or motorcycle helmets.

As to having a financial emergency, a few months back, we had to replace a water heater, washer/dryer, and an A/C/heating unit, all in the same month. While we were able to cover it, it was painful, especially since they were so close and not really anticipated. (Well, I knew the dryer had been limping along...) DH asked, "Why do I feel poor?" and I pointed to his hot shower and clean clothes.

 

[dpswift]

Means being able to pay for stuff without having to take out loans. Wife had a wreck Friday. Didn't total the car, so we will have to pay for the repairs out of pocket. Probably $4k-$5k. Financially stable would be having the ability to pay for that without a loan of some sort.

Talk to your insurance company. If the other driver has any insurance at all your repair should be covered

 

[cvjw]

Some people drop collision to save money after the car gets to certain age. Or some people only pay the minimum liability insurance require by their state. Collision is not a state requirement.

If this is the case here, it is a good reminder that dropping collision coverage may not be the best idea if you don’t have a savings cushion. People can be left with thousands in out of pocket repairs.

 

[WDW_fan_in_TX]

Yes, we have insurance. But the officer deemed neither driver at fault. So can't go through insurance.

Do you not have car insurance? Why are you paying out of pocket?

 

[WDW_fan_in_TX]

We did. They said since neither party was faulted/ticketed, it's like it never happened. So there's nothing they can do.

Talk to your insurance company. If the other driver has any insurance at all your repair should be covered

 

[barkley]

If this is the case here, it is a good reminder that dropping collision coverage may not be the best idea if you don’t have a savings cushion. People can be left with thousands in out of pocket repairs.

also-if you live in or near a state with low coverage requirements it can be well worth the additional amount to have underinsured motorist coverage.

 

[Matty B13]

Yes, we have insurance. But the officer deemed neither driver at fault. So can't go through insurance.

You should be able to go through your insurance, but check your deductible if it is higher than the damage amount it isn't worth initiating a claim.

 

[tvguy]

You should be able to go through your insurance, but check your deductible if it is higher than the damage amount it isn't worth initiating a claim.

Yeah, if there is damage, the insurance should cover anything beyond the deductible. The insurance company may do their own investigation, so police determining who was at fault does not release the insurance from paying. Here in California, police rarely do reports on accidents if there are no injuries. No need to. They consider it a civil, not a criminal issue.