var json_comments = new Array("
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farcedude
October 23, 2009 9:58 PM
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As he acknowledged, I'd say the leased car isn't the best idea, but I'd imagine he's stuck in the lease for a while (not sure how that works). As soon as I was out, I'd look for a good model used car.

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farcedude
October 23, 2009 10:03 PM
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@farcedude: Also, if you want to build credit, try getting a loan for the used car. If you (or the bank) are worried, look for an older model car, so your first loan won't be that big.

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catastrophegirl chooses not to fly
October 24, 2009 3:34 AM
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@farcedude: when i was getting my first car loan the credit union wouldn't loan on a car older than 5 years. i don't know how common that is, but it doesn't hurt to be prepared to ask the question before you get pre approved and go car shopping.

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ecwis
October 23, 2009 10:06 PM
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@farcedude: I don't think it's worth paying interest just to build credit. One can build their credit easily enough with just credit cards.

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Quake 'n' Shake
October 23, 2009 10:13 PM
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@ecwis: That's not entirely true. You need to establish a history with revolving credit and fixed payments, both of which will almost certainly involve interest payments.

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XianZhuXuande
October 24, 2009 8:17 PM
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@Quake 'n' Shake: You don't need fixed-rate credit of any sort to build credit. Two or three credit cards, paid in full each month, will do the trick nicely. A person doing this should gradually work their way up to better credit limits or better cards (no annual fee, unless the benefits make it worthwhile).

Fixed-rate loans and such have some benefits in credit history, but the OP should never engage in those loans, and the associated interest payments, unless they're appropriate for what they wish to buy. Don't pay interest just to build credit...

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SammyD1st
October 23, 2009 11:42 PM
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@Quake 'n' Shake:

Revolving credit never once involves interest payments for me. Pay the darn credit cards off every single month.

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ninja-meh
October 24, 2009 12:43 AM
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@SammyD1st:
Howdy there,
This is Andrew. I just got my second credit card. I usually try to use both once or twice and pay them off as soon as the charge shows up on the account. My plan was to get a used card once my lease is up which will be partially financed. Trying to put a little into a savings account every month (around $600). The reason I wanted to build credit was to buy a house which I won't sell if I ever move (I'd like to rent it out when I get a second home).
-Andrew

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ecwis
October 23, 2009 10:38 PM
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@Quake 'n' Shake:

I came out of college with little debt which I paid off quickly and had no credit cards until this job.

I assume he had some sort of loan which is an example of installment credit and if he gets a credit card, that will create history for dealing with revolving credit. If I were him, I wouldn't get a loan just to possibly increase my credit score.

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Quake 'n' Shake
October 23, 2009 11:14 PM
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@rocketbear79:

other than to change the \"available\" credit amount.

That's actually my point, and not just for the credit cards. By carrying the occasional balance and paying it off, he will increase the amount of credit lenders will extend to him for auto loans or mortgages.
While technically speaking, paying off the card in full each month is \"revolving credit,\" lenders aren't that impressed. Take the time to carry a balance over for a month or 2 and reap the rewards later.

As for my sources: I know several people in 2 different states who work in the lending business. They've all told me this. When they see an applicant with no \"revolving credit\" history, meaning they never carried a balance, that will reduce how much they're willing to lend.

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WillB
October 24, 2009 12:41 AM
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@Quake 'n' Shake: I don't care enough to look it up, but a goon used the equation in a SA thread to show that carrying a small balance made no significant change over carrying no balance.

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rocketbear79
October 24, 2009 1:20 AM
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@WillB: If you are talking about credit scores there has never been a valid equation EVER published outside of the scoring houses themselves. They are proprietary information, just like KFC's 11 spices. There are also way too many unknown variable-weights for any analysis to be done without thousands of sample points.

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rocketbear79
October 23, 2009 11:21 PM
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@Quake 'n' Shake: Wow, making a claim and then backing it up with sources/reasoning? Blasphemy!

I was not aware that lenders thought like that. I'm not a pay it off every month kind of guy anyway, but maybe I'll augment my future advice to friends with your input.

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rocketbear79
October 23, 2009 10:29 PM
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@Quake 'n' Shake: I'm just curious, what make@Quake 'n' Shake: Just having the card with monthly activity (so the on time payment flags in the credit reports ping) is enough. I'm not sure who told you that having a balance carry over from month to month makes a difference, other than to change the \"available\" credit amount.

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supercereal
October 23, 2009 10:34 PM
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@rocketbear79: His point was that a generous chunk of your credit score is based on what kind of credit you've taken on. Having strictly credit cards will only get you so far.

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rocketbear79
October 23, 2009 10:35 PM
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@supercereal: Yeah, for some reason this was supposed to be a response to his post below about buying the TV or sofa, my reply makes no sense in this context.

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rocketbear79
October 23, 2009 10:30 PM
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@rocketbear79: I'm not sure what happened in that comment, ignore: \"I'm just curious, what make@Quake 'n' Shake: \"

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Eldritch
October 23, 2009 10:00 PM
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Get a credit card. Use it for one purchase a month and pay it off every time. Also, open a saving's account and put in ten or twenty dollars a week. This is what I do. For ten bucks a week, the cost of eating lunch out, you can have $500 saved in a year.

Speaking of Suze Orman, she DOES have a good book called \"The Money Book for the Young, Fabulous & Broke\". It has a lot of good advice for car payments, building good credit, etc. I have a copy that I sometimes flip through for some advice.

Last ditch effort, as your parents what THEY did when they were starting out. My parents have been a wealth of info to me.

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Yurei
October 23, 2009 11:14 PM
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@Eldritch: Yes, I do this. Every week I put away $20 into an account that I do not touch. In addition to this I dump all my spare money not going to bills or necessities into a emergency fund I use for things like fixing my car which is a frequent occurrence lately. Since I started doing this and working at this newish job I got back in March, i've managed to keep a backup flow of about 3 grand not counting the untouchable stuff, which will hit 2 grand or so at the end of the year since i've been doing it for 2 years ish now.

The 3 grand fluxes quite a lot since I use it for unexpected out of pocket expenses like the car, medical bills, but I always pay it back next paycheck or two. It's really, really saved my bacon this year several times when I have had to shell out $500+ a whack in car repairs. Plus if I get laid off, I can pay my bills out of that for a good number of months till I find a new job. Definitely worth trying to do.

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Quake 'n' Shake
October 23, 2009 10:06 PM
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@Eldritch: Good points. But I'd like to add that with the credit card, one does need to establish revolving credit. When he's saved up enough for a large purchase, say a sofa or TV, he should use the card, but pay it off over 2 or 3 months. Yeah, he'll pay some interest, but if he doesn't he won't have any revolving credit history.

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ecwis
October 23, 2009 10:43 PM
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@Quake 'n' Shake: I'm not an expert but I'm pretty sure that one can still build credit history for revolving credit by paying off the balance in full.

I would suggest charging large amounts to the credit card though. A bank won't trust you enough to give you a mortgage or other loan if your highest balance was only $20 or so.

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MeOhMy
October 26, 2009 3:50 PM
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@ecwis: Indeed, I never ever carried a credit card balance...I got the credit card when I was 19, got my first car loan at 22, first house at 25. Never an issue. I'm not paying the credit card people any more than I have to!

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rocketbear79
October 23, 2009 10:46 PM
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@ecwis: You might not be an expert, but you are correct. All it needs is frequent enough use to show on-time payment history. I posted about this above. Below I suggested using something relatively cheap and auto-charging like the EZPASS (or whatever your local toll system has) program. Then pay it off each month.

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tingeyga
October 23, 2009 10:32 PM
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@Quake 'n' Shake:
I don't think that you need to pay things off over 2 to 3 months to establish a revolving credit history. I pay my credit cards off in full every month when the bill arrives and my credit score hasn't suffered and shows that there is an average balance on those cards.


You just need to remember that your credit score is a measure of how likely you are to fulfill the terms of future credit offers based (partially) on how well you have kept the terms of previous credit agreements. Thus the simplest way to build credit is to pay your bills on time and in full every month. Repeat for a couple of years and you shouldn't have any problems getting any credit that you may need.

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chiieddy
October 23, 2009 10:34 PM
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@tingeyga: I started my credit history with a Macy's card that has never carried a balance. It was a great way to get 10% off the first winter coat I had to buy with my own money though!

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Esquire99
October 23, 2009 10:02 PM
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You can try and assign the car lease to someone else. There are a couple of websites that offer listing services for that kind of thing, www.leasetrader.com comes to mind.

Other than that, I'd recommend voting Republican in the next election in order to attempt to keep from handing over even more of your salary to the govt. That and encourage your Representatives to vote against the current health care reform package; that $900 Billion is going to come from higher taxes paid by you.

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dilbert69
October 24, 2009 12:21 AM
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@Esquire99: @ecwis: This is innumerate. The majority of people are working class, but the wealthy earn far more income and hold far more wealth, thus they pay the lion's share of taxes. They could, however, afford to pay far more.

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ecwis
October 24, 2009 2:29 AM
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@dilbert69: There's no point in debating this further (since it's rather irrelevant to the post) but feel free to read this article. [online.wsj.com]

A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue.
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Esquire99
October 24, 2009 3:16 AM
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@ecwis:
But that $1.3 trillion could be redistributed to other people, since the rich already make enough money......

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Esquire99
October 24, 2009 1:16 AM
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@dilbert69:
First, I really dislike the term \"working class.\" Even those who draw high salaries work, usually very hard, for their money. It may not be physical labor, but long hours of intense work.

I personally favor a flat tax. I think it's totally unfair that some pay 50% of their earnings in taxes and others pay zero. I think the progressive nature of our tax system is terrible and should be replaced. The fact that those who make a lot of money *can* pay more in taxes isn't a valid reason to force them to pay more.

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Eyebrows McGee (now with more baby!)
October 24, 2009 2:10 PM
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@Esquire99: Oh, Good God. How did you even get into law school if you don't understand progressive taxation, how flat income taxes are regressive, and how for VIRTUALLY ALL OF US, we'd have to pay quite a bit more in a flat tax? (I suppose I've known innumerates who went to law school, but it's really not good.)

(And who pays 50% of their income, exactly?)

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Esquire99
October 24, 2009 3:00 PM
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@Eyebrows McGee (now with more baby!):
I fully understand progressive taxation, I just don't agree with it. I don't think it's fair that some pay 40-50% and others pay zero. Yes, that results in those who currently pay zero, or 5% or 10% or 15% having to pay more; those people are underpaying their fair share. I have no problem with forcing them to pay more.

As far as the 50%, that's based on marginal rates. The 50% number is essentially the top marginal rate, depending on what state/city you live in. Someone in NYC making over ~$200k per year in salary will be paying a roughly 50% marginal rate, after you take into account State and local taxes and FICA.

Please explain to me why someone making $20k per year should pay ZERO taxes, while someone making $200k per year should pay $90k in taxes? How is that fair, save for the old argument that the person making $200k can \"afford\" to pay more.

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WillB
October 24, 2009 5:02 PM
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@Esquire99: Because society as we know it would collapse.

Those who are able to benefit from the social and economic structure created by our country should want to pay more into it, but then again MY MONEY is a pretty strong argument!

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Esquire99
October 24, 2009 5:15 PM
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@WillB:
But those on the lower end benefit from the majority of what tax revenues pay for as well, such as infrastructure, social programs, police/fire protection, post office, etc. The wealthy don't enjoy exclusive use of govt. resources.

I reject your conclusion that society would collapse. Some might find it harder to make ends meet, but so be it. The hardships of the few do not create sufficient support for imposing an unfair system on the majority. People would adapt and perhaps insist that the govt. stop wasting so much money, since they are actually paying into it.

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veg-o-matic
October 25, 2009 3:40 PM
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@Esquire99: You like capitalism, free markets, and all that noise, yeah?
Even Ol' Invisible Hand McGoo knew you would be wrong.

Wealth of Nations: Book V, Chapter II, Part II:
I. The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

On the standard of living of those pesky \"working classes\":

Book I, Chapter VIII
Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.

As for your whiny interpretation and ignorance of the history of the term \"working class,\" I'll leave it to Google.
I don't want to ruin the surprise.

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Esquire99
October 25, 2009 4:00 PM
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@veg-o-matic: @veg-o-matic:
My dislike for the term \"working class\" has nothing to do with it's historical roots; it has to do with the way it's used today by everyone to separate the \"hard workers\" from the rich wall streeters who apparently sit at home and watch the cash roll in.

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veg-o-matic
October 25, 2009 5:14 PM
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@Esquire99: Not talking about your latent prejudices against physical laborers.

I'm talking about your inability and unwillingness to educate yourself even a little bit about the reason we use the term \"working class,\" and your obvious desire to be a persecuted hero for the managerial and capitalist classes.

As much as you deliberately and disingenuously use the term \"working class,\" you can't change what it actually means.

I appreciate you addressing the other 95% of my post, though.. that was.. \"classy,\" if you'll indulge my use of a pun.

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ecwis
October 27, 2009 12:22 AM
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@WillB: Do people still think that ad hominem attacks strengthen their argument?

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Esquire99
October 25, 2009 4:03 PM
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@WillB:
See my comment above about unnecessary personal attacks.

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WillB
October 25, 2009 5:17 PM
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@Esquire99: It's not an attack. I really do think you're either a high-functioning autistic or have aspergers. You should also talk to a psychiatrist. \"A lack of empathy\" is the root of many psychological disorders per the DSM IV.

There are many reasons to support a progressive tax system and the are many reasons that a flat tax is an awful idea. You can basically Google search those. Veg-o-magic already reinforced what I said about how supporting the underclass with social programs works and why you should desire to support the economic and social systems by which one obtains their wealth. It's in your best interests. That's why I love paying taxes. If this was 60-70 years ago, I'd be a hard-line Republican. Funny how politics works!

Aside from a bunch of facts that you'd just dodge anyway, basically, you should move one of those country that offers the stability of the U.S. government and the wealthy a greater influence over social policy. Good luck.

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NancyCpants
October 25, 2009 6:15 AM
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@Esquire99: Well you could try developing a conscience instead of being a greedy brat.

I hate this attitude from people. Of course if you work hard you can afford nicer things, but you don't think that someone with privilege should try to pass some of that on? It doesn't occur to you that someone with money was likely born into it or was at least taught principles of good money management early on, and therefore started out a good bit ahead of a lot of people?

Maybe he could try voting Democrat instead, so that when the banks you Republicans deregulated go stealing all his money and then FAIL, he can afford to retire without living in a homeless shelter.

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Esquire99
October 25, 2009 4:02 PM
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@NancyCpants:
I fail to understand why it's so difficult for people on here to attack a person's opinion without feeling the need to hurl personal insults.

Secondly, I think that it's great if someone \"with privilege,\" as you call it, wants to pass some of that on. I also don't fault those who don't want to pass it on. I certainly don't think the govt. should mandate that they pass on any more than their fair share, which should be the exact same percentage as everyone else.

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catastrophegirl chooses not to fly
October 24, 2009 3:40 AM
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@Esquire99: i don't necessarily agree with some of your other statements, but i agree that when i go to my shiny happy desk job [that makes my mother happy because i 'finally have a REAL' job] i am just as tired as when i unloaded trucks, moved furniture, checked in hotel guests, shuffled luggage, stood on my feet all day folding mickey mouse sweatshirts or any other job i've have.

the difference is now i am also emotionally drained from people telling me about their lost jobs, their health problems, their unsupportive families and the occasional few who actively try to commit suicide while talking to me [on the phone]

i get paid more than twice as much now but i feel like i earn every penny

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rocketbear79
October 24, 2009 3:35 AM
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@Esquire99: I don't agree with your earlier posts, but this one I do. The \"working class\" has been an argument point for me as well. I also support a flat tax, but a consumption flat tax such as VAT.

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TheSpatulaOfLove
October 24, 2009 12:50 AM
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@dilbert69:

How come OP hasn't been disemvowled?

Way to go crapping on a post with politics!

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BabyFirefly
October 23, 2009 11:19 PM
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@Esquire99: Way to push politics where no one asked about it.


To the OP: don't be tacky/rude enough to push politics where it is not asked for.

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Esquire99
October 23, 2009 11:21 PM
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@BabyFirefly:
He asked about how to put himself in the best position for a positive financial future. I feel like my points are entirely valid in that respect. The more he pays in taxes, the less he has to save, to buy a home with, to spend, etc.

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BabyFirefly
October 23, 2009 11:28 PM
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@Esquire99: So you don't think telling someone to vote for a certain party is pushing politics?


This is acceptable and okay in America now? Wow, it's certainly been years since I last was there, then.

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Esquire99
October 24, 2009 1:13 AM
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@BabyFirefly:
I didn't necessarily say it wasn't pushing politics; I said they were valid points in response to the question.

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Tzepish
October 23, 2009 11:41 PM
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@BabyFirefly: Depends what is meant by \"America\". The place that Sarah Palin and Glenn Beck describe as \"America\" doesn't resemble any location I've *ever* been to, despite having lived here my whole life.

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Alarm Bell
October 23, 2009 10:51 PM
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wow. some people will use any possible arena to push their indoctrination. it is well established that the health care bill will not cause higher taxes, but that is a myth promoted by the same people who think Obama is going to kill them.

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Esquire99
October 23, 2009 11:09 PM
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@Alarm Bell:
Where is the $800bln going to come from?

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Tzepish
October 23, 2009 10:47 PM
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@Esquire99: Actually, those taxes will be coming from the wealthy, or, in the worst case scenario, upper middle-classers. I'll glady pay them so more people like Andrew can have health insurance.

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unpolloloco
October 24, 2009 12:50 AM
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@Tzepish: Andrew will likely fall into the upper middle class bracket since he is a single independent.

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Esquire99
October 23, 2009 11:13 PM
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@Tzepish:
If that's how you feel, why don't you donate your money to charities that provide health care for impoverished individuals. Just because YOU are OK paying more so that a mere 15% of the population can have health care doesn't mean everyone is.

Further, my guess is Andrew is doing just fine. He's being pretty discrete about how much he makes, but I suspect it's well over the national average.

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ecwis
October 23, 2009 11:05 PM
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@Tzepish: There are simply not enough wealthy people in America for this to be feasible. The majority of tax-payers are middle-class so their taxes will have to increase if the budget increases.

Also, I'm sure Andrew could easily get health insurance; he doesn't need your help. Healthy 24-year-olds are the ones who will be paying the hospital bills for the unhealthy baby boomers if Obama succeeds with his health-care agenda.

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aphi3986
October 24, 2009 3:59 AM
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@ecwis: I find this statement to be very untrue. I am healthy 23 year old and have been able to obtain health insurance due to three minor pre existing conditions. Insurance companies who haven't rejected me outright want to charge me ridiculous monthly payments that are more than my salary (I've only been able to obtain part-time employment). Health insurance needs revamping to help everyone, not just the very sick of the elderly.

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fs2k2isfun
October 23, 2009 10:52 PM
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@Tzepish: If you believe that's true, I have a bridge to sell you.

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ecwis
October 23, 2009 10:04 PM
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A savings account with a good emergency fund should be his number one priority. I would have a certain percentage of my salary automatically transferred from my checking account to my savings account on pay day.

Also, he needs to get a credit card but he should pay off the entire balance monthly.

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srh
October 23, 2009 10:05 PM
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*PAY YOURSELF FIRST*

That's a cliche expression that's often suggested but rarely followed. Fortunately it's not that hard:

* Max out your 401k

* Direct deposit the remaining paycheck into a money market fund at Vanguard

* Set up an automatic monthly transfer from the money market fund into your checking account, for less than your pay. So there will be a net increase in the money market account every month.

Then budget what you have in your checking account. You never see the rest of the money (well, unless you look at your Vanguard account), so you won't spend it.

Now when you get raises, you'll never notice. They'll just stay in your savings account. When you get bonuses, you won't notice. Once the savings account grows beyond 6 months salary, set up a second monthly deposit that deposits a portion into, for example, the vangaurd s&p 500 or target retirement 2045 fund.

DO THIS NOW WHILE YOU ARE YOUNG.

If you start spending money now, you'll find it very difficult to get off the earn-and-spend treadmill. Get on the earn-and-save treadmill at the very start. Live well below your means.

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NightSteel
October 23, 2009 10:08 PM
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I'd say get a credit card with a low-ish limit through your bank, which is the least likely to have fees, and use it to pay some of your recurring bills, like phone, cable, etc. Pay it off every month. This has the added advantage of the additional protections of credit cards on your bills, so if your phone company tries to bone you on something or charge you multiple times, for example, you can initiate a chargeback.

That's how I started out. I've 'graduated' to paying for pretty much everything with my credit card now, so that my purchases enjoy those protections and I gain the rewards. I continue to spend wisely, just now my money goes to the credit card company instead of directly to the payee. So far, I've managed to get a 'free' microwave, vacuum cleaner, and various kitchen utensils with my rewards points. It's not a bad deal.

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grebby
October 23, 2009 10:09 PM
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Drop $14 on a book called \"I Will Teach You To Be Rich\" by Ramit Sethi. Read it.

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RandomHookup
October 24, 2009 3:05 AM
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@grebby: Even better, pick it up at the library.

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Personia
October 24, 2009 1:50 PM
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Awesome book. Read it three times, really helped me with my finances.

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hereisaaron
October 23, 2009 10:10 PM
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Don't buy a home unless you are POSITIVE that you will be staying in your job and in your city for at least 5 years. 5 years is the average time it takes to break even in a home resale (this does not account for huge fluctuations in home value either market based, or b/c of repairs you do).


Just be cautious, I've seen lots of people dive into buying homes and worked great for 2 years, but then they want to move and cant'.


In this sad day and age, a house is more permanent than a wife.

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duffman13
October 26, 2009 1:27 PM
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@hereisaaron: I don't understand the fear of buying a home of most posters on here. It also seems like most people here live in a big city close to good public transit too but thats another conversation.


The whole thing that appeals to me about it is that at some point in the future, my only costs to keep a roof over my head will be property taxes and maintenance. Isn't that a better long-term plan than paying rent your whole life?


I wouldn't buy until I had at a minimum 20% down and I'd stay in a price range that I could afford on a 15-year mortgage.


Doing it the more common way people do now for 30+ years and minimum down payment is where you get yourself in trouble anyway.

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rdm
October 24, 2009 11:41 PM
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@hereisaaron: You are right. I bought a house in Michigan that I have been trying to sell for 7 years - 5 full years after my divorce was final.

It is not a necessity to buy a house. I bought one now in Texas mostly for tax benefits (and to stop moving every year), but we are stuck here and the housing market tanked within a year of us buying it. We won't move for a long, long time, but would we move if we didn't have this house?

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littlemisslondon
October 24, 2009 9:22 PM
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@hereisaaron: This is true.

On the other hand, if you ARE planning to stay in your current location for 5 years or more, and you're in a region where house prices are relatively steady, AND you can put up a decent downpayment, AND you can find a house that you like enough to stay in long term, then now's a good time to buy. Fixed interest rates are incredible right now.

We bought our house about a year ago after I graduated and got a great job like the OP did, negotiated a phenomenal rate with the bank, put down 20%, and have already paid off over $15,000. Our house cost almost $500k but we live in an urban area where you can't get much for less than that. I'm in Canada where you can't get a mortgage for a term longer than 5 years, but after those 5 years we'll have paid off over $100,000 and will hopefully be making even more money. And our house is small but so nice and in such a fantastic location that we'll probably just build a second story when we have more kids. We are never moving. :)

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squablow
October 24, 2009 2:34 AM
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@hereisaaron: I actually bought my first house right out of high school, closed 2 weeks before my 19th birthday. Didn't need a cosigner, this was 1999 when it wasn't all that hard to get a mortgage. I understand that everyone's results may vary, but for me it was the best decision I ever made. It forced me to budget every dollar, and 5 years later I sold it for a decent profit (probably at the peak of prices) and bought the current fixer-upper forclosure I live in now.

I can see where living in a pricey, urban area can mean home ownership doesn't make sense, due to cost and big price fluctuations, but in my area (northeast Wisconsin) the prices have stayed pretty steady and it makes for a relatively stable investment.

Plus, it's just plain fun to have your own house.

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supercereal
October 23, 2009 10:29 PM
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@hereisaaron: I never understood when buying a house became the \"it\" thing to do right out of college. Being a 20-something, I'm surprised that most other people my age see a house as a sure-fire investment that is care-free, hassle-free, and will automatically pay for itself. Ignorance plays a huge role in the propagation of the myth that buying a house is unquestionably better than renting in every case.

Countless people I know regretted buying a house because they realized 6 months later that they dislike their job and want/need to move, unexpectedly broke up with their significant other, or any number of other foreseeable reasons.

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veronykah
October 24, 2009 12:41 AM
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@supercereal: Not to mention the mortgage is not the only thing you have to pay for.
I'm quite content to have a landlord to call when there are problems, never have to paint, cut grass, clean the pool etc etc.

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rocketbear79
October 23, 2009 10:34 PM
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@supercereal: I have a friend who bought right after college just 3 months ago. I kept advising against it but he didn't listen. I was 28 when I bought my house and I realize I didn't really need it (just me, the wife, and the rooch), and for that reason and the reason above, I wish I would have continued to rent.

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rocketbear79
October 23, 2009 10:19 PM
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@hereisaaron: You can always move, just depends on how much you care about your credit rating.

This is great advise though. In some places, like here in FL 5 years is the low end though. I bought a house 2.5 years ago and got a great deal compared to the original asking price, but since then the house lost another 30% of worth, and I've only been able to add about 15% of self installed upgrades to counteract that. I figured I would be in this house 3-5 years then move out of town. Even if I didn't get a call a month or so ago that my job was moving to CO at the end of the year, I'd still be in deep trouble 2 years from now.

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Chumas
October 23, 2009 10:13 PM
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To be blunt, make an \"Oh shit!\" fund in a savings account. Every paycheck drop 50-100 in it and don't take any out until you really need it.

Renting isn't bad so long as you watch your expenses. If you think you will be in a place for a while, buy a house. Not some damned McMansion but a small house you can take care of yourself. It'll build creit and equity and chicks dig it. :p

Good job on landing with your feet on the ground. Keep your wits about you and don't do anything dumb.

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rocketbear79
October 23, 2009 10:13 PM
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Ok first of all, a lease is not a bad idea unless you like having to pay for a depreciating asset. I currently lease my vehicle and I will never buy again. People say that leasing is a great way to get a nice car for a cheaper monthly payment. I say its also a way to get a cheaper car for a dirt cheap monthly payment. Its also great if you have a certain brand loyalty (mine is Nissan) as there are benefits. Its not so great if you are putting 20k miles on your car in a year.

Get a credit card. You should have gotten one by now, but its never too late. Easiest thing to do with it is to use it for some small auto-charging system, like EZPASS for tolls or something. It will keep the card active via usage and it will be easy to pay off each month. Don't use it for anything else, even to \"float\" expenses between paychecks (trust me on that one it can bite you in the ass).

The whole \"Why pay rent?\" reasoning isn't completely justified for everybody anymore. Especially with the transient nature of jobs today. A lot of companies, especially large ones, don't expect their employees to be lifelong assets anymore. This can lead to your job moving around, especially if you are single and don't have kids tying you down. Therefore, in my opinion, I think buying a house is ridiculous until you need the space or think you are going to be permanently in a certain area.

Other than that, don't fall into new job = new toys mentality, though treat yourself to something nice every once in awhile, and be attentive and careful about your finances but don't let them rule your life.

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searonson
October 23, 2009 10:17 PM
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Hi Andrew! I'm 24 too, but not fortunate enough to have a good job. Here is my advice:

Save as much as you can. Even with my crappy source of income, I save as much as 20% of my net pay and there have been so many times that I have been thankful for it. We're still young! We have an excuse to live cheap.

Create \"buckets\" for your savings to indicate goals. You will need money for a car once your lease is up. Save 2-3 months expenses in an emergency fund. Save for a cool vacation! (This one is important!) Make that money go into savings automatically every month.

Learn useful stuff like cooking. Cooking is fun once you know how to do it and will save you tons of money over the course of your life over eating out or prepared store meals. Other useful things involve routine car and house maintenance, mending clothes, and basic computer/gadget repair.

It's ok to not have \"nice\" things! Almost all my stuff is second hand or gifted at xmas. I am so much happier to have the extra money that I could have blown on stuff to use for experiences and for life flexibility. Plus, we are young enough that no one judges us on it!

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ninja-meh
October 24, 2009 12:45 AM
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@searonson:
I really do suck at cooking, any kind of advice on how to learn or recipes I can use? Oh yeah this is Andrew by the way hha

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mac-phisto
October 24, 2009 11:26 AM
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@ninja-meh: 1) get a wok. everything is easy to cook in a wok. plus, you can make all kinds of crazy-awesome dishes: veggies & rice. chicken, veggies & rice. steak, veggies & rice. chicken, steak, veggies & rice.

i think you get the idea.

2) get a slow cooker. slow cookers are even easier than woks, but they take much, much longer. plus, you can't cook chili in a wok, but guess what? you can cook it in a slow cooker!

3) experiment with seasoning. you don't want to overseason your dishes, but hitting the same dish with different marinades/spices will result in completely different dishes.

4) use fresh ingredients. they taste way better. trust me, it makes all the difference.

i don't use recipes. to me cooking is more fun that way b/c every time i make something new. i make mistakes along the way, but nothing tragic. you know what still intimidates me though? baking. i can't bake worth shit. that's where you have to start paying attention to recipes. try putting baking soda in a cake instead of baking powder & see what happens (spoiler: flat cake).

if you need some inspiration, check this out: jamie oliver (used to have a show called the 'naked chef'. watch it sometime if you can find it. here's a clip from a different show, but it's the same idea - don't 'overthink' your cooking. have fun:

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Covertghost
October 26, 2009 1:15 PM
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@mac-phisto: This sounds like me.


I'm a wok junkie since I first started using one a year or so ago and I'm addicted. All the flavors coalesce so well when you wok.


Using fresh ingredients is amazing (I'm lucky to have one of the biggest farmer's market in the country in madison, wisconsin).


What I'd do when you're first starting to learn is look up recipes on random dishes you like, but don't be afraid to change things for your tastes!


Cooking with a wok is 60% prep, 30% improv with flavors, 10% luck.

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thesadtomato
October 24, 2009 12:40 PM
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@mac-phisto: @searonson: I agree with 1-4 entirely, but cookbooks can be really helpful for the novice. Try Mark Bittman's \"How to Cook Everything\" which is totally straightforward and tells you how to cook healthy things that are super-easy to make, but you might be to intimidated to try because you can't cook. Grains (quinoa), vegetables (asparagus), bread (pizza dough!).

And you should definitely try this book if you're intimidated by baking.

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catastrophegirl chooses not to fly
October 24, 2009 3:55 AM
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@ninja-meh: for cooking try this: [rouxbe.com]
short videos [free!] on cooking tips/techniques. great for impressing a date with your fancy food prep abilities, easier to cook for yourself to save money and... FREE EDUCATION
nothing like being the guy who can carve a turkey at the family dinner the first time you meet her parents
or just being the guy who doesn't cut a finger off chopping veggies for a salad

also, [www.epicurious.com] is a great recipe site. you can look in the fridge, see what you have on hand and then search for a recipe with it there.

a personal favorite food-money saving thing for me is price comparison shopping for food before i leave the house. a lot of grocery stores have online shopping sites or sales flyers online. even if you don't go from store to store to get the best sales on everything you can at least see which one store will save you more on the whole bill.

three rules of cooking that have always served me well:

1. hot food doesn't stop cooking when you turn off the heat. plan for that or you will overcook everything

2. making lumpless gravies and sauces - either use: F_lour into F_at or C_ornstarch into C_old water [switching them makes lumps]

3. if you use salted butter, remove salt from the recipe until you taste it.

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searonson
October 24, 2009 2:31 AM
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@ninja-meh: Pick one or two of your favorite foods and learn how to cook them. They might not turn out right at first, but if you like what you are cooking then it gives you incentive to keep trying. I went from very little cooking knowledge to learning to make sushi (!). It didn't turn out pretty at first, but it was yummy and I kept trying. Plus, it was great to make on dates and way cheaper than going out to a sushi bar.

So, I would say, just pick what you like (so you'll stay with ti), look up the recipe on google, and it will feel more natural from there. I would say you don't even need a recipe book... I just have a three-ring binder with print outs or handwritten recipes.

Also, hanging out with friends who like to cook can teach you a lot. I first learned how to make homemade pizza dough from a friend and now I make it on my own all the time! Oh... and you don't need a ton of stuff for your kitchen... for the longest time, I got by with only a good knife, a frying pan, a saucepan, a stew pot, and a baking pan. Everything else is just convenience and not necessity.

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fourmajor
October 23, 2009 10:17 PM
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Move close to work and sell your car. Rent a car for the occasional weekend trip when you need it. Learn to use the bus or ride a bike otherwise.

Get roommates. That will instantly cut your rent basically in half.

Get rid of cable TV.

Basically, look at all your expenses and say to yourself, if I HAD to cut that expense in half, or get rid of it, would it make me any less happy? How would I accomplish that?

You can save SO much more money once you do this.

Afterall, you don't want to spend your entire young adult life working, do you?

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mac-phisto
October 24, 2009 12:10 PM
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@fourmajor: the roommate thing is a good idea. i've lived with roommates; i've lived alone. in addition to having your rent cut in half (or more), the same happens to virtually all your household expenses: heat, electricity, cable, etc.

when i was living alone, my monthly electric bill was $80. now i have a roommate & it's about $120. that saves me $240/yr. gas (for heating/hot water) is the same now as it was before (we use a little more, but i'm on pipeline instead of propane, so i'm saving A LOT there on delivery), which means my gas bill has been cut in half (that saves me $600/yr).

just make sure you find a good roommate; someone like you that you can tolerate. friends aren't always the best roommates. remember that.

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chiieddy
October 23, 2009 10:37 PM
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@fourmajor: Hard to sell a lease. He's stuck for a bit.

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dragonfire81
October 23, 2009 10:19 PM
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@fourmajor: Access to a car may be a requirement of his position.

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fourmajor
October 23, 2009 10:30 PM
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@dragonfire81: It is certainly possible. But let's hope not ;-)

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The_Red_Monkey
October 23, 2009 10:23 PM
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I would recommend not buying a home at this stage in your life. New career starting and the majority of workers will move and change jobs, each time you move (on average) it cost $60k including agent fees and what not. I say to save and invest the money and rent a place out. Remember that when you buy a home you are paying the property taxes and at least 5% in maintenance fees on the property and a 300k home will end up costing at least 1.2 million by time you pay it off.

I rent for 1200 while a friend bought for 2100 a month so I have basiclly 900 a month to squirrel away and he has a room mate to make ends meet. We both work for the state of CA and got furloughed 3 days a month taking 15% pay. I am still fine and he is struggling.

The deals look great on a home but in reality they are negative cash flows unless you spend all 30 years there.

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squablow
October 24, 2009 2:38 AM
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@The_Red_Monkey: $60,000.00 every time you move? Where do you live? How are you arriving at that figure? Curious to know.

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Eyebrows McGee (now with more baby!)
October 23, 2009 11:52 PM
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@The_Red_Monkey: I pay $1000/month including mortgage, extra principal, property taxes, and homeowner's insurance. Rent for a smaller apartment in a comparable neighborhood runs around $900, insurance not included.

The home is worth more than when we bought it six years ago and we've had the freedom to make changes and grow a spectacular garden. And we're building equity; otherwise we'd just be throwing money down the rent hole.

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Eyebrows McGee (now with more baby!)
October 24, 2009 5:10 AM
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@Eyebrows McGee (now with more baby!): to add ... we did rent while in DC, where we didn't think we'd stay long-term AND buying was ridic expensive.

But in the market we're in now, it's frankly silly not to buy. We're thinking of buying a rental property, in fact, to rent to college students who have to rent.

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halcyondays
October 23, 2009 11:48 PM
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@The_Red_Monkey: This all depends on where you live. In some parts of the country, you can own a nice 3-bedroom house for less than $1200 a month.

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catastrophegirl chooses not to fly
October 24, 2009 3:59 AM
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@halcyondays: seconded! i pay $771 for a 1600sq ft 3BR with a giant kitchen, covered deck and half an acre. that includes taxes and insurance.
i used to rent 400 sq ft less for $900 and before that i was in a 1BR 740 sq ft apartment for $650 with a shared water heater. just over $100 more a month for more than twice the space and no one tromping around upstairs while i am sleeping or using all the hot water.
location, location, location

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seanism
October 23, 2009 10:25 PM
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Get some room mates instead of living alone. You can save a ton that way. I'm 25 and in your same situation.

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Techguy1138
October 24, 2009 3:25 AM
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@SammyD1st: I'd say also don't date your roommates. It can lead to some complications you'd best like to avoid, like who gets to stay or go on break up and the lease is split.

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thesadtomato
October 23, 2009 10:26 PM
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As someone in nearly the same situation, my advice is:

a) If you have a 401k, open a Traditional IRA for tax savings.

b) Start investing in the market in other ways. I opened an account with Sharebuilder and having been buying stocks on a dollar cost averaging basis. The younger you are the more aggressive you can be in your investments. And you don't have to put in a lot of money.

c)DON'T fall into the fallacy of home-ownership. Think of your home equity as a savings account you can only withdraw from once, and only after about 5 years, as some people have pointed out above. Not the best idea for younger, unsettled people. Rent is not \"wasted\" money, it just isn't an investment. Everyone pays somehow for the roof over their head; making it a mortgage payment isn't always all to the good.

In fact, my advice is don't buy a home unless you're thinking about kids or you live somewhere where there's no rental market and houses are cheap. I've seen too many people who can't move because they can't sell.

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Tzepish
October 23, 2009 11:39 PM
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@ecwis: You're right, he describes his situation as \"having a good job\", so he probably has health insurance.

@Esquire99: \"If that's how you feel, why don't you donate your money to charities that provide health care for impoverished individuals.\"

I do, thanks for the suggestion.

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PunditGuy
October 23, 2009 10:50 PM
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@thesadtomato: Now is definitely the time to be investing -- there are a lot of bargains in the stock market right now.

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LMacConn
October 23, 2009 10:31 PM
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First, I would getting a second savings account, something with a good rate. Personally, I use my credit union for primary checking and savings, and have an ING Direct for secondary savings. My ING account is set up to take money from my primary checking account automatically, which means $x every month goes into savings and I can forget about it.

When I look at my paycheck, I subtract out the amount that is going to savings, then pay my bills, and then look at what is left over. I use my credit card, but think of it as if it were coming out of my checking account, because it will when I get around to paying the bill. It took me a few months to get the hang of this, and over about 2 years I got better and better at keeping track of my finances this way.
And during those years, when emergencies happened, I was able to go to my savings. When really bad emergencies happened, I was able to go to my secondary savings.

Emergencies will happen, so plan for it.
The worst purely financial emergency I had was in my first year of employment. I thought I was doing pretty well financially, moved into an apartment by myself on Saturday, and lost my job on Tuesday. A few months later my savings was down to $5.12

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LMacConn
October 24, 2009 12:59 AM
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@LMacConn: oh, I almost forgot. Check out the Investopedia Stock Simulator and start investing with play money. It will give you an chance to try investing in the stock market, building experience, without risking real money. Hollywood Stock Exchange is also a lot of fun.

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lordargent
October 23, 2009 10:32 PM
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1) Don't have kids

2) Brand name clothing is not worth it.

3) Don't have kids

4) It takes money to get money.

5) Don't have kids

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Scoobatz
October 24, 2009 1:45 AM
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@lordargent: Not sure if you mentioned this already, but don't have kids. If you're like me, not only do you have the increased costs that kids bring, but your spouse may decide to quit her job and stay home to raise them.


Our household salary went down almost 50% about three years ago. We went from a situation where money was never an issue to living on a strict budget and closely evaluating all of purchasing decisions.

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robgbrown
October 24, 2009 1:31 PM
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Im 34 and just getting my ass straight after some bad money management. However I have 2 boys, and wouldnt trade them for anything. Im still able to save, invest and spend some $$ on myself(PS3!!), AND have my kids. BUT...don't go out and knock up some chick (theres a good money manager,,,always have condoms...ALWAYS), just dont throw away the idea of kids...later in life!
Enjoy!

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ecwis
October 23, 2009 10:45 PM
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@thesadtomato: Agreed. Go for quality, not price.

If you refuse lordargent's advice and do have kids, then it may be worth it to buy cheap quality clothing for them since they won't be holding onto it for too long anyway.

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Triterion
October 23, 2009 11:58 PM
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@ecwis: It also helps to make a lot of friends that you can invite to your baby shower, hehe. We saved a lot with our baby by having a huge family.

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thesadtomato
October 23, 2009 10:35 PM
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@lordargent: If brand name clothing is made with 100% wool, silk, or cotton, then brand name clothing is worth it. Non-brand name clothing made of acrylic is not worth it, even though it costs half as much.

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redqueenmeg
October 23, 2009 10:47 PM
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I think buying a house is a good idea, but don't buy more than you can afford. I bought my place six years ago and everyone told me to buy a bigger house (which sure would be nice considering it's a two-bedroom and we're about to have our second kid) but that advice was predicated on \"you're sure to get a promotion soon\" and I haven't and I never will.

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WillB
October 23, 2009 10:52 PM
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\"Why pay rent when you can have a mortgage instead\" is language that sellers use to convince people that owning a home is THE AMERICAN DREAM. While able and fiscally sound buyers are getting a great deal now, it's more because of the rate at which they can borrow money more than the idea that their house will appreciate that makes it such a great deal.

I would really need to see a budget from you to tell you how you're doing. Without seeing this, there is very little we can do. I guess I'd just recommend that you continue to invest with your company's 401k up to match so long as the match exists. Then you can work out how much you want to save vs. how much you want to put into an IRA, mostly likely a Roth unless you feel a traditional IRA would be better for you with projected earnings across your lifetime in relation to tax rates.

Good ways to stop setting money on fire is to curb drinking, curb eating out, and monitor your spending to see where the holes are.

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chocolate1234
October 26, 2009 4:26 AM
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@WillB: I've been contributing above what my company will match in the 401 K. Is there an advantage to putting the excess cash into an IRA instead?

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colorisnteverything
October 24, 2009 3:00 PM
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@WillB:


Definitely all good ideas.


I am a 22 year old soon-to-be college graduate. Unlike the OP, I am going on to graduate school, so I have a little more time before these decision, but I would like to start saving as soon as possible for retirement, a house, and already have money saved for a car.


My Dad is an accountant and a banker and he always gives good much like the above. I barely spend money each month on myself. If I need something, I buy it. I don't eat out a whole lot and when I do, it is REALLY good food. I don't care if I spend $20.00 on a good ethnic restaurant, but you will see me avoiding fast food and Applebees like the plague. I don't drink much and when I do, it is for enjoyment. After spending a year abroad in England I am not only poor, but all partied out ;)

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Alarm Bell
October 23, 2009 10:53 PM
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Maybe put 10% or more of your paycheck into a separate account, through direct deposit. Leave it alone, and use it for buying that house, or just keep it for emergency, or whatever else. And dno't be too gung-ho on buying that house in a few years. It has to be the right time and placw. You could invest money if you know how.

Use only credit cards that give you a reward, like the Starwood Amex, or Discover. If you get rid of Cable, and watch TV shows on Hulu.com, or from Netflix DVDs, that saves money. Cook dinner at home as much as possible, since ordering food and eating out adds up fast.

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wcnghj
October 23, 2009 10:57 PM
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Get a rewards credit card. Put everything for the month on this card, then pay in full.

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BabyFirefly
October 23, 2009 11:22 PM
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If you have a girlfriend (going by your age you probably do), don't have a huge expensive wedding. It's completely useless.


My number one advice always is the same: cut unnecessary expenses.


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just_me
October 23, 2009 11:26 PM
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now 45. same place you where when I was 25, except no leased car. now I really don't need to work.

1. Take 5-10% of your salary and have your company put it into a Long term savings account. DO NOT TOUCH THIS.
1.a put the rest into your checking account/short term savings

2. Put everything your company will allow, put it into your 401K.

3. From now on, 50-75% of every raise goes to your savings started in #1, the rest you can start to spend

by the time you are 35, you will have more money than anyone around you, and you can start to spend the savings in #1. This includes houses etc.

if you cannot sell your lease back (I doubt you can), then live through it. then buy a used car, never new, let the other sucker get the depreciation.

Don't worry as much about budget if you use these steps, when your checking account is empty, you don't have money... don't think of your long term savings as money, eventually it will be a solid 6 figures and you will be amazed how fast it grows.

Good advice above:
-- house. If you buy one, don't plan on moving. If you buy one, get roomates, otherwise rent and get roommates. A house is not that great of an investment early, it takes away way too much cash. wait until you are stable.
-- clothing/etc. Don't buy the hype, don't buy what you don't need, and you don't need a lot.
-- Cars - money pits, not from maintenance, but from depreciation, your worse maintenance is 2 months of loan on a car... think about that!
-- Learn to take lunches, and Make dinners (girls will like a nice home cooked meal) Eating out is fine, but eating out all the time is a hole in your pocket.

Do this and you will be the one taking trips and cruises and owning nice cars... all by paying cash!

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rhys1882
October 23, 2009 11:31 PM
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I second getting a credit card. What I did was I set up autopay on my cell phone and instead of paying my cell phone bill every month I paid off the balance on the card every month. Got pretty good credit that way. Also, if you miss a payment the penalty is relatively minor, so it's a good learning experience without screwing you over.

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zzxx
October 23, 2009 11:40 PM
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1. Pay off any debt you have.
2. Get a credit card with a cash rewards program. My rewards from Chase last year were $1250.00. BTW, this is not taxable income. Charge everything that you would normally buy.
3. It depends on your situation about a car. If you get to work with only public transit you don't need much of a car. If you live in the snowbelt you need 4wd. If you drive more than 20 miles to work you care about gas mileage. You do not impress girls with a fancy car. So...I can recommend that you get a small 4wd SUV (Ford Escape, Honda CRV, Toyota RAV4, Chevy Equinox). They are cheap to insure and still socially presentable. All of these vehicles can be parked in all but the worst neighborhoods with impunity. I know people with 150K cars. They are forever worrying about them. I couldn't give a hoot about using my cheap SUV.
4. Use public transit if you can.
5. Don't eat out.
6. Avoid bars, drink at your own house or at friends houses.
7. Pool is a great hobby. If you have room buy a $2K table and you will have it for life.
8. Avoid vacations. They mostly suck.
9. Don't buy a house. I did when I was 20 and regretted it. The work on it never stopped. The responsibility is a pain in the ass especially if you are alone. Also, if you buy now you better be sure that you will stay where you are for a while. You may even miss out on job opportunities out of town.
10. Avoid shopping like the plague. Most of what people buy beyond consumables is crap and will end up in the landfill.
11. Get a Rolex now. Before you have commitments or at retirement is the only time to indulge. Retirement is too late. The value of the watch will do better than the value of a car or a house. 5500 should buy you a new Submariner.
12. Learn to play golf. This is very important in the corporate world.
13. Save money in a bank. Make sure that you get free checking.
14. Stop all of the money leaks, like sleazy cell phone contracts, speeding tickets, parking fines, late fees, etc... BTW, I heard that my local PD is at only 60% of their annual expected revenue from parking / moving violations. I love it. I know that when I park legally and don't speed I am adding to the frustrations of ticket cop and the local politicians.
15. Avoid tolls. I work in NYC and never drive there. It costs 8.00 to cross the GW Bridge. EZpass separates you from the real pain that tolls are.

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SammyD1st
October 24, 2009 12:04 AM
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1. DON'T buy that house... yet. You will regret being stuck in it when you'd rather have flexibility. The very marginal difference between rent and interest on a mortgage is worth the flexibility and freedom.

2. DON'T go into debt solely to have a credit score. You do NOT need a credit score to get a mortgage, look for \"manual underwriting.\" I did this myself personally, anyone who tells you that you need to build up a credit score doesn't know what they're talking about.

3. You do NOT need to \"save/build credit for the future\" - you need to save/build MONEY for the future.

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wcnghj
October 24, 2009 3:12 AM
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@SammyD1st: In 2009, I don't believe any bank or credit union would consider lending to one with no credit file.

You don't need debt to get a credit score. Get a CC, pay in full, no debt.

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SammyD1st
October 24, 2009 3:47 AM
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@wcnghj:

Absolutely, 100% incorrect. I worked with a multi-state mortgage lender, and many small local credit unions will do so as well.

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catastrophegirl chooses not to fly
October 24, 2009 4:03 AM
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@SammyD1st: agreed. in 2007 i had 0 credit history at the age of 31. my credit union let me open a line of credit to start building a history in anticipation of buying a house.
they didn't base it entirely on my previous decision not to have credit but on my job and history of accounts with them

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dilbert69
October 24, 2009 12:37 AM
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I would do the following in this order, no matter how long it takes:
1. Invest your existing retirement account (both your portion and the employer match, if you have the option) in index funds, split between equities (the percentage should be 120 less your age, so 96% this year, 95% next year, etc.) and long-term bonds. Each year on your birthday, rebalance so that these percentages hold. As you reach your 40s, consider splitting the bonds into long-, medium-, and short-term, but never buy anything but an index fund. This keeps expenses low (very important, as even 1/10% can add up over decades) and don't subject you to the whims of a guy in a fancy suit who probably can't beat the market anyway. And it's very low stress and doesn't require you to monitor stock prices (in fact, you probably shouldn't).
2. Get out of the car lease. Purchase an inexpensive used car. Pay it off as quickly as possible. Save money each month so that when the car wears out, you can purchase a new one without borrowing.
2. Pay off all credit card or other debt. The only thing you should ever owe money on is your principal residence.
3. Save money in a savings or money market account (shop for the highest rate) until you have six to eight months of living expenses accumulated, separate from your new car fund.
4. Ramp up your retirement savings to the legal maximum (currently $16,500/year). Visit [www.paycheckcity.com] to calculate how this will affect your paycheck - it's less than you think because of the sweet tax advantages. Do not change the percentage allocations except as described above.
4. Save money in a third savings or money market account, separate from the emergency and new car funds, until you have accumulated 20% of the cost of a house or condo. Buy that house or condo with a 30-year fixed mortgage. Never borrow more than three years' income to do so. Never take out a home equity loan.
4. Put further savings into a non-retirement mutual fund account allocated the same way as your retirement account (described above).
5. When your income increases, save more, but don't spend more.

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amberlink
October 24, 2009 12:52 AM
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WOW, so much missing information:

Where do you live geographically?
Do you need a car to get to work or is it a luxury?
What other debt do you have, you mention, the following:

\"I haggle my bills when they are unreasonable and can even afford my own apartment.\"

what does the first part of that sentence mean? Since when does ANYONE allow you to haggle your \"bills when they are unreasonable\"?

Can we get any real information about what his real-life situation is before offering advice?

Also, does he have an emergency fund? Sure, he contributes to his company's 401k to the matching level, but does he have an emergency fund of up to 3 months' worth of rent and bills inclusive?

There's just too much missing information here.

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MakGeek
October 24, 2009 1:05 AM
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check out www.financeguido.com its a twofer, humor and advice! It's a good read.

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paddlacus
October 24, 2009 1:11 AM
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Having recently gotten completely out of debt (except mortgage) and fixed my financial life up completely, I'd have to recommend Dave Ramsey. He's more hardcore than anyone I've ever heard (no debt, ever, even credit cards), but the steps he maps out are simple to understand and execute and really put you in control of everything. In a nutshell, they are as follows (you never move on to one until you've finished the ones before it):
Pre step: cut up all credit cards. Many people here will disagree because you won't have a credit rating, and this is where many will not be able to follow him, but without the option, you only buy what you can afford and it makes everything else easier.
1. Get a $1000 emergency fund
2. Pay off all debt (sounds like you've done that except the car, which you would now get rid of and buy a cheaper one, or pay it off asap).
3. Increase the emergency fund to 3-6 months worth.
4. NOW start saving for retirement or down payment for a house.
5. college fund for kids (if applicable)
6. Pay off house faster.
7. Be rich

Sounds simple and straight forward, and it is. google him and see for yourself, but listening to him almost single handedly got me out of debt, into control, saved my relationship, and taught me how to be a man.

Either way, just the fact that you're asking the question means you're going to be ok.

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remington870_20ga
October 24, 2009 1:38 AM
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Hi Andrew, Im 24 myself and when I was 20 I took a class by Dave Ramsey. See if you can get into one. If not, buy a book of his. That guy will teach you everything. He when from riches to rags from debt and credit cards and lost every thing. He started all over from scratch and now hes a millionaire.

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remington870_20ga
October 24, 2009 1:38 AM
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@remington870_20ga: The best part is, once you pay for a class, you can go back as often you want, for free.

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Scoobatz
October 24, 2009 1:40 AM
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1 -- Resist the urge to buy/lease a cool car. Driving around a beater can save you over $20,000 in a five year period after factoring in lease payments and higher insurance costs.


2 -- Resist the urge to live by yourself, even if you can afford it. Again, you could easily save another $20,000 over a five year period.

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nstonep
October 25, 2009 4:25 AM
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@Scoobatz: No way...if you don't drive a banging car you don't get any pussy. And the way this guy is running around asking for people to decide what to do with his money, he obviously isn't scoring that much. And it's not like guys get laid more when they can actually afford them what with the ED and missing hair.

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Techguy1138
October 24, 2009 1:53 AM
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It really seems that you have most of your stuff together.

This will seem really but decide if your going to be married. If the answer is YES find a wife now. You can wait but you don't want to be looking for a wife in your 30's. You will want a strong relationship under you when you start buckling down to advance your career.

Several co-workers of like age(both sexes), are looking for love AND having large demands made at work. You can only really do one at a time without putting half effort into both.

A hasty marriage will cost you, but if marriage is something you want, do it sooner rather than later. You will benefit for the rest of your life.

It will likely also allow you the advantage of a dual income and the ability to buy a house.

I wish I knew this at 24.

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Techguy1138
October 24, 2009 3:21 AM
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@Techguy1138:

Also buy a classic car. It may cost 20k for a used classic but it will hold it's value better and maybe appreciate some. It's also better to drive a classic car with you're 24 instead of 34

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AnthonyC
October 24, 2009 2:04 AM
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Take a look at your credit report; your lease probably shows up as a loan. I know mine does; I leased a Toyota in May of this year.

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thisistobehelpful
October 24, 2009 2:52 AM
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Actually leasing a car isn't necessarily a bad idea. I knew a guy who leased a car for a year and then flipped it every year for a new car. If the payment is low enough (he was paying around $200) then getting a new car every year can be the same as getting a new car once, financed, for 10 years, possibly for less depending what the car is except you don't eat the depreciation until you're read to. If you're not sure about a car purchase it's not the worst way to wait. Yes I realize at the end of 10 years you'd have a car, but you'd have a car that's 10 years old and probably be about to buy a new one anyway.

Otherwise, I'd say save the old fashioned way, by giving yourself a budget. Make a list of all the bills you HAVE to pay and total it. Now double that and save that for a couple months, after that, save one month's worth of bills on top of paying your bills obviously. If your rent makes that more than your monthly income then your job is not as well paying as you think and you should think about moving if at all possible.

For the fluffy stuff, make wishlists, prioritize them and mete them out to yourself. Rent everything you can (netflix, gamefly, library, etc.). If you have to buy books, wait til you at least finish whatever you're reading currently. Same with video games.

At your age you should also have a wedding travel savings account since a lot of your friends will probably be getting hitched in the next couple years.

Don't buy a house until you've had a steady income for at least 5 years and have 20% for a downpayment. Unless you're married or have kids on the way, there's no reason not to rent that either. Renting means you skip property taxes which are sometimes surprisingly high. Unless you need to settle down, renting a nice apartment is not a bad idea. On top of this it means you can't lose your house to debt, only to things like failure to pay rent.

Roommates also save money, and become especially tolerable if you can get a duplex.

Your savings should be split into a few categories. Retirement is 40 years away for you so you can actually quite easily figure out how much you want to retire on and backwards plan for that. Don't put it in the stock market. SO many people call this investing but it's gambling. If you can't afford to lose it, you can't afford to \"invest\" it on the open market. An HSA is not a bad idea, even with insurance. An emergency fund of a few thousand dollars if you can swing it and an I WANT A NEW FLASHY THING fund.

ALso having two checking accounts is not a bad idea. One for fixed and household bills that does not have a debit card attached to it and one for your other purchases so you never unconsciously dip into the rent money.

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ninabi
October 24, 2009 2:54 AM
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I can say this from experience-
hold off buying a house.
We moved around frequently (military) but we had friends who'd buy homes during assignments. We rented for all but a few of 24 years.
We came out ahead financially- those trips to the hardware store for lawnmowers, tile, faucets, paint, replacement windows, etc add up. Kids told us their happiest memories were when we rented a condo that had woods behind it! and kids to play with! and a pool!

By having a money cushion early on (we were very frugal on entertainment, too), emergencies such as big car repairs or root canals did not force us to turn to our credit cards and we never got into the trap of credit card debt.

Sounds like you are on the way to a solid financial future.

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StanTheManDean
October 24, 2009 3:28 AM
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What is your salary, hwo much (%) of the salary is absorbed by rent, car lease, retirement fund and other unavoidable costs?

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aphi3986
October 24, 2009 3:57 AM
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@ ecwis \"Also, I'm sure Andrew could easily get health insurance; he doesn't need your help. Healthy 24-year-olds are the ones who will be paying the hospital bills for the unhealthy baby boomers if Obama succeeds with his health-care agenda.\"

I find this statement to be very untrue. I am healthy 23 year old and have been able to obtain health insurance due to three minor pre existing conditions. Insurance companies who haven't rejected my outright want to charge me ridiculous monthly payments that are more than my salary. Health insurance needs revamping to help everyone, not just the very sick of the elderly.

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KinzuaKid
October 24, 2009 4:06 AM
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Phenomenal advice up there. Just like everyone else:
-Pat yourself on the back for a job well done thus far. Don't beat yourself up about the lease; you know better now and are doing the other bits right
-That said, if you can get out of the lease cheaply- do it
-Budget, budget, budget
-Save some cash from every paycheck into a MM fund or high yield savings account
-Save as much as you can and set an aggressive target. Cut other things from your budget to hold that target if you have to
-Save automatically, either through payroll or an automated transaction from the brokerage or bank (e.g., I use my ING bank account to automatically pull the money the day after payday)
-No more leases. No more brand names that don't deliver value
-Read Consumer Reports and watch Suze Orman. Enjoy a little schadenfreude.
-Don't get smug. ;) Always be learning.

Good job so far...keep it up!

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catastrophegirl chooses not to fly
October 24, 2009 4:06 AM
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if and when you buy a car don't forget to save just for the car. the car costs more than the payments and gas.
i used to pay cash for cheap cars and then save money instead of a car payment - and that money always went to oil changes, repairs, tires, maintenance. [although not always by design]
a lot of car expenses are predictable and if you put the money in savings until you need tires/oil/transmission flush then you earn interest on it.

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Daveinva
October 24, 2009 5:34 AM
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My advice.

Saving is for suckers.

Meaning, save enough for the emergency fund-- the 6 months or so of salary.

You're maxed out on all your \"standard\" retirement accounts. Perfect, keep that up.

Continue to save a little bit each month, but really, put that extra money into something that will work for you more over the near-term.

It simply makes ZERO sense to sock your money away in 1-2% savings or money market accounts right now. You're young, you have a lonnnng time to survive market volatility, your rate of return in market investments will serve you much better.

Again, it's all in the balance.

As for a house, I'll echo most everyone here: unless you're living in a VERY cheap area for real estate, I wouldn't even consider it. Home ownership is NOT just your mortgage-- it's far, far more expensive than that. Of course, there are many psychic benefits to be had, but in almost every circumstance, you'll do better saving the difference in $$$ and investing it. Study after study show that, over time, a house returns only about 0% investment over time, while stocks will get you 5-15% percent depending on your good fortune.

Plan on buying a house when you need to, if you ever need to. Don't just buy one because that's what everyone else is doing, or that's what's expected, etc. You'll spend too much money in too short a time for too little a return and WORSE, lock yourself into a geographical area at a time in your life when you should ensure your mobile in order to take advantage of job opportunities and/or career changes.

Lastly, that's the most important point: don't focus TOO much on money right now. You don't want to go into debt, you want to maximize the power of compounding interest while you're young, BUT... you are only young once. Don't live on kibble in your 20s just because you want your 30s to be better-- seek out opportunities for inexpensive travel, cheap entertainment, $1 drink nights, etc. Just as I've seen folks ruin their 30s and 40s by being profligate in their 20s, I've seen people ruin their 20s and 30s in the hope that they'll enjoy their 40s and beyond. Trust me, BOTH groups usually come to regret that decision.

It's all in the right balance.

P.S. In purchases, focus on quality over quantity. I still bought electronics, a car, etc. when I was younger, but I made sure that what I was getting was well-built and well-liked. Research your purchases to get the best value for your dollar, and determine where your priorities are-- you may want that big screen TV *and* the new Macbook, but you may find yourself much happier buying the Macbook and watching TV on that for the time being, and banking the money you *didn't* spend.

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P_Smith
October 24, 2009 8:40 AM
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If he's been responsible his whole life, his credit is good, no debts except those paid like student loans, it couldn't hurt to ask mom and dad to cosign a loan if they have good credit as well.


Yes, everyone wants to cut the apron strings, but if he can get a better loan (lower interest, not a larger amount) with a little parental help and buy a small home outright within 10 years, why not?


At least by owning a 900 sq. ft. home outright he can put the \"monthly mortgage payment\" into a compound interest saving account for a bigger house later on.

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SOhp101
October 24, 2009 11:19 AM
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Don't listen to Consumerist comments. If they have a comments code and still imbeciles like these get in to say their crazy conspiracy theories, who knows what advice is actually helpful.

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nstonep
October 25, 2009 4:21 AM
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@SOhp101: This has nothing to do with consumerism!

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Megladon
October 24, 2009 11:35 AM
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Once you have a safety net built up incase of disaster you need to get your money out there and put it to work. If you have some free time and can do research on companys and the stock market this is a great way to make extra money. If thats not your thing there are other ways such as prosper.com for doing lending to people where that site will do most of the leg work to tell you how worthy they are of your money. No matter what you want anything you dont need out making you more money always.

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mhutt
October 24, 2009 12:32 PM
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Put aside $5000 in a savings fund. When you meet the right girl you will want to buy her a ring someday. Don't wait until you meet her to have to start saving. You will want to spend money taking her to dinner, vacation, etc. having a little savings for it before you even know who she is seems silly now but when you meet her you will be glad you were ready.

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Thermopyle
October 24, 2009 2:23 PM
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You don't need a credit history to buy a house. Don't play their game.

Just use a bank that does manual underwriting. This means they'll look at your income, job history, and down payment to determine whether you qualify. You'll be in the best financial position of your life when you've followed a good savings plan and have a credit score of zero.

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ma5t3rw1tt
October 24, 2009 4:11 PM
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What I do is put anywhere from $10-$15 per week into a savings account. Sure its a small amount but when you automatically get use to doing that, you most certainly won't miss it and before you know it, it will be getting big.

Another thing to do is get the sunday news paper for the coupons. I always save a lot at the grocery store but using coupons and buying the store brand.

If have have an apartment, get those energy efficient light bulbs, and you won't believe how much your energy bill will be reduced to if you use those instead. Turn off lights when ya don't need them, unplug those things you really don't use on a daily basis, that will put more money back in your pocket.

Small things like that make a big difference in a months time.

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wcnghj
October 24, 2009 4:24 PM
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To those who say don't build credit, my advice to the OP is do build credit.

Apply for a card like Citi Forward. No annual fee and no interest if you pay in full each month. Get rewards and build credit.

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Gracegottcha
October 24, 2009 4:59 PM
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My best advice would be to live as frugally as he can. I know that's not fun (especially when you're young), but as he is not supporting a family it shouldn't be too painful. Rather than buying the newest tech gadget or funding entertainment, he should save as much as he possibly can. Having money means having choices - having power when you really do want something or a really great deal comes up.

I would get a credit card and use it for your usual purchases of gas and food, etc., then be sure to pay it off completely every single month on time.

Continue to pay you car lease, rent, and such on time and completely without fail and see out your contracts.

\"Neither a borrower nor lender be\" seems like good advice to me in most cases.

You've received some very very good tips for others. Pay attention and understand that they come from people who have been where you are and wish they had had someone give them the advice that you have received today.

Good luck in life - and much success!

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Hepcephus
October 24, 2009 5:49 PM
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One word: plastics

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nstonep
October 25, 2009 4:22 AM
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@Hepcephus: Yes...plastics and condom factories.

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jadeoracle
October 24, 2009 8:11 PM
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I'm 23 years old and just purchased my first home and have some advice for you.

Although I'm still working on getting my savings back up, as all of it when to my condo, the best thing I can say on that front is pay yourself first and budget for savings. I have a minimum \"Emergency\" amount that is my main goal. After that I'm hoping to save a 6-9 month funds in case anything were to happen, like being laid off. For me I just have just have to be in the habit of savings, and look very closely for deals before I purchase. I also have some money in short term CDs and am looking at high yield savings accounts.

Now you talk about building credit with a credit card. I can tell you it is not necessary if you use other credit tools available for you. I've never had a credit card but I have a great credit score which helped me purchase my home.

However, when I was planning on purchasing my home, I didn't know this and was freaking out that I had not built enough credit history or had a lower or nonexistent credit score. I thought I needed a credit card to build a credit score. After doing research I found that I had already built credit and here is all I had:
Student Loans - I pay my students loan on time and have never had a late payment. I even paid interest in college so this helped give me a longer credit history than other people my age.
Car Loan - I purchased a car 2 years ago for a 5 year loan and have never missed a payment.
Revolving Credit - You know when those stores will do the \"No Money Down and No Interest for a Year\" deals? I purchased a couch for an apartment a year ago and paid it off before the year was over.

So with just those 3 items I had built up enough credit history and had a good enough score to secure a mortgage for my first home.

I'm betting in your case your Lease Payments on the car will show up in your credit history, so make sure to make every payment and this will help build your credit history. If you need to buy something definitely shop for those \"No Payments for a year\" and use those revolving credit accounts to help build your history. Certainly using a credit card wisely can also build credit, but I just want to dispel the myth that it is required for a home purchase. I would also recommend to watch your credit score now so you can fix any issues and also find out what your credit history is by going to the only really free Credit Score site: [www.annualcreditreport.com] This is the one run by the government which lets you pull your stores from each of the 3 reporting agencies once a year. I'd recommend doing 1 every few months so you can have a ballpark on how your score and history are doing.

Congrats on the new job and good luck!

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chacotom
October 24, 2009 8:31 PM
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1) Forget about buying a house as an investment. If you find somewhere you really want to live, and the only way to do it is by buying the house, fine. But don't think of real estate as a good investment. The gains made in real estate between 1995 and 2007 are not likely to be repeated. Even with those years included, the average gain from real estate is about 4% over the last 50 years, compared to about 8% in the stock market. Yes, the mortgage interest is deductible from your gross income, but you'll shell out a lot for property taxes, maintenance, HOA fees, etc. On top of that, real estate is not a liquid asset. And when you need to convert it into cash the most, that's when it's hardest to do. [ I own a house, but I'm advising my adult kids to forget about it].

2) Work on getting a rainy day fund that will carry you through at least 6 months. You have a nice job now, but it can disappear at a moment's notice.

3)Prepare an emergency budget for yourself - something that you can rely on if you lose your job. Be brutal about it - no eating out, minimal cable, etc. If you do lose your job, or suspect you're going to, revert to this budget immediately.

4) Buy used cars. Get cars that have excellent repair records, around 3 years old. You can get some great deals on 3+ year old Hondas, Toyotas, and VW's. Many of these have already gone though 1 lease term and have been maintained by the dealer.

5) Get one credit card, but make it something like Amex, where you have to pay it off each month.

6) Keep enough in your checking/savings account so you never, ever pay the usurious fees the banks are charging young people. They have replaced the mafia as today's loan sharks. I know one young woman to used her bank to to get an advance on her paycheck. They charged her $50 for this \"service\", which came to around 345% APR.

7) Unless you have time to follow individual stocks, put your savings into an index fund with low or no fees. Vanguard has a number of funds which follow the S&P 500, Russel 5000, etc., and the fee is less than 1/2 percent. Remember that mutual funds run by high paid \"experts\" 80% of the time do WORSE than index funds.

8) For liquid savings, look at online banks like Ally, which give around 2% on deposits. Keep your rainy day fund (which I guess for someone your age would be around $18,000) in an account like this, where there is no penalty for early withdrawal.

BTW, congrats on approaching things the way you are. You're off to a great start!

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Jetgirly
October 25, 2009 3:37 AM
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I'm twenty-five. I live in Canada and my gross annual salary is $62,500. It goes up annually and the current cap (after ten years' service) is $83,000. I take home about $3700 every month. I have a permanent contract and basically can't be fired or laid off; if I want, I can keep this job until I retire.


Things That Are Working For Me:
- Putting almost everything on my credit card. I collect Air Miles through my card, and each year I rack up enough miles to fly home at Christmas. That saves me about $400 at a time of the year when money is a bit tighter.
- Having lame-ass Pay Day. The day I get paid, I immediately pay off my entire credit card balance, my student loan and my car payment. Then, I put about $800 into my savings account. I consider it an over-save and sometimes I have to dip back into my savings, but sometimes I don't.
- Living alone and making payments on a new car. I've gone through thirteen roommates. I don't live well with others. I like to cook dinner naked. I walk to work (it's thirty metres away!). I know I could save money living with others and using transit, but I have to put my mental health first.
- Speaking of health, I make full use of my health care plan. I get free essential health coverage from my province, plus extended medical and dental from work. In addition, I get a health spending account for \"incidentals\". I see a naturopath and get massages, charge them to my credit card (Air Miles!) then apply for reimbursement from my insurer. Last week I had a dental checkup (no special work or anything) for three hours. It cost $500, which I charged to my card (Air Miles! - plus the bill won't come due until December 4th). My dentist submitted a claim as I entered the office, and I was reimbursed BEFORE I LEFT. Cash in bank account. That's going to collect interest for six weeks until I pay off the card!
- I'm not super freaked out about retirement right now. My employer automatically puts about $400 into a retirement plan each month, and I figure I'm ahead of every single other twenty-five-year-old I know so I'm good for now.
- Cooking. I make a weeks' worth of lunches on the weekend and bring them to work on Monday morning so I don't have to worry through the week. In an average week I spend $50 on seven breakfasts, seven lunches and five dinners (I might eat dinners out twice). When I used to eat lunches out, I spend more than $50 just on my weekday lunches.
- Gambling. I've never lost money at the casino. I go for about five or six hours, only bring a tiny bit of money, use my \"system\" on the slot machines, and come out with an extra $25 in my pocket and an evening of better-than-free entertainment.


Things That Are Not Working For Me:
- Car extras. I really thought I could get through the season with no snow tires, as most of my friends do. Thing is, I've never driven in the snow before! My first snow day saw me slide right through a four-way stop. Five days later I spent $850 on new snow tires. The same day, I got a photo-radar speeding ticket in the mail for $136. It's not going to put me in the poorhouse, but it sucks.
- Buying stuff for work. I need to buy less stuff for work. I can do my job with what is supplied by my employer, but it's more fun with \"extras\". We used to have money for extras, but now we don't and I've got in the habit of spending my money on work stuff. Must stop!
- Living in Canada. When people talk about 401Ks and other stuff, none of it relates to my situation. I do have a tax-free savings account (I put in the annual limit of $5000 last year) but I'm not even really sure what other options are out there for young Canadians.

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iron_chef
October 25, 2009 3:39 AM
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put your energies into finding ways to make passive income on top of your regular income. I've lived with roommates until my 30's and used the extra money I save to build myself a sizeable war chest to buy stocks, rental property, etc.

one day that passive income (stocks, rentals, etc) will come in handy when you retire or can't work.

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nstonep
October 25, 2009 4:20 AM
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Call suzie orman and don't be a tool. Eat ramen noodles. Don't date a gold digger. Don't take a piss in your boss' coffee. Tie your shoes in a bowtie not bunny style. Put ketchup on your ramen noodles. Be sure to ask your doctor if plavix is right for you.

Really...if you ask for money advice from complete strangers you need to re-evaluate your life.

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Ptath
October 25, 2009 5:26 PM
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1) Look up the information on DRIP (Dividends Reinvestment) Plans. Many companies will let you piurchase stocks directly if you own as few as one share. Also look at stock index funds, specillythose listed on the stock market: FEw mutual funds have beaten the stock index over time, and their management fees are the lowest.

2) Don't listen to \"good advice\" from folks around you when you buy stocks. Buy for the lomng term, don't try to beat the market. Only purchase stocks in companies you know, that make products you like and use and that you see being popular around you.

3) Skim 5% of every paycheck the minute it is deposited in you account and transfer it to a savings account which you will not touch. Borrow from that 5% stash when you need to cover unexpected expenses but repay it quickly - become your own lender!

4) For building credit, purchase a bond of appropriate value, 50% to 100%, and assign it as guarantee against a line of credit or a personnal loan. Not only will the bond gather modest interest, but by having a guaranteed loan you should be able to benefit from priviledged interest rates, and not have to worry too much either about repaying the loan itself or being victim of climbing interest rates on your loan at renewal.

When the loan is repaid, the bond is returned to you - instant savings. Or cash it in and clean the balance ahead of schedule.

Needless to say, if you cannot afford the bond, you probably cannot afford that loan either.

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LVP
October 25, 2009 11:49 PM
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Start an emergency savings account. Open a Roth IRA and max it out every year. When you buy your own place try to get a multi-family home. Be sure that the rental portion covers your mortgage and taxes.

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gabrewer
October 26, 2009 12:36 PM
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I would second a lot of the comments already made about being wary of buying a home at this point in your life. I've become convinced from my own experience as a homeowner that the vast majority of us have never improved our financial wellbeing by owning a home. At best, a home might increase enough in value over time to give you a refund -- and probably just a partial refund -- of all the money you sink it to it. Not to mention the stress factor of dealing with issues such as broken water lines, trees blown down in the yard, rodents in the attic, etc.


Secondly, and more importantly, take with a grain of salt the advice and recommendations of self-appointed experts on talk radio, the web, and other media outlets. Especially be wary of the \"one size fits all\" approach promoted by a number of them. And tightly hold on to your wallet and run from those who mix financial planning with religious beliefs or faith and values. Commit to educating yourself so that you can scrutinize advice and recommendations from different perspectives. It will admittedly be a long process but well worth it.

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duffman13
October 26, 2009 12:53 PM
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It depends what your plans are, job security, etc. In your position there are a few things I would do:


1. Get roomate(s). The savings on rent and utilities are completely worth it. I used to pay $400 to live with 2 other duded all rent and utilities together. Now I pay around $1250 for myself and the wife. Pretty simple math there.


2. Depending how serious you are about buying a house in 3-4 years, here are some good prerequisites for you: buy something you can afford on a 15yr mortgage with 20% down and you're relatively certain you'll be staying there for a minumum 5 years. Do the budget math yourself when you're going to buy it and don't fall for the realtor or bank's crap. I don't know where you live or costs associated, but a $300k house ($240k mortgage) with those numbers costs roughly $1900/month without factoring property taxes, utilities, etc.


3. Start investing. You're young and you can afford to be risky at this point. Diversify, allocate probably 30-40% into something with a reasonable guaranteed interest rate of around 5-7%

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duffman13
October 26, 2009 12:58 PM
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@duffman13: Oh, I forgot my real #1 and 2:


1. Get a credit card with a good rewards system. Do ALL of your spending on it, but keep track of your spending so you can pay it off every month. This way you get to treat yourself with the rewards and it doesn't have to come out of your own pocket.


2. Build credit: Don't know if you need any big ticket items like furniture, etc., but you can almost always get a deal on 12 months 0% interest from furniture and electronics stores. It never hurts to take out a loan on larger items and pay it off. heck, I have my big TV on a 0% card so I'm treating myself and helping my credit simultaneously

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kungfujohnny82
October 26, 2009 1:48 PM
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1. Set up a budget every month and stick to it.
2. Save a $1000 emergency fund.
3. Pay off all of your debt.
4. Build your emergency fund to 6 months worth of expenses
5. Invest 15% of your income into retirement

Do not use credit cards! Reward programs are for suckers!
Read \"The Total Money Makeover\" I just read it and it (at risk of sounding douchbagish) changed my life!

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LVP
October 29, 2009 4:48 PM
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@kungfujohnny82:
Do not use credit cards! Reward programs are for suckers!

Not if you pay it off every month.

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Mecharine
October 26, 2009 2:46 PM
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Im in the same boat is the guy. 24 and in a job with a big company.

Here's the basic things I figured out:

1) If you're company has a 401k match, put in at least up to that maximum into your 401k.

2) Don't try to lease anything that isn't your apartment/home

3) Reduce expenses on useless stuff like foam fingers or beanbags

4) Used cars are better. They're cheaper and since they're still on the road, they aint broken.

5) Try to save at least 50 percent of your income into savings, another 5 percent into your own stock trading account (optional).

6) Enroll into a health insurance. You're in a big company now so that means you get access to the company's HMO, time to get as much from your health insurance as possible, IE finally going back to the dentist after 10 years.

7) Keep some money for consumables (food etc) but also keep some money for things that you like. Which mostly should be Transformers or Gundam action figures.

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TexasP
October 26, 2009 6:54 PM
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Good grief, so much bad-to-terrible advice given so far.

1) Don't live beyond your means. That means debt payments no higher than 33% of your net income while you're single.
2) Leasing is perfectly fine as long as you invest the difference between the lease payments and the loan payments in something that pays a higher rate of return than the loan interest rate.
3)Find a good spouse.
4 Get married and have 2 to 3 children. Life has no purpose other than to reproduce yourself, and homo sapiens is genetically encoded to be miserable if he doesn't have a purpose.
4) Ignore the misanthropes. For goodness sake, have some fun while you're young. Travel the world, buy a cool new car, eat nice meals. Hint for #3: splurge on shoes. Just don't violate rule #1 in order to do so.

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Loias calls you out if you can't RTFA
October 26, 2009 6:56 PM
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Check with the dealership that you are leasing your car about purchasing the very car you are leasing. Dealerships may be receptive to terminating a lease early if you are buying the car (assuming this is a car you would like to keep). That's more money in their pocket that they desperately need. If not, you can still buy your car after the lease is up which is beneficial to you because you know it's history.

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nirvaeh
October 26, 2009 10:00 PM
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You earned your money...have some fun. Just don't live beyond your means, but that doesn't mean live way below your means.

Here's what I do:
1) live within my means
2) budget my money and find out where it goes
3) max 401k employer match
4) got good cash back credit cards (discover open road)
5) pay off credit cards every month
6) don't impulse buy. Wait 30 days and reevaluate the pros and cons. I'm still macbook free!
7) set up a car repair/maintenance fund (= deductible)
8) cook at home and bring my lunch to work (most days)
9) put money away into savings before buying anything.
10) paid off my car (7.1% interest was draining me)

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ACMC85
October 27, 2009 2:27 AM
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Ok, so this is my advice, but I am no expert. All this depends on what you want and the current state of your life.


Leasing is not a bad option depending on your lifestyle, but it does sound like you are frugal, which is a good thing. So, leasing probably isn't for you, but it does depend on your deal. Do you put a lot of miles on the car or enjoy driving a new car constantly? I'm not sure how the property tax works on the car, I was surprised that my friend had to pay tax on his lease, even though its not legally his.


And housing, lol housing is incredibly complicated. There are many benefits to renting, but it really depends on you. Do you expect to move, can you afford a house, will you have your job a year from now? All I can help you with is that this is based on your personality and please don't let anyone shoe horn advice to you. It doesn't work that way. I don't plan on buying a house, as I plan on working and traveling when ever I feel like moving. And, yes that is possible for me, if I truly think thats what I want to do.

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