Should be I be investing anything in my current situation?

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blakeb
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Should be I be investing anything in my current situation?

Post by blakeb » Wed Nov 06, 2019 4:31 pm

Hello all,

First time posting here, still reading through all of the great post. I am also currently reading through The Boglehead's Guide to Investing, just started it the other day. Hopefully this is the right forum to ask. If not, I will repost this in another forum.

Current situation: just turned 28. Did a year of college after HS in 2009-2010, did the whole party and fraternity thing. Ended up failing most classes. Didn't go back the next year, and in early 2011 enlisted in active duty U.S. Navy. Did that for 4 years, and racked up about 15k+ in CC debt (I was very young and dumb and naive, I regret all of it). Came back home in 2015, and started using my GI Bill to finish school. After a year or two, post-military depression and anxiety consumed me, and after jumping around to different majors and failing more classes, I transferred between community colleges, trying to get my GPA up. Now I have a ton of credit hours, which is making it super difficult to raise my GPA quickly. Should FINALLY be done with my Associates next semester, but my GI Bill has now run out.

As with the CC debt, I have since added a few thousand more trying to support myself over the past few years. Since I am in school full time during the day, doing work full time has been extremely hard. I do work part time (25 hours) on campus, which is nice to have work and school be in one, but that income, combined with my GI bill, is really inconsistent. I just got married last year, and my wife is a high school teacher. Living in Oklahoma and her being a new teacher, her income isn't exactly super high either.

My main question is, since I am coming up on 30 with no real retirement, 401k, or anything, should I invest in anything, or focus 100% on the debt first? with my CC payments and bills, I barely break even every month, making paying down more than the minimum is extremely difficult. I do have a Vanguard Roth IRA account open, but its currently empty.

Quaestner
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Re: Should be I be investing anything in my current situation?

Post by Quaestner » Wed Nov 06, 2019 6:51 pm

I think different people will give you different answers, and the worth of the answers depends on your temperament, work ethic, and employment prospects. Here's my thoughts. You make this out to be an either/or decision. It doesn't have to be. I think there would be some value in contributing to an IRA - even if it is in small amounts. Building the habit of saving and investing, and learning to not care too much about the rise and fall of the stock market could be good for you in the long run. That said, your financial situation would be much better without high interest debt - so if it was me, I would spend more effort on paying down the debt than I would investing. Maybe 80% towards debt and 20% towards an IRA? Just a guess. Your biggest investment should still be investing in yourself and working towards decent job. Do you know what this will be? If you do have a specific plan, would using a lower interest student loan to pay off the credit card be a possibility? Or would this just let you get further into debt? Be honest with yourself. Old habits are hard to break! You may need to look for a bit more part-time work. You're lucky to have that Navy experience. Good luck to you!

(FWIW: it took me 7 years to get my undergraduate degree. I majored in fraternity for a while. I also did a bit GPA catch-up. I now wish I would have focused on getting credits that counted towards a degree rather than enhancing my GPA. No one has ever cared about my GPA, but the degree itself was useful.)

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Nate79
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Re: Should be I be investing anything in my current situation?

Post by Nate79 » Wed Nov 06, 2019 7:05 pm

Do you have a plan to get out of debt with a tight budget, beans and rice? I would focus on debt. It doesnt make sense to borrow on a credit card to invest.

snailderby
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Re: Should be I be investing anything in my current situation?

Post by snailderby » Wed Nov 06, 2019 7:14 pm

1. Thank you for your service! And congratulations on getting married!

2. I'd focus on the credit card debt first. Maybe check out Dave Ramsey for tips. Then come back here for advice on the investing side of things.

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JoeRetire
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Re: Should be I be investing anything in my current situation?

Post by JoeRetire » Wed Nov 06, 2019 7:20 pm

blakeb wrote:
Wed Nov 06, 2019 4:31 pm
My main question is, since I am coming up on 30 with no real retirement, 401k, or anything, should I invest in anything, or focus 100% on the debt first? with my CC payments and bills, I barely break even every month, making paying down more than the minimum is extremely difficult.
You should concentrate on
- getting a solid job with solid, consistent income ASAP
- if that means completing your education, do that as quickly as you possibly can - nights and weekends included
- paying off your debts - highest interest rate debts first
- saving an emergency fund
- saving into retirement accounts
Last edited by JoeRetire on Wed Nov 06, 2019 7:23 pm, edited 2 times in total.

michaeljc70
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Re: Should be I be investing anything in my current situation?

Post by michaeljc70 » Wed Nov 06, 2019 7:21 pm

snailderby wrote:
Wed Nov 06, 2019 7:14 pm
1. Thank you for your service! And congratulations on getting married!

2. I'd focus on the credit card debt first. Maybe check out Dave Ramsey for tips. Then come back here for advice on the investing side of things.
+1. Tackle the debt first.

DesertDiva
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Re: Should be I be investing anything in my current situation?

Post by DesertDiva » Wed Nov 06, 2019 7:22 pm

Welcome to the forum. There is no better time to start planning for your future than the present.

First, I would urge you two establish a budget together. Work as a team and ensure that you see the same future together. Your life will run more smoothly. A budget doesn’t sound like fun, but it is necessary to make sure you identify where your money is going. You may find there are areas where you can trim expenses. Have a plan to pay off “bad debt”, starting with high-interest credit cards. This will set the course for a better financial life and keep open dialog between you regarding money.

The key isn’t the amount of money you make—its all about what you keep. Don’t compare yourself to others. Just formulate a plan and stick to it. Monitor your progress along the way. Work at being frugal and find satisfaction in it.

Have a small emergency fund set up. It could be $500 to $1000 at first. Agree between yourselves what a true emergency is (new tires, medical expenses) and what it is not (new clothes, going out to the bar).

Meanwhile, if either of you have employer-sponsored retirement plans (like a 401k or 403b), contribute just enough to get an employer match. For example, if the employer offers a 50% match up to 6% of your contributions, then sign up for the 6%. Some people argue against this, as they believe that debt should be attacked first. However in investing, time is your greatest friend. A small amount should be (relatively) painless. Over time the balance will grow due to compounding. If no plans are.available, contribute to a Roth IRA. Even small amounts matter so don’t fret about it at this point.

Do you have a way of improving your income? Can you get a side gig? Learn a new skill or trade? Education hasn’t been your strength and many employers value military service. Can you leverage that to get in-the-job training while earning a better income? Sell something of value to pay off debt, if you can.

When you pay off a debt, take the monthly amount you were paying and attack another bill. Keep doing this until you pay off all debts. Then increase your investment contributions.

There is more that could be said. However these are the essentials. Check out the “getting started” info on this site.

Another resource that could help you with financial planning is Dave Ramsey’s Total Money Makeover. He outlines “baby steps” (similar to what I have here). When you get to the parts about investing, immediately return to Bogles book. Keep learning. Post your questions along the way.

soccerrules
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Re: Should be I be investing anything in my current situation?

Post by soccerrules » Wed Nov 06, 2019 8:03 pm

michaeljc70 wrote:
Wed Nov 06, 2019 7:21 pm
snailderby wrote:
Wed Nov 06, 2019 7:14 pm
1. Thank you for your service! And congratulations on getting married!

2. I'd focus on the credit card debt first. Maybe check out Dave Ramsey for tips. Then come back here for advice on the investing side of things.
+1. Tackle the debt first.
Yes thank you for your service!
I wish I had a site like this when I was 28. Here are some thoughts
I would sit down with your spouse and talk about short/medium/long term goals (not dreams) realistic possible goals (reasonable house, Family, future)
Get a Budget together dividing essentials and non-essentials. Stick to essentials.
Commit to putting all energies to paying of CC debt ASAP. (drive Uber/Lyft, find some work) I imagine the interest rate is high and killing you. Also to have NO Debt is freeing and will remove stress to you and your life.
Work on finding good employment and work on yourself. Your #1 asset is your ability to earn an income. This may require getting serious about school/vo-tech whatever. It is time to get serious.
Also getting where you want to be will take some time-- not 6 mo -- think several years, but you will begin to see success.
Celebrate milestones.(paying off CC debt, hitting $5K in Emergency Fund; landing decent work)
Keep reading books and the forum.
ASK MORE QUESTIONS!
Don't let your outflow exceed your income or your upkeep will be your downfall.

BeneIRA
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Re: Should be I be investing anything in my current situation?

Post by BeneIRA » Wed Nov 06, 2019 8:21 pm

First, thank you for your service. It is much appreciated.

If I am you, I would tackle the debt first. The credit card debt especially. The interest rates on those have to be 16% or more and if they were over 20% I wouldn't be surprised. Ask anyone who invests if they would like a guaranteed 16%+ return on their money. Everyone would tell you absolutely. That's the opportunity you have here then you pay off this debt. It sounds like you aren't either a big fan of school or just aren't good at it, which is fine. Is there a trade you like or something else you would like to do? Maybe you want to do some kind of manual labor job? Roofer? Plumber? Contractor? etc? You could also just start applying for jobs after you get your Associates. Best of luck.

StrawMan
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Re: Should be I be investing anything in my current situation?

Post by StrawMan » Wed Nov 06, 2019 10:53 pm

I can’t give you real good investment advice. However, as a Army retiree who did a short stint as a recruiter you should seriously look at joining one of the Reserve Components. You’ll have access to TSP and more/additional education benefits - possibly student loan repayment. Choose whatever branch you want, you have everything to gain.

Thegame14
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Re: Should be I be investing anything in my current situation?

Post by Thegame14 » Thu Nov 07, 2019 1:02 am

I think it is more important that you figure out a long term employtment plan. I personally think you should try law enforcement, pay is good, it becomes great pay towards the end and great pensoin. In my town the AVERAGE police salary is $140K, plus overtime plus pension after 25 years. They also pad the overtime for the guys in the last three years to pad the pension, so many police end up with a six figure guaranteed pension per year. with your military background id try and finish a criminal justice degree and go that route.

mark39
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Re: Should be I be investing anything in my current situation?

Post by mark39 » Thu Nov 07, 2019 1:41 am

I am also a proponent of paying off the debt first. At the same time the best thing you can do is concentrate on improving your ability to earn a good income. Getting your foot in the door and working your way up, internships, online classes, school, etc. whatever you can do. You are your number one asset, cultivate it.

Real quick: I am waaaay less wealthy financially than most people here so take this for what it’s worth. But, I was 31 y/o and had a negative net worth. At the time I was making around $50k a year but had just started that job and was making around $30k for a few years before that. Eleven years later I am counting my net worth in the hundreds of thousands of dollars with no debt no debt whatsoever and am looking forward to the day where compounding starts to take over. When I was 28 I never thought I would be in my forties one day. Time will pass and you can either let your money compound for you or against you (debt).

I also say this because I made some mistakes during the first few years. While I agree taking care of debt is most important I would also continue to educate yourself on investing (Boglehead style, obviously) so when you do start investing you can hopefully avoid those mistakes. Mine were minor but still cost me a bit. Mainly with proper tax strategy but some buying and selling also.

The most important step other than investing in yourself will be spending less than you earn. Then you can get out of debt, have an emergency fund, and invest. It’s a really good thing you came here now because you can avoid a lot of mistakes when you are ready to put a lot towards investing. There are literally financial geniuses that post here. I still get nervous posting here but it helps me a ton.

I would also make sure you have a very honest discussion with your spouse and make sure you are on the same page if you haven’t already.

politely
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Re: Should be I be investing anything in my current situation?

Post by politely » Thu Nov 07, 2019 2:25 am

Yes, it's logical to tackle the highest cost debt first; however, when I was younger with a serious amount of debt, I made a conscious decision to create an emergency fund and build up a savings/investment account together with paying off debt. Financially and mathematically, it would have made more sense to just focus on paying off high-cost debt, but seeing my savings and investments grow made me feel better, with more motivation to add to those accounts. Investing gave me more of a feeling of being in control vs being only a debt slave. For me, it helped to feel like I was getting ahead rather than simply filling a prior hole (to heck with logic & math). However you decide to approach, I think it's much more important that you've recognized the problem, that you will make a plan to fix the problem, and that you will have the discipline/will to follow through. Good luck.

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Brianmcg321
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Re: Should be I be investing anything in my current situation?

Post by Brianmcg321 » Thu Nov 07, 2019 8:47 am

Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

stoptothink
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Re: Should be I be investing anything in my current situation?

Post by stoptothink » Thu Nov 07, 2019 9:13 am

Thegame14 wrote:
Thu Nov 07, 2019 1:02 am
I think it is more important that you figure out a long term employtment plan. I personally think you should try law enforcement, pay is good, it becomes great pay towards the end and great pensoin. In my town the AVERAGE police salary is $140K, plus overtime plus pension after 25 years. They also pad the overtime for the guys in the last three years to pad the pension, so many police end up with a six figure guaranteed pension per year. with your military background id try and finish a criminal justice degree and go that route.
Where is it that you live? That is insane pay for law enforcement. FWIW, a quick Google search says pay for law enforcement in Oklahoma is $30k-$78k (it is similar where I live).

Thegame14
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Re: Should be I be investing anything in my current situation?

Post by Thegame14 » Thu Nov 07, 2019 9:20 am

stoptothink wrote:
Thu Nov 07, 2019 9:13 am
Thegame14 wrote:
Thu Nov 07, 2019 1:02 am
I think it is more important that you figure out a long term employtment plan. I personally think you should try law enforcement, pay is good, it becomes great pay towards the end and great pensoin. In my town the AVERAGE police salary is $140K, plus overtime plus pension after 25 years. They also pad the overtime for the guys in the last three years to pad the pension, so many police end up with a six figure guaranteed pension per year. with your military background id try and finish a criminal justice degree and go that route.
Where is it that you live? That is insane pay for law enforcement. FWIW, a quick Google search says pay for law enforcement in Oklahoma is $30k-$78k (it is similar where I live).
suburbs of NYC

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Watty
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Re: Should be I be investing anything in my current situation?

Post by Watty » Thu Nov 07, 2019 9:24 am

Two things that have not been mentioned.

1)If you or your wife have any employer 401k match then it might be worth contributing just enough to get that.

2) If your income is low enough you might be able to get a retirement savings contribution credit and get up to a 50% match on a $2,000 contribution to a retirement savings plan. The income numbers here are after a lot of adjustments and subtractions so your salaries could be higher.

https://www.irs.gov/retirement-plans/pl ... ers-credit
Brianmcg321 wrote:
Thu Nov 07, 2019 8:47 am
www.daveramsey.com

I have seen lots of good comments about him for getting out of debt but you need to be leery about his investing advice once you are out of debt. Frankly his investing advice is really bad.

stoptothink
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Re: Should be I be investing anything in my current situation?

Post by stoptothink » Thu Nov 07, 2019 9:40 am

Thegame14 wrote:
Thu Nov 07, 2019 9:20 am
stoptothink wrote:
Thu Nov 07, 2019 9:13 am
Thegame14 wrote:
Thu Nov 07, 2019 1:02 am
I think it is more important that you figure out a long term employtment plan. I personally think you should try law enforcement, pay is good, it becomes great pay towards the end and great pensoin. In my town the AVERAGE police salary is $140K, plus overtime plus pension after 25 years. They also pad the overtime for the guys in the last three years to pad the pension, so many police end up with a six figure guaranteed pension per year. with your military background id try and finish a criminal justice degree and go that route.
Where is it that you live? That is insane pay for law enforcement. FWIW, a quick Google search says pay for law enforcement in Oklahoma is $30k-$78k (it is similar where I live).
suburbs of NYC
https://www.indeed.com/salaries/Police- ... ew-York-NY ...average pay for NYPD is $67,920/yr, which is among the highest in the entire country for police officers.

a_movable_life
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Re: Should be I be investing anything in my current situation?

Post by a_movable_life » Thu Nov 07, 2019 9:44 am

Thegame14 wrote:
Thu Nov 07, 2019 9:20 am
stoptothink wrote:
Thu Nov 07, 2019 9:13 am
Thegame14 wrote:
Thu Nov 07, 2019 1:02 am
I think it is more important that you figure out a long term employtment plan. I personally think you should try law enforcement, pay is good, it becomes great pay towards the end and great pensoin. In my town the AVERAGE police salary is $140K, plus overtime plus pension after 25 years. They also pad the overtime for the guys in the last three years to pad the pension, so many police end up with a six figure guaranteed pension per year. with your military background id try and finish a criminal justice degree and go that route.
Where is it that you live? That is insane pay for law enforcement. FWIW, a quick Google search says pay for law enforcement in Oklahoma is $30k-$78k (it is similar where I live).
suburbs of NYC
Those jobs are very difficult to get unless you *know* someone. I'm saying this as someone who's Brother in Law, and a close friend's Fiancee works for two department like that. Yes being a veteran gets you extra points on the test and it's interesting how certain people's family keep showing up in uniform.

I was 28 when I put my first dollar in a Roth. I'm 40 and doing all right.

Reamus294
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Re: Should be I be investing anything in my current situation?

Post by Reamus294 » Thu Nov 07, 2019 12:59 pm

Congrats on your upcoming degree!

Lots of good advice here. Your situation falls right into Dave Ramsey's wheelhouse (minus his investing advice). Get an emergency fund going, tackle your debt, and don't make any bad car or house decisions with recurring payments. I would also start investing something small (take advantage of any matching if available then a roth), even if it is $5-10 a month so you can build up some knowledge and start to see the benefit of compounding interest in a positive way vs the negative way of debt.

I wished I built up my professional work experience while going to school. I didn't know what I wanted to do, but taking a job where I could have become an expert at something, and semi-enjoy, while getting paid (even if minimum wage) would have done wonders for me professionally and personally.

If you want more schooling after your associates, find a place that will pay for it. Lots of places offer tuition reimbursement and some are offering student loan repayment as well!

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