What Options Do i Have ?

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Jaay
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Joined: Sat Aug 01, 2020 2:09 pm

What Options Do i Have ?

Post by Jaay » Sat Aug 01, 2020 2:17 pm

Hi was recommended this org. By few people, heard its amazing for people to get good ideas for finical questions.

Im an 23 year old, i Dont want to do college because school isn't for me. I have a plan on wanting to buy a Condo, i live in Los angeles,CA. Plan on buying a home in 2-3years need a guide line.

My current gross pay is 61k , within the next years i should
Be moving ip in position for higher pay.
I have no assets im current in debt with an Car Loan of $29k
And own 8k in credit card. I have these out out for a better credit score history of 4 years of credit.

Im currently learning the Stock market put about $500 a month into index funds and some other mid term stocks..

Wondering if any has good advise for me in regards my middle class income. I once heard it “doesn't matter how much you make but how much you invest”

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FiveK
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Joined: Sun Mar 16, 2014 2:43 pm

Re: What Options Do i Have ?

Post by FiveK » Sat Aug 01, 2020 3:49 pm

Jaay, welcome to the forum.

One could do worse than starting with Getting started - Bogleheads and links therein.

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David Jay
Posts: 8950
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: What Options Do i Have ?

Post by David Jay » Sat Aug 01, 2020 3:54 pm

Welcome to the forum!
Jaay wrote:
Sat Aug 01, 2020 2:17 pm
I once heard it “doesn't matter how much you make but how much you invest”
The very best investments, at age 23, are investments in your human capital. Read widely, do self-study in areas that will benefit your growth in your field of endeavor.

For your future:
1. Live below your means
2. Pay off the credit card before doing any investing
3. Don't purchase another brand new car until you can afford to pay cash.

I spent my working lifetime in a moderate-income career. The last new car I purchased was a 1989 Dodge Colt ($6300). I haven't ever spent even 50% of your car loan amount on a passenger vehicle.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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geerhardusvos
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Joined: Wed Oct 23, 2019 10:20 pm
Location: heavenlies

Re: What Options Do i Have ?

Post by geerhardusvos » Sat Aug 01, 2020 4:29 pm

Jaay wrote:
Sat Aug 01, 2020 2:17 pm
Hi was recommended this org. By few people, heard its amazing for people to get good ideas for finical questions.

Im an 23 year old, i Dont want to do college because school isn't for me. I have a plan on wanting to buy a Condo, i live in Los angeles,CA. Plan on buying a home in 2-3years need a guide line.

My current gross pay is 61k , within the next years i should
Be moving ip in position for higher pay.
I have no assets im current in debt with an Car Loan of $29k
And own 8k in credit card. I have these out out for a better credit score history of 4 years of credit.

Im currently learning the Stock market put about $500 a month into index funds and some other mid term stocks..

Wondering if any has good advise for me in regards my middle class income. I once heard it “doesn't matter how much you make but how much you invest”
Hey there, welcome to the forum. Definitely check out the wiki and the getting started page. Unfortunately, you are starting out in the negative. Your situation is pretty much an emergency. Get out of debt as soon as you can. Sell your new car immediately and buy a $3000 Toyota Corolla. That will last you for five years at least. Don’t get into debt ever again except mortgage. Don’t invest anything until you are out of debt. You are in no position to buy a house. Do not buy a house. I repeat, do not buy a house until you have a very positive net worth (5-10x your living expenses invested). Live with family or rent a cheap apartment with friends.

How much do you spend per year? Start budgeting if you don’t know the answer. Take all your extra money and pay off the debt, Starting with the credit card debt. After that, save up six months cash as an emergency fund. After that, start putting all your money into VTSAX or similar total Stock market index fund. Don’t stop investing. Don’t inflate your lifestyle. Do not spend more money. Do not try to keep up with your friends. Stop spending money. Enjoy the small things in life. Do budget travel and visit friends.

Glad you found the forum, and this is your chance to turn things around. There’s a lot of work to do, and you can do it!
Last edited by geerhardusvos on Sat Aug 01, 2020 5:00 pm, edited 2 times in total.
VTSAX and chill

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grabiner
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Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: What Options Do i Have ?

Post by grabiner » Sat Aug 01, 2020 4:32 pm

Jaay wrote:
Sat Aug 01, 2020 2:17 pm
And own 8k in credit card. I have these out out for a better credit score history of 4 years of credit.

Im currently learning the Stock market put about $500 a month into index funds and some other mid term stocks.
Paying down the credit card is the best investment you can make. If your interest rate is 12%, you earn 12% risk-free, and once the credit cards are paid off, you will have more money to invest elsewhere because you won't be making credit-card payments. In fact, even if you would have a tax bill, it's probably worth selling your existing stocks to pay down the credit cards faster.

You don't need to carry a balance on a credit card to have a good credit score. If you have an open credit card, charge something to it, and pay it off in full before the due date, you pay no interest, but it is still reported to the credit bureau that you have an active credit account.
Wiki David Grabiner

FarmWife
Posts: 21
Joined: Wed Jul 15, 2020 9:07 am

Re: What Options Do i Have ?

Post by FarmWife » Sat Aug 01, 2020 6:48 pm

Take Dave Ramsey's Financial Peace course, or at least get the book. Soak it up, read it 3 times if you have to. You have a debt problem. Different car (cheaper!), pay off those credit cards. Actually using the cards that much hurts you as it eats into your available credit and affects your score. Pay it off and then use it to buy gas. Pay it in full each month.

Work up a budget of your spending. Adjust accordingly so you can max pay on your debts. Do not eat out, do not buy toys until that debt is cleared. Dave would even say don't invest until you have it cleared except for your 6 month emergency fund.

You have an advantage of being young and WANTING to improve your finances. That's more than 1/2 the battle, congrats! College is not required for success, if you buckle down and get your $$$ in order you'll end up ahead of many of your peers because they will be trapped into overspending and debtridden and you will be lean and mean and saving for an early retirement if you want it. If you're a visual person, get a spreadsheet to show your debt progress. vertex42.com has some great one I love, but there are many out there. Track your spending in something like Quicken or Mint. Your 40 yr old self (still young!) will thank you for doing all this now to massively improve your life later.

Addition: some of us would give anything to go back and do it right from age 23, many aren't even aware of proper money management at your age. They still have a hangover from college. You have the gift of time, use it right and get aggressive.
Last edited by FarmWife on Sat Aug 01, 2020 6:53 pm, edited 1 time in total.

inbox788
Posts: 7264
Joined: Thu Mar 15, 2012 5:24 pm

Re: What Options Do i Have ?

Post by inbox788 » Sat Aug 01, 2020 6:48 pm

Jaay wrote:
Sat Aug 01, 2020 2:17 pm
1) I have a plan on wanting to buy a Condo, i live in Los angeles,CA. Plan on buying a home in 2-3years need a guide line.

2) My current gross pay is 61k , within the next years i should Be moving ip in position for higher pay.

3) I have no assets im current in debt with an Car Loan of $29k
4)And own 8k in credit card. I have these out out for a better credit score history of 4 years of credit.

5) Im currently learning the Stock market put about $500 a month into index funds and some other mid term stocks..
1) You want to buy a condo. How much cash down do you have? $0? How much do you need? 100k? You're a long ways off.
2) Good. LBYM https://www.bogleheads.org/wiki/Getting_started
3) What is the interest rate? That's a whole lot of debt! 50% your income! Very BAD!
4) What is the interest rate? Credit card debt on top of big car debt indicate a spending problem! Very, very bad!
5) Why are you putting borrowed money at risk? Unless the money is close to free, you shouldn't even be considering this. Stop digging and get out of the hole first.

Stop overspending, create a budget, stick to it, save more, pay back debts faster, save up for the down payment and then start investing for real.

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