Got Financial Cushion?

[Sprint100]

Between Jtrain's posts and Seggy's and Doug sporadically kickin knowledge here and there, I would suggest to every potential pilot to invest in mutual funds and open an IRA. Save the individual stocks for after you have developed a good cushion. I'm not talking a $500 type cushion either, but something you could live off of for about 6 months or more. The reason I say this is because flight training takes lots of money, so you spend all your money on flight training then afterwards you get the pay that follows which amounts to, well you know. Before you know it you're living paycheck to paycheck barely making it, then most get married, have kids, yada-yada-yada and your monetary value is dictated by your next paycheck. Keep in mind that next paycheck is already accounted for anyways.

 

[Maximilian_Jenius]

Between Jtrain's posts and Seggy's and Doug sporadically kickin knowledge here and there, I would suggest to every potential pilot to invest in mutual funds and open an IRA. Save the individual stocks for after you have developed a good cushion. I'm not talking a $500 type cushion either, but something you could live off of for about 6 months or more. The reason I say this is because flight training takes lots of money, so you spend all your money on flight training then afterwards you get the pay that follows which amounts to, well you know. Before you know it you're living paycheck to paycheck barely making it, then most get married, have kids, yada-yada-yada and your monetary value is dictated by your next paycheck. Keep in mind that next paycheck is already accounted for anyways.

:yeahthat:

Anything to keep peeps from scabbing!

 

[Sprint100]

Anything to keep peeps from scabbing!

Oh please, let's not turn this into a scab/strike thread. This is helpful information that can go beyond that.

P.S. - If you feel the need to dab into that financial cushion to buy your first house, at least, have a solid plan to put that money back ASAP.

 

[derg]

A lot of people don't think about that though. Do you know how many people I've heard from over the years that are at "Job A" that want to work for "Job B" but can't afford the drop to the bottom of the seniority list at a bigger airline?

The industry, as I saw personally in 2001 and 2005, is notoriously unstable and you need to protect yourself financially.

We'll see at least 15 different excuses for not having an 3 to 6 month emergency fund, but you still need to build one.

Mutual funds to burying money in mayonnaise jars in your backyard, it doesn't matter, but pepole need to do that.

 

[Maximilian_Jenius]

Oh please, let's not turn this into a scab/strike thread. This is helpful information that can go beyond that.

P.S. - If you feel the need to dab into that financial cushion to buy your first house, at least, have a solid plan to put that money back ASAP.

You're right of course. But just teasin ya (hense the emoticons).

But back on topic that sounds like a pretty good set up for some financial security.

I'm not a financial guru so not into stocks, bonds or mutual funds only because of ignorance. I just save $100-200 out of each check and put in my money market account.

Want to help me learn to be that big time financial guru?

 

[Sprint100]

You're right of course. But just teasin ya (hense the emoticons).

But back on topic that sounds like a pretty good set up for some financial security.

I'm not a financial guru so not into stocks, bonds or mutual funds only because of ignorance. I just save $100-200 out of each check and put in my money market account.

Want to help me learn to be that big time financial guru?

No prob, anybody can pm me and I can point you in the right direction for novice investors without alot of money to start. Be forewarned, I can't tell you what to invest in.
Tonyw is the bigger financial guru though!!!

 

[Minnesota_Flyer]

You're right of course. But just teasin ya (hense the emoticons).

But back on topic that sounds like a pretty good set up for some financial security.

I'm not a financial guru so not into stocks, bonds or mutual funds only because of ignorance. I just save $100-200 out of each check and put in my money market account.

Want to help me learn to be that big time financial guru?

Your emergency stash should be cash (savings account, CD, money market) or maybe in a short-term bond fund. If your need for that money coincided with a nasty economic downturn (very likely), and you had that emergency stash in stocks or mutual funds, you could find yourself with a lot less money right when you really need it.

 

[jtrain609]

A lot of people don't think about that though. Do you know how many people I've heard from over the years that are at "Job A" that want to work for "Job B" but can't afford the drop to the bottom of the seniority list at a bigger airline?

The industry, as I saw personally in 2001 and 2005, is notoriously unstable and you need to protect yourself financially.

We'll see at least 15 different excuses for not having an 3 to 6 month emergency fund, but you still need to build one.

Mutual funds to burying money in mayonnaise jars in your backyard, it doesn't matter, but pepole need to do that.

Reason number 92348 I need to get the heck out LA like yesterday...

 

[typhoonpilot]

I agree every pilot should have a 6 month emergency fund to make ends meet when the job goes away. It will happen to 95% of pilots at some point in their career.

I would tend to disagree about going with the herd mentality of mutual fund investing with the majority of your investable assets though. Just look around you to see who is doing that and where they are in the financial spectrum of people. Mutual fund investors are people with jobs who need to work to pay their monthly expenses. People who are hoping to retire and live comfortably on their invested assets. The only thing mutual fund investors are doing is making financial planners, talking heads ( think Suze Orman ), bankers, investment houses, and mutual fund managers rich. True, you get a paltry average rate of return that is better than cash and keeps you hoping, but in the end you are just contributing to the creation of wealth for those who are controlling your thoughts and actions.

Think outside the box. Be different. Become an investor, an inventor, an entreprenuer.



Typhoonpilot

 

[KLB]

Think outside the box. Be different. Become an investor, an inventor, an entreprenuer.
Typhoonpilot

I agree with you. The only thing is that if don't know what you're doing, you'll lose big time.

 

[Timbuff10]

A lot of people don't think about that though. Do you know how many people I've heard from over the years that are at "Job A" that want to work for "Job B" but can't afford the drop to the bottom of the seniority list at a bigger airline?

So if we had a national seniority list people could move around easier and the airlines would be forced to compensate their employees better or either have their "employee transition" costs go up.

 

[FlyChicaga]

What would your advice be for someone who has high expenses (rent, gas, car, electricity, groceries, etc.) and is also working to pay off debt (credit, car, school loans)? I would love to stash away six months of pay, but I'm putting what I could use to stash up that money into credit card repayments. I feel that the need to get out of credit card debt outweighs the need to have six months of pay saved up, at the moment. That is not to say that I don't plan on building up that kind of savings, however.

If I have one bit of financial advice, it is do not, I repeat do not, use credit cards for daily expenses. I don't have a huge amount of debt, but it is enough to make my stomach ache. I can't imagine having any more than I do now, and I will never, ever have carry-over credit debt once I'm out of the hole I'm in now. Just don't do it. Trust me. You'll sleep better at night!

 

[Sprint100]

Pump ya'lls brakes.
There are a number of ways to do things to make money just as there are a number of ways to lose money. Instead of criticizing an action and saying don't do that, when doing nothing is worse, provide insight. I could list numerous reasons why I don't like just saving solid cash, but I'm not going to do that since it may work better for some.
This SHOULDN'T be a don't do that, do this thread. That is another reason why some don't do anything because people in the know aren't letting others make choices with their money. They just say this is the only way to go, but the person with the money may not be feelin' that or it just makes them that much more confused. Plus, none of us are trying to make a commision.
Information only, please, because I'm serious as cancer for peeps to do something.

 

[Minnesota_Flyer]

I would tend to disagree about going with the herd mentality of mutual fund investing with the majority of your investable assets though. Just look around you to see who is doing that and where they are in the financial spectrum of people. Mutual fund investors are people with jobs who need to work to pay their monthly expenses. People who are hoping to retire and live comfortably on their invested assets. The only thing mutual fund investors are doing is making financial planners, talking heads ( think Suze Orman ), bankers, investment houses, and mutual fund managers rich. True, you get a paltry average rate of return that is better than cash and keeps you hoping, but in the end you are just contributing to the creation of wealth for those who are controlling your thoughts and actions.

Index funds. With few exceptions, active investors (fund managers or do-it-yourselfers) do not beat the market over the long haul. So why bother? If you think you can do it -- fabulous. But do yourself the favor of keeping track of your returns (your real, honest-to-god, taxes and investment costs included, and don't forget that Bolivian penguin farm you took a bath on returns) and make sure that you actually are beating the market and not just making your broker rich with short-term trading commissions. And if you find you really are that good at it, that's what you should do for a living because if you want to get really, really, really, really, reallyreallyreally rich, other people's money is the way to do it.

I agree with you. The only thing is that if don't know what you're doing, you'll lose big time.

Exactly.

 

[Maximilian_Jenius]

Tonyw is the bigger financial guru though!!!

But MeritFlyer is the ultimate financial guru!!!

 

[Sprint100]

What would your advice be for someone who has high expenses (rent, gas, car, electricity, groceries, etc.) and is also working to pay off debt (credit, car, school loans)? I would love to stash away six months of pay, but I'm putting what I could use to stash up that money into credit card repayments. I feel that the need to get out of credit card debt outweighs the need to have six months of pay saved up, at the moment. That is not to say that I don't plan on building up that kind of savings, however.

If I have one bit of financial advice, it is do not, I repeat do not, use credit cards for daily expenses. I don't have a huge amount of debt, but it is enough to make my stomach ache. I can't imagine having any more than I do now, and I will never, ever have carry-over credit debt once I'm out of the hole I'm in now. Just don't do it. Trust me. You'll sleep better at night!

That is one helluva question. I would say put a temporary stop to doing things that could make a job-loss situation even worse.
My aunt had to do that. She was bringing in 6 figures and still had to declare bankruptcy, but she declared with a plan to payoff creditors. The only way she did it was putting a hardcore stop to things and saving/investing what she could, even if it was putting away $10 for the month.
When it comes to building up a nice nest-egg, every little bit counts. Remember to that you gotta crawl before you walk. So if you are truly serious about setting up a nest egg, you would be socking away whatever little bit you can.
As far as paying off debt first, that is a big priority to some. Some would put that ahead of anything else, but for me I would cutback on some of the debt payments to sock away a little. As much as I consider it important to knock out debt, I still think you should have a just in case fund. Because the quicker that fund starts getting established, you're lessoning the fall of a possible job loss. Job is loss and nobody gets paid, period.

 

[typhoonpilot]

Matt:

Yes, definitely pay off the credit card debt as fast as possible. The interest rate on that has got to be high.

Sprint:

I would say that it is okay to start off saving in Mutual Funds until you have enough real money to invest. Something with a 3-5 year time horizon or more is best. The best overall mutual fund of the last twenty years is Dodge and Cox Stock fund. Unfortunately not open to new investors. Their International fund has been doing very well over the last few years and is open to new investors. That is a good way to diversify out of the U.S. Dollar.

The point of my first post was to get people to realize there are alternatives and not everyone needs to go down the path of mutual fund investing.

I would submit that a person in their twenties or thirties who can start building up a rental property portfolio will do far better in the long run than someone who invests in mutual funds. Not necessarily residential property either. How about building hangars at a small airport and leasing them out? That's what I mean by thinking outside of the box. Be different, find a need and exploit it.


Typhoonpilot

 

[B767Driver]

Matt:

I would submit that a person in their twenties or thirties who can start building up a rental property portfolio will do far better in the long run than someone who invests in mutual funds.

Airline pilots should not have the typical 3-6 months of living expenses saved. It should be more like 18 months, IMO. It's more difficult to find a similar job in aviation...and at the higher levels, you may never replace your income.

As far as rental home investing, I have some and agree it can be a good investment...but not how the typical person goes about it. Never go into debt to buy rentals (i.e. take out a mortgage)...save until you can buy one completely. Too much risk otherwise. Lots of other risks as well...maintenance, liability, vacancies, etc. Treat it like a business, not an investment. Would you ever go to the bank and borrow $75,000 to put in a mutual fund or stock buy? Neither should you to buy rental property. You'll go broke.

 

[Sprint100]

I would say that it is okay to start off saving in Mutual Funds until you have enough real money to invest. Something with a 3-5 year time horizon or more is best. The best overall mutual fund of the last twenty years is Dodge and Cox Stock fund. Unfortunately not open to new investors. Their International fund has been doing very well over the last few years and is open to new investors. That is a good way to diversify out of the U.S. Dollar.

There are mutual fund companies out there that start investing your money immediately. I started with T. Rowe Price at $50 a month. Sharebuilder, pretty much, takes what you have but they have upfront fees that can make investing seem like a why bother deal. Note: That last sentence depends on how much you invest during each transaction.

The point of my first post was to get people to realize there are alternatives

Way cool!!!!! People do need to know there are alternatives

I would submit that a person in their twenties or thirties who can start building up a rental property portfolio will do far better in the long run than someone who invests in mutual funds. Not necessarily residential property either. How about building hangars at a small airport and leasing them out? That's what I mean by thinking outside of the box. Be different, find a need and exploit it.

I am looking out for the newbie, whether you are a pro pilot already or aspire to be a pro pilot, with little expendable cash that hasn't started that emergency fund.

 

[aloft]

I would love to stash away six months of pay, but I'm putting what I could use to stash up that money into credit card repayments. I feel that the need to get out of credit card debt outweighs the need to have six months of pay saved up, at the moment.

I hear ya, but I disagree. If you lost your job tomorrow, how would you make your credit card payments? What about 3 months hence? If you don't have a sufficient cushion and the worst happens, late or missed payments will wreck your financial future. Your cards will all go to default APRs nearing 30% or more, you'll get raped by late/missed payment fees, etc etc.