Real-World Funds Allocation

i'll assume you're spending the full $600 estimate in non-fixed expenses, that rounds out your monthly expenses at ~1400/mo with 2150 in income and 250 you're autosaving which I think is good, leaving you +500 every month not including poker. Sucks that there's no employer match, but it's still nice to just auto-save for retirement. I don't think you should approximate 600/mo in poker withdrawals when your BR is only 2k though. I would say stop withdrawals altogether since you have a positive savings rate already not including poker income, so that you can move up stakes, etc, but since you are from the U.S. I think it's smart to keep a lot less of your net worth online these days. So just keep whatever you are willing to lose via a site shutdown online, and keep withdrawing to stay conservative.

As far as what to do with your excess money, what interest rate do you have on your car loan? If it's anything higher than 4% it's hard to beat the instant return on just throwing money toward that until it's gone. If it's lower than 4% then investing in index funds isn't a bad way to go, but getting out of debt should be a priority imo. So I would just take the full 500 in excess cash you generate each month and throw it at your debt, and anything you cash out from poker I would leave in your checking account to replace funds in your bankroll if you were to go on a downswing. Seems like a safe/reasonable plan. And also if you ever do go on a downswing, since your roll is only 4x your monthly free cash flow it doesn't hurt you to pay off your debt in advance because it would only take you another month to generate another 500 to use for poker if you chose to.

On May 17 2012 15:44 thewh00sel wrote: i'll assume you're spending the full $600 estimate in non-fixed expenses, that rounds out your monthly expenses at ~1400/mo with 2150 in income and 250 you're autosaving which I think is good, leaving you +500 every month not including poker. Sucks that there's no employer match, but it's still nice to just auto-save for retirement. I don't think you should approximate 600/mo in poker withdrawals when your BR is only 2k though. I would say stop withdrawals altogether since you have a positive savings rate already not including poker income, so that you can move up stakes, etc, but since you are from the U.S. I think it's smart to keep a lot less of your net worth online these days. So just keep whatever you are willing to lose via a site shutdown online, and keep withdrawing to stay conservative. As far as what to do with your excess money, what interest rate do you have on your car loan? If it's anything higher than 4% it's hard to beat the instant return on just throwing money toward that until it's gone. If it's lower than 4% then investing in index funds isn't a bad way to go, but getting out of debt should be a priority imo. So I would just take the full 500 in excess cash you generate each month and throw it at your debt, and anything you cash out from poker I would leave in your checking account to replace funds in your bankroll if you were to go on a downswing. Seems like a safe/reasonable plan. And also if you ever do go on a downswing, since your roll is only 4x your monthly free cash flow it doesn't hurt you to pay off your debt in advance because it would only take you another month to generate another 500 to use for poker if you chose to.

Thanks for the advice. I have 0% interest on my car (parents gave it to me at 100/month till i pay it off). I also have no other debts. Many options available. Ideas?

That's cool about the car loan, can't beat that.

The market has been downswinging the last couple weeks, would be a good time to put some money in since you can find some good value with the prices this low. Either do some research on specific investing strategies or plop some money into index funds. Fidelity has a handful of ishares ETF's (exchange traded funds) that are no commission so you can save a bundle when you aren't investing really large sums by putting money into those and not hand-picking stocks and paying $8 per trade or w/e. Another option for index funds is Vanguard which is pretty well-respected afaik although I haven't dealt with them personally. Could look into low expense mutual funds too. They have to tell you what their expense ratio is, so you can google "lowest expense ratio mutual funds" and come up with a good list high-rated/low-expense ones.

As far as more risky stuff goes, you could leave all of your money in your bankroll in order to move up stakes more quickly, bc you can't beat the ROI of poker in the stock market, just much more volatile. You don't even have to leave it online but you could dedicate money in your bank account toward your bankroll from cashouts each month knowing you will replace the online poker money if you need to. If you are from Tampa then I assume there are decent live games near you that you could seek out as your roll grows too. Another benefit to putting money into something like no-commission ETFs is that you can leave it in there even if it's part of your roll and then it's invested while it's also your roll...One of the most important things about poker is liquidity (being able to get to your money fast) which is why I like the idea. You could end up in some sticky situations if the market tanks and you don't want to withdraw at a loss, etc, etc but still a good, aggressive plan I think with a nice blend of money invested, but still easy to get to without paying commission to liquidate if need be.

awesome woosel, youre the man. I've posted this same thread on Reddit/personalfinance and Reddit/poker... but this seems to be some of the best advice yet. That and this:



The first suggestion I would make is to get a better idea of your non-fixed monthly expenses. Use some software like excel or mint.com to help you track your expenses for a couple months to get a range. Using the software to track your transactions will also help you identify wasteful or non-essential spending that you can (and should) cut out. Based on your findings, set a reasonable and realistic monthly spending limit and stick to it. For me, I put $400/month into a separate checking account for my non-fixed expenses. By keeping only $400 in this account, it ensures that I don't go over my budget, because I can't physically spend money that's not in that account.

After that, it's pretty standard advice around here. Establish a savings account and work on getting a $1,000 emergency fund. After the emergency fund, work on paying down your debts (car, credit card, medical bills, student loans). After your debts are gone, build an emergency fund big enough to cover 3-6 months worth of expenses.

It's good that you're investing in your 401k. I would perhaps lower your contribution since there's no matching to something like 5%. I would then setup a Roth IRA and start contributing to that. You can put up to $5,000/year into an IRA.

Anything that you've got left over after that, I would set aside for a targeted savings account. This can be for things like: vacation, upgrading to a better/newer car, down payment on a house.

One thing I would stress is to not ever rely on your poker winnings to support yourself. It is great that you're skilled enough to be able to bring in that kind of money playing a game, but you can't count on that money always coming in. I would take maybe 25-50% of your poker winnings and spend it on yourself, your family, or friends, take them out to eat, buy a new tv or computer, travel, take a class - just do things you enjoy with those people you enjoy spending time with. The rest of the poker earnings, I would put into a targeted savings account

I agree with the part about not relying on poker winnings to support myself (at least for right now) because A) i have a small sample size, and B) I'm not a professional by any means.... but I think he's definitely off with his 2nd half of that paragraph. Thoughts on this strategy?

*Edit - I have since linked up with Mint.com and that shit is amaaaazing. Really broke down my spending for me. SO +ev

I must say, i REALLY like the thought of opening a new account for poker (if not ETFs like you suggested) offline... and redepositing if need be. sounds really +ev in respect to liquidity, and protected against poker sites going down, etc...

Roth IRAs are really cool for tax purposes...but for liquidity they are awful. If you need access to the money that you put in you have to pay a 10% penalty if it is earlier than 5 years since you made the deposit. Mint.com is great if you're not using it already, I assumed everyone was on there since it's so useful :-P.

Anything that you've got left over after that, I would set aside for a targeted savings account. This can be for things like: vacation, upgrading to a better/newer car, down payment on a house. One thing I would stress is to not ever rely on your poker winnings to support yourself. It is great that you're skilled enough to be able to bring in that kind of money playing a game, but you can't count on that money always coming in. I would take maybe 25-50% of your poker winnings and spend it on yourself, your family, or friends, take them out to eat, buy a new tv or computer, travel, take a class - just do things you enjoy with those people you enjoy spending time with. The rest of the poker earnings, I would put into a targeted savings account

This says "This doesn't look like sustainable income, you should SPEND IT"?! I would avoid all of this. Sounds very consumerist/wasteful/borderline retarded, but I will give them the benefit of the doubt since they probably don't view poker playing as an investment. Minus the down payment for a house you are going to be much better off just making your ball of money grow as large as you can. You are drastically increasing the amount of time it will take you to build up a huge amount of money by just randomly spending that much of it.

Since you mentioned personal finance sites I would check out:

www.mrmoneymustache.com
Personal finance/early retirement site. Has a lot of neat ways to save, and is easy/fun to read. Some of the stuff is kind of extreme, and nature-ish, but he also has a lot of articles that poker players/logical thinkers can relate to and the site is easy to navigate and find the most popular/useful articles.

www.dividendmantra.com
This site is just a guy's personal blog where he talks about dividend stocks, which ones he invests in, etc. The main premise of the blog is the goal of early retirement, but there is good, transparent investing advice as well.

www.dividendgrowthinvestor.com
Kind of a raw-data blog where the writer breaks down different stocks and analyzes whether they are worth investing in at the current levels. Similar to dividendmantra, but less personal, and more stock data.

If your looking for guaranteed returns and don't really wanna trust the market there are several "Green" checking options in my local area that offer 3% interest up to "X" amount by just direct depositing, using your debit 8-10 times a month and getting e-statements. Again not the greatest and paying off your car would be money better spent as whoosel point out.