What First Steps to Take to Help Me Become Financially Independent

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RatRace007
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Joined: Thu Jan 04, 2018 3:14 pm

What First Steps to Take to Help Me Become Financially Independent

Post by RatRace007 » Thu Jan 04, 2018 3:55 pm

Hello,

I just got done reading the first chapter of "The Boglehead's Guide to Investing 2nd Edition" and I thought it would be a great idea to sign-up for this forum to get advice from other knowledgeable investors. I am a beginner to investing, with a lot of student debt. I graduated in 2015 with a bachelor's degree in human physiology. I was in the working world for two years and found out that paying $500 a month plus trying to live on your own was close to impossible. I got interested in personal finance and investing, because I wanted to learn how to become financially independent. I decided to go back to college to obtain a bachelor's degree in accounting. I want to learn more about business and investing.

I believe working in the accounting field will help me achieve more financial independence, by being rewarded with a bigger salary. However, I want to learn how I should be investing properly to make the best of all my possibilities. I want to pay off my student debt fast, as well as invest in other things so I can make my wealth grow by investing while paying down my student debt.

Below I have included a list of the books on personal finance and investing I have read, and also the books I have purchased to read in the future. I would like to know if there is any order I should be reading these books? Also, if there are any of the books that I purchased, that I should not be reading? I will be reading these books pretty slowly since I am going to school full time.

As a full time student getting his second bachelor's degree and $60,000 in debt from student loans, what are my first steps to investing and becoming financial independent? Thank you!

Books I Have Read:
Rich Dad Poor Dad by Robert Kiyosaki
The Millionaire Next Door by Thomas J. Stanley & Wililam D. Danko
I Will Teach You To Be Rich by Ramit Sethi
The Automatic Millionaire: A Powerful One-step Plan to Live and Finish Rich by David Bach
The Money Book for the Young, Fabulous & Broke by Suze Orman

Books I Have Purchased To Read In The Future
The BogleHeads' Guide to Investing 2nd Edition by Mel Lindauer, Taylor Larimore, Michael LeBoeuf
One Up on Wall Street by Peter Lynch
The Intelligent Investor Revised Edition by Benjamin Grahm
Think and Grow Rich by Napoleon Hill
Fooled by Randomness by Nassim Nicholas Taleb
Irrational Exuberance Revised and Expanded 3rd Edition by Robert J. Schiller
Common Stocks and Uncommon Profits by Philip A. Fisher
Business Adventures by John Brooks
The Little Book of Common Sense Investing by John C. Bogle
The Little Book That Still Beats the Market By Joel Greenblatt
The Four Pillars of Investing by William J. Bernstein
Common Sense on Mutual Funds by John C. Bogle

Shallowpockets
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by Shallowpockets » Thu Jan 04, 2018 4:11 pm

Rule one should be live within your means. Really below your means, but within is a start.
Also make sure you marry someone who is on the same page with this.
Then just squirrel money away year after year. It is a process.

cjcerny
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by cjcerny » Thu Jan 04, 2018 4:15 pm

If I were in your shoes, my first step would be to invest only enough money in your 401k to get the full employer match. I would not invest a dime until I paid off the student debt. An emergency fund would also be a higher priority than investing.

WhiteMaxima
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by WhiteMaxima » Thu Jan 04, 2018 4:16 pm

reduce spending, increase earning and saving. done.

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Taylor Larimore
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by Taylor Larimore » Thu Jan 04, 2018 4:17 pm

RatRace007:

Welcome to the Bogleheads Forum!

After reading the "get-rick-quick" books you listed, you need help.

Bill Bernstein has written a wonderful short book for Millennials. It is available free in pdf here:

https://www.etf.com/docs/IfYouCan.pdf

Happy New Year!
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

2015
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by 2015 » Fri Jan 05, 2018 12:50 pm

WhiteMaxima wrote:
Thu Jan 04, 2018 4:16 pm
reduce spending, increase earning and saving. done.
^^^
This. The exact formula I used to retire at 60 after a complete crash and burn at 40.

You have to be prepared to see life and spending differently from most of your peers, and AFAICT, it takes a change in values, from spending to saving. Invest in yourself, and your career, and commit to always be learning. Get the best mentors you can find everywhere, people who have gone before you, who can save years off of your life by giving you the best advice as opposed to having to learn it on your own through trial and error. Work on yourself and try to get rid of emotional baggage as we see examples everyday of successful people with foibles that damage their success. Learn from the best, and avoid the worst. Align yourself with people who are going somewhere, and stay away from those who are doing nothing with their lives. Remember that your choice of a mate is one the most important decisions you will ever make.

RatRace007
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by RatRace007 » Fri Jan 05, 2018 7:03 pm

Taylor Larimore wrote:
Thu Jan 04, 2018 4:17 pm
RatRace007:

Welcome to the Bogleheads Forum!

After reading the "get-rick-quick" books you listed, you need help.

Bill Bernstein has written a wonderful short book for Millennials. It is available free in pdf here:

https://www.etf.com/docs/IfYouCan.pdf

Happy New Year!
Taylor
Mr. Larimore,

Thank you for the response. I appreciate the response from someone with such a high status on this forum and the investing field. I did read your link you provided. I do have a question some of the books I asked about.

Some of the books I purchased are highly regarded as some of the best investing books. They are even talked about on the wiki page links provided through the forum. Should I focus on those books after the books suggested in the PDF you provided me by Bill Bernstein? Should I also finish the Bogleheads' Guide to Investing, or go right into reading Common Sense on Mutual Funds by John Bogle (since I have already read the Millionaire Next Door)?

Look forward to your answer! Thank you again!

RatRace007
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by RatRace007 » Fri Jan 05, 2018 7:05 pm

cjcerny wrote:
Thu Jan 04, 2018 4:15 pm
If I were in your shoes, my first step would be to invest only enough money in your 401k to get the full employer match. I would not invest a dime until I paid off the student debt. An emergency fund would also be a higher priority than investing.
Thank you for the help. That was something I was think of as well.

Would it be smart to start investing more into a 401K or Roth IRA if the interest rate for return on investment is higher than the interest rate on some of my student loans?

Sophia1884
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by Sophia1884 » Mon Jan 22, 2018 11:33 pm

Hi there, not sure why this thread died out and I may be late to the party but I wanted provide the small amount of guidance that I can. I would say that I am a novice on the investment spectrum but I hope I have the basics right. If I don't, I'm sure I'll get corrected (and learn something along the way!).

So, what you're saying is that you paid a lot of money for a degree that's not useful. You are now in debt, needing another degree that you're currently working towards. Accounting is a great option! On the education front, keep your grades high and make every single attempt to intern, make connections, attend alumni gatherings, etc. What you need isn't just an education, you need a GOOD JOB....and good jobs are given to those that are liked and trusted. Get to know your profs, ask them how to get involved in the accountant organizations in your area, talk to your guidance advisers to see what alumni groups you can join. Keep your grades up to show you're smart and committed. Build your dream network/job BEFORE you graduate, because if you graduate without a job lined up...you're then unemployed. Unemployed accountant is a much harder sell then a hardworking, brilliant, likable accounting STUDENT.

On the investing front, bogleheads have a deeply ingrained way (a wise way, I think) of doing things. They cover the risks and then to grow from safety. Meaning: 1. Live below your means. If you want to be financially independent, you have to take responsibility for the $60,000 degree mistake you made, pay it off as quickly as possible. Yes, it is uncomfortable but then, there is a reason why most people work until they simply can not. 2. Build an emergency account. You NEED backup funds so that when you are invested in the market, you don't have to take money out of the market to pay off an accident/emergency.

Those steps are incredibly important because by covering those two things, you now have a clean slate on which you you draw out your plans and dreams. Once you're done with those two (it may take several years as many on this forum have indicated), you'll no longer be paying off your debt but be using that money to invest. The more left over money you have, the more you can invest, the quicker your funds will grow. The three funds that are heavily recommended here are the Total Stock, Total International, and The Bond Index. The books you've listed as being read are a fun read, but they are really written to either sell books or give ideas outside of market investment. A lot of people buy and read books (making the authors wealthy) but not a lot of people are able to actually become financially independent. Your answers are in the books are are selling but in the books that have made a difference for others, books that have actually helped make people financially savvy and independent. Also, you may want to start going to the library vs. buying...hundreds of dollars worth of savings there :) Libraries have e-books as well.

When I started learning about investing, I mostly had questions. When you research the questions, you learn a lot. I would encourage you to spend as much time as possible on this site and just read. The board provides incredible guidance on not only finances but also on life questions in general.

Good luck!

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Hawaiishrimp
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by Hawaiishrimp » Mon Jan 22, 2018 11:41 pm

Rule #1: Don't accumulate debt (especially student loans). if you have it already, work a 2nd job or 3rd to pay it off asap.
Rule #2: Increase your income. Be it passive income, YouTuber, Uber/Lyft, weekend OTs, higher paying jobs.
Rule #3: Live below your mean. Don't buy stuff you don't need with money you don't have to impress people you don't really care.
Rule #4: Save as much money as you comfortably can and invest in low cost indexes (e.g. 3 Funds portfolio)
Rule #5: Ask questions and advice here. Keeping you stay the course.

Good luck and God bless.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

tarmangani
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by tarmangani » Mon Jan 22, 2018 11:48 pm

I'll echo what others have said about expenses. Really critical to cut those down if you're gunning for FIRE. While it doesn't look like you'll have any income coming in, you can progress by not compiling your debt.

Anyway, now I'm going to revert to my student adviser role. I'm not sure you're going about this the right way. You want to get another Bachelor's so you can get a bigger salary. Well, you already have a Bachelor's. Have you explored graduate school? It doesn't sound like you're that sold on accounting, and that you want it because you believe it's attainable and can make you more money. If you're going into a field just to make more money, you're setting yourself up for a miserable slog. I wouldn't give up on your degree so fast. IMO, I don't think you need advice from investors right now. I think you need some from professionals in your field and perhaps some friends/colleagues who've changed careers.

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climber2020
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by climber2020 » Mon Jan 22, 2018 11:51 pm

You're completely broke, 60 grand in the hole, and in school. The first thing that you should probably do is stop spending money you don't have on stuff you don't need - like that massive list of books you just bought. At this stage of the game, you only need one or two books to read; the free William Bernstein book mentioned is an excellent one and has pretty much everything you need to know. If you want some tips on frugality, read Mr Money Mustache's website. Also completely free. Any other books you want you can borrow from the library. These are probably not books you will ever need to re-read regularly.

Also, I'd suggest you don't have kids (if you even want them) until your personal finances are in order. That can completely wreck any well-intentioned plans you may have.

KlangFool
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by KlangFool » Tue Jan 23, 2018 12:14 am

tarmangani wrote:
Mon Jan 22, 2018 11:48 pm
I'll echo what others have said about expenses. Really critical to cut those down if you're gunning for FIRE. While it doesn't look like you'll have any income coming in, you can progress by not compiling your debt.

Anyway, now I'm going to revert to my student adviser role. I'm not sure you're going about this the right way. You want to get another Bachelor's so you can get a bigger salary. Well, you already have a Bachelor's. Have you explored graduate school? It doesn't sound like you're that sold on accounting, and that you want it because you believe it's attainable and can make you more money. If you're going into a field just to make more money, you're setting yourself up for a miserable slog. I wouldn't give up on your degree so fast. IMO, I don't think you need advice from investors right now. I think you need some from professionals in your field and perhaps some friends/colleagues who've changed careers.
+1000.

Klangfool

BiggerFishToFI
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Re: What First Steps to Take to Help Me Become Financially Independent

Post by BiggerFishToFI » Tue Jan 23, 2018 1:01 am

I say watch expenses first, increase income second. Figure out how to get the same utility in life for less money.

For example, you purchased 20 books when they all likely could have been had for free at your local public library.

How many hours of work did it take you to earn those 20 books (these are AFTER tax dollars)?

Small changes like this can have profound effects over time.

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