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7 helpful posts from /r/personalfinance

Reddit’s personal finance subreddit is a great place to find interesting and helpful financial advice. Here are the 7 most thought-provoking threads I’ve found in the community.

Ramit Sethi

One of my favorite things to read is /r/personalfinance.

Here are seven of my favorite posts from the sub — and what YOU can learn from them.

7 valuable Reddit personal finance posts

1. “Paying rent isn’t throwing away money.”

If I ever go bald, know it’s because I tore my hair out every time I heard people say this.

From the /r/personalfinance thread:

While it is true that when you buy a home a portion of your monthly mortgage payment will be going to principal, and therefore you are paying yourself in some ways, however, the cost of home ownership is significant. Some of the lesser known costs include the lack of flexibility, stress, the risk of home price declines, home maintenance, real estate taxes, and HOA fees.

These are also known as phantom costs — the expenses you don’t normally consider when you buy a house.

OP also offers a great mental reframing of rent, saying, “As human beings, there are several things we need to survive, including food and shelter. Paying money for rent is no more a ‘waste’ of money than paying for food is.”

For more, be sure to check out my article on real estate investing myths and my post on how to buy a house.

2. “Your parents took decades to furnish their house.”

It’s easy to look at someone successful and compare yourselves to them. You start feeling like you aren’t doing enough to reach your own goals and might try to rush things to achieve their level of success.

In reality, the most successful people devoted a lot of time and energy into getting to where they are — and you should do the same.

That’s what’s at the heart of this thread about the importance of patience when it comes to your goals:

If you’re just starting out, remember that it took your parents decades to collect all the furniture, decorations, appliances, etc you are used to having around. It’s easy to forget this because you started remembering things a long while after they started out together, so it feels like that’s how a house should always be.

It’s impossible for most people starting out to get to that level of settled in without burying themselves in debt. So relax, take your time, and embrace the emptiness! You’ll enjoy the house much more if you’re not worried about how to pay for everything all the time.

So whether you’re saving for your wedding or trying to get out of debt, know that these things take time and that’s okay. Once you stop worrying about trying to accomplish your goals quickly, you can focus your mental energy on the things you can control to accomplish your goals.

3. “I found out a coworker with the same job is making twice as much as me.”

A fascinating story about a research assistant who finds out she’s being paid MUCH less than a coworker who joined six months after she got the job.

When she raised the issue to management, her boss tried pulling some corporate trickery that’s common with bad companies:

One week later she called me into her office. She absolutely berated me for thinking I could move into the coordinator position for which I was already doing the work, and complained about my work performance. Last month I had an evaluation, and received very high praise for my performance, and there has not ever been complaints about my performance in the past. All in all, I assume she was making excuses not to increase my pay.

Eventually, she was able to find a job at another place that offered her more than she was currently earning — which led to a bidding war between her old boss and her new employer (aka the best position you could possibly be in as a job seeker).

A few lessons for job seekers from this post:

  • Negotiate mercilessly. OP could have just shrugged her shoulders and kept quiet when she found out she could be earning more — BUT she didn’t. She addressed the issue and now has two different companies vying for her work. That’s why it’s always in your best interest to negotiate your salary even if you think you’re earning enough.
  • Adopt an abundance mindset. It’s easy to take any job offer that comes your way — especially when money’s tight. OP had two job offers and knew that if one didn’t work out, the other would be there for her. This is also known as an abundance mentality, and it can be a powerful mental shift for the way you approach finances.
  • Know your worth. The first step to any salary negotiation is knowing how much you’re worth. While websites like Glassdoor or PayScale can help you get a good sense of this, talking to people in your field about their earnings can give you a sense of what you should be making (like OP did). So don’t be afraid to ask. Top Performers do all they can to know what they’re worth.

Be sure to check out my article on how to negotiate your salary and the Briefcase Technique for more.

4. What to do when a loved one dies.

When tragedy strikes, you find yourself asking questions you’ve never even considered before. This /r/personalfinance thread tries to answer one of those questions: How do I handle my finances when someone I love dies?

While the post deals with money accounts and estate issues beautifully, it also goes into the more lesser known parts of dealing with death, like where to get an urn:

The funeral home won’t tell you this, but you don’t have to buy things like urns and whatnot from them. I chose to, because the prospect of receiving a plastic baggie with my husband’s ashes that I would have to deal with was horrifying. A friend bought an urn for his father’s ashes on Amazon. There are options that are cheaper than the funeral home, but I chose to pay the obscene markup so that I wouldn’t have to deal with the logistics.

Overall, it’s a great read for anyone — even if you haven’t suffered any personal tragedies. It’s an excellent perspective on life, death, and where our finances fit in between it all.

5. “We decided not to buy a bearded dragon.”

For some, a Rich Life means a new car, ordering appetizers at restaurants, or paying off their debt. For others, it’s a desert lizard chilling out in a reptile aquarium in their living room.

Or at least that’s what one Reddit user thought when he got ready to buy a bearded dragon for his son’s birthday. When he ran the numbers though, he realized that the investment he’d be making into the pet would be much more than he bargained for.

[We] learned it needs expensive UV bulbs that last about 6 months and are about $40 each. Also the electricity cost the run this heat 24 hours can be a drain on the electric bill.

Also the beardie needs to go to the vet every 6 months for a checkup. And finally, food. They have a very diverse diet and can eat up to $15 per week in foods. So I did a total cost analysis for a beardie that lives 12 years and it turned out to be a whopping $10,000.

This is a great example of figuring out what fits into your Rich Life. I’m a big believer in spending on the things you truly love and ignoring the rest. So if you believe that a bearded dragon will help you live your Rich Life, by all means buy that lizard!

However, if you find that the benefits of caring for a reptile native to sweltering deserts for a decade aren’t worth the money and energy, don’t worry about it. Your Rich Life is what YOU make of it.

Also LOL at this robotically cold statement from a commenter: “It’s about ROI on the pet. Dogs are more fulfilling companions than a lizard. At least that’s the case with OP.”

6. What to do when you lose everything in a fire.

Sometimes we do all we can to prevent disaster — but it ends up happening anyway. Case in point: Losing everything you own in a fire like this OP.

One former insurance worker offered their incredibly insightful advice on how the insurance company is going to approach the situation and what OP should do to get the most out of his claims.

The biggest takeaway: Use the truth to your advantage. The commenter then used an example of how one guy used his situation to net him a five-figure insurance claim.

I remember one specific customer … he had some old, piece of shit projector (from mid-late 90s) that could stream an equally piece of shit consumer camcorder. Worth like $5 at a scrap yard. It had some oddball fucking resolution it could record at, though — and the guy strongly insisted that we replace with “Like Kind and Quality” (trigger words). Ended up being a $65k replacement, because the only camera on the market happened to be a high-end professional video camera (as in, for shooting actual movies). $65-goddam-thousand-dollars because he knew that loophole, and researched his shit.

This goes to illustrate a big point when it comes to anything insurance related: Do your research. Once you know the rules of the game you’re playing (whether it be taxes, insurance, or salary negotiations), the better positioned you are to win.

7. Explain it like I’m 18/22/30/40.

These threads are the perfect place to start if you’re completely new to the world of personal finance (aside from IWT of course).  

These guides break down important themes for your personal finance journey at different stages of your life. They are:

  • ELI18. For when you’re out of the house for the first time and wouldn’t recognize a 401k if it walked up to you and slapped the fidget spinner out of your hand. Great advice on topics like opening bank accounts, applying for a credit card, and even finding a roommate.
  • ELI22. So you’ve graduated college and are out in the “real world.” Scary right? This post makes it a little less scary by providing a solid introduction to taxes, contributing to retirement, and paying off your student loans.
  • ELI30. When you’re 30, a whole new crop of financial questions start coming up. How do I handle money when I get married? How do I buy a house? I have a dog … that’s like taking care of a baby right? This comprehensive post helps answer a few of those questions.
  • ELI40. The name of the game at 40 and beyond is retirement — rather, it’s making sure your investments are best positioned for when you retire. This post is a great primer on planning for the future and beyond.

Why I LOVE /r/PersonalFinance

You probably wouldn’t say anything if a friend or coworker tells you about a money decision you don’t agree with (racking up credit card debt, buying a house with little income, etc.). But if you saw the same issues on Reddit personal finance, you’d let the world know exactly how you feel about their issues and what you’d do instead.

It’s this level of honesty that helps us see how people really use money — and how to use it yourself.

Whether you’re in your forties planning out your retirement or you’re still in high school trying to figure out what to do with your paycheck, I’m glad you’re here.

I want to give you something that can help you take your personal finances to the next level:

The Ultimate Guide to Personal Finance

In it, you’ll learn how to:

  • Master your 401k: Take advantage of free money offered to you by your company … and get rich while doing it.
  • Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
  • Spend the money you have — guilt-free: By leveraging the systems in this book, you’ll learn exactly how you’ll be able to save money to spend without the guilt.

Enter your info below and get on your way to living a Rich Life today.

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2 Comments

 
  1. Phil

    Love number 2.
    Also I believe that people don't set enough micro-goals that support the process towards their end-goal. That is why people soon start to think their goals are unattainable and thus they lose motivation. Setting micro-goals on the contrary will give more confidence and reassurance on the way.
    In fact I believe you can't set enough small goals. Example: Let's assume your goal is to get promoted by the end of the year. In that case your focus always should be your next meeting, your next email or your next phone call. By focusing and doing well on these short term goals you will probably over perform on your long term targets.

  2. Carmen

    Good stuff. Thanks.