Konichiwaneko

get a credit use it and pay it off in full each month.

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NoSoup

Well, it really depends on the type of risk that you are willing to take. If you decide to take some risk, decide how much of that money could could afford to potentially lose.

However, I would make sure that you have a minimum of 6 months living expenses saved up in an emergency fund - keeping those funds liquid for anything that may come up.

Any additional funds, however, you should invest in something - be it a CD ladder for low risk/low yield, or stocks for a higher risk but more potential.

As far the student loan is concerned - weigh any tax advantages it may offer vs. the amount of interest you are paying. Even though it may be a low interest rate, it will likely be more advantageous to pay it off before investing, as you would have to earn X% higher on your investments just to break even.

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I have an aura of reliability and good judgement.

Just in case you were wondering...

LewisCouch

Buy a home, first and foremost. Minimize your taxable income; i.e. defer as much income through an employer (401K) and open your own IRA; look into life insurance while you're young, consider annuities as an income stream, and most of all---diversify.

__________________
"The gift of liberty is like that of a horse, handsome, strong, and high-spirited. In some it arouses a wish to ride; in many others, on the contrary, it increases the desire to walk."

-- Massimo d'Azeglio

jorgelito

Hey NoSoup, long time to see!

Good to see you! Anyways, thanks for the tips. As for my student loans, I don't start paying interest until 6 months after I graduate. Not sure what happens if I go to grad school. Maybe still deferred.

I am concerned with if there's anything I can do in the interim.

I guess keep the six month reserve in the ING account which essentially eats up most if not all the "surplus". Whatever is left can be tossed in to a CD ladder and/ior murual fund or individual stock like P&G, Lever or Coke (gotta start somewhere) and hold forever.

iccky

People have said a lot of bad things about credit cards, but they actually offer two big benifits:

1. They let you borrow money without paying interest. Yes, the interest rates are obscene, but you don't start paying them until the grace period is over. If you pay of your cards every month its like a free month long loan.

2. If you're smart, you'll get one that gives cashback, usually in the neighborhood of 2%. Not much, but it ads up, especially if you pay for everything with your credit card. Given all the thought given on this and other forums to squeezing a few extra percent out of investments, getting 2% back on everything you spend is a pretty big deal.

3. It helps build credit, which will save you a lot of money in future interest payments when you buy a house.

Now of course, all of these benifits are nothing compared to the obscene interest you'll pay if you don't pay your card off every month, so if youknow you can't handle the plastic, stick to cash. But if you are responsible enough to use a credit card and still live within your means, the smartest financial advice is to pay for everything with your card.

Cynthetiq

Iccky, well stated, but clarification of MONTH is in order... read the fine print.. it's not 30 days which is what you and I consider a month. For some cards it's around 20+ days and and for some the interest starts at the moment of purchase.

READ THE FINE PRINT!!!! ASK CUSTOMER SERVICE REPS THOUGHTFUL QUESTIONS!!!!

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

iccky

Very true. I guess an addendum to that would be, credit card companies will try to screw you at every turn, so be very careful

hunnychile

Spend less than you make.
Pay cash whenever possible.
Never buy a totally brand new car.
And always have an Emergency fund saved for that rainy day or a real emergency.

__________________
"I need compassion, understanding and chocolate." - NJB

nofnway

I would also endorse Millionaire Next Door as well as "The Richest man in Babylon" By George Clayson

The millionaire next door has some very good insights to the common traits and disciplines of mostly, self made millionaires....." The Richest Man in Babylon" gave me my first inkling of the difference between what makes one rich or poor. It encompasses so many of the general principles of wealth in an easy read.

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"Iron rusts with disuse, stagnant water loses its purity and in cold water freezes. Even so does inaction sap the vigor of the mind"
Leonardo Da Vinci

frogza

Pay yourself a percentage of your income every check no matter what, this money goes into a savings account. Once you have enough put into CDs, money market accounts, mutual funds. Once you have enough invest in real estate, for the long haul, no short term garbage.

Realize that get rich quick schemes rarely, if ever, work.

questone

Build credit while you're young but be responsible about it. This means using your credit card on a limited basis but enough to pay it off on a monthly basis. If you do not build credit when you're young you'll have a hell of a time establishing credit later on in life when you want that new sports car or house.

Matadon

Lots of great advice, especially about buying quality. Something that has helped me, toy-freak that I am:

Anytime you want to buy something 'signifigant' (e.g., not groceries), think about it for a month. You'll often find that you didn't want the thing as much in the first place, and not end up spending that $100 or $200. Use that month to hunt down bargains as well; waiting a month or two can mean getting that hot item for half of what you would have paid for it.

Bump on the advice to buy quality, and take care of what you buy. Save up for it, and buy something that will last a long time, even better if it's on sale, doubly good if it's a repairable item or has a lifetime guarantee. I got $1000 of good cutlery (Vier Sterne, complete set) for about $350, and I will never need to purchase knives again, because I take very good care them, and because they all have lifetime guarantees. My parents, on the other hand, have about $500 worth of cheap, lousy cutlery. All of it is dull, which is dangerous to the user, and none of it is really usable. They spent more than I did, but have gotten less out of it, because they were too focused on buying 'bargain basement' goods, rather than getting high-quality goods to last a lifetime.

Last but not least, use real cash for your weekly 'spending cash'. It's nothing to buy a $5.00 latte at Starbucks on your Visa card, but actually forking over the money gives it a very real feeling. This little tip has saved me a lot of money over the years, and has the added benefit of small change -- throw it in an opaque jar or box, and every few months, you'll have an extra $20 to $100 in change which you can throw back in your bank account.

lemans

Never ever pay the min. balance on your credit cards!!! Pay in Full!!

Smart investors manage risk, not-so-smart investors manage rewards. Patience is key when you manage risk; the rewards will come. When people manage rewards, the risk will hit them hard.

777

I'm surprised that no one brought this up earlier. If you can't out pace inflation, then your missing out. I recommend an investment that pays more than 3%. If your CD only pays 2%, then your money is shrinking in buying power 1% each year.

__________________
"I don't know that I ever wanted greatness, on its own. It seems rather like wanting to be an engineer, rather than wanting to design something - or wanting to be a writer, rather than wanting to write. It should be a by-product, not a thing in itself. Otherwise, it's just an ego trip."

Roger Zelazny

Hardknock

One thing about that 20% down. If you want to buy a $150,000 house you need $30,000. Who has 30 grand sitting around? I didn't. You have to take into account that homes are apreciating every day. Even when the bubble bursts, homes will still appreciate. The major markets like Seattle, LA, New York are going to be hit the hardest when the bubble bursts. Small towns aren't going to be hit as hard. But, if you save and save and save that 30K and it takes you 5 years to do it, in that 5 years that same house has appreciated to say, $170,000. You have 30K in had but you now need $34,000. In other words, if you don't outsave the average rate of appreciation, you've never save that 20 percent. There are 80/20 loans that you can do to get into a home and avoid the PMI payments. You'll still get to deduct interest and property tax. If you already have 20% great. Use it. But if you don't there are ways to get into a home versus throwing money away on rent while youre trying to save 20% over a number of years.

BigBlueWrecking

1. ARM's are not bad at all, and actually they make much more sense for younger buyers. The average person is not in their first house for more than five years, so getting a five year ARM at a lower rate makes much mroe sense.

2. Make more money. I work in a commission basse industry and I think the easiest way to creat wealth is to work in sales or own your own business.

3. Save AT LEAST 15% into a 401(k) if available. Invest in a variety of Large/Small Growth and Value funds. Also, don't sy away from international funds. Have at least 3-6 months income in a liqiuid account.

Hardknock

That's true, IF you know for an absolute fact that you will be out of the house within 5 years. If you're not 100% sure of that, then I wouldn't bother with an ARM. The rates are going nowhere but up from here on out.

You and I are in agreement though about owing a business. I'm in the process of starting up a consulting firm out of my home right now. Hard work, but worth it.

Lead543

I'm probably too young to post here. My mom bought into an RESP for me when I was 12 and has saved enough to pay about 2 years tuition. I'm not sure if this is available in the US but it's been great for me. If you can get it and have kids or plan on having kids it'll save you a lot in the future. I know that's what I'll be asking for at my baby shower (it's in 2012, everyone's invited).

arch13

They are called 529 Plans in the States.
The best ones are run by the states, though some brokerage houses also have them.
State run 529(b) plans often lock in the price of tuition at the year you start the plan.

__________________
Seen on an employer evaluation:

"The wheel is turning but the hamsters dead"
____________________________
Is arch13 really a porn diety ? find out after the film at 11.
-Nanofever

777

These plans are cool. We recommend them to families were there is a 100% chance the children are going to a good school. Like if the family is from a long line of doctors or engineers or lawyers, the 529 is perfect.

__________________
"I don't know that I ever wanted greatness, on its own. It seems rather like wanting to be an engineer, rather than wanting to design something - or wanting to be a writer, rather than wanting to write. It should be a by-product, not a thing in itself. Otherwise, it's just an ego trip."

Roger Zelazny

fewy

Don't forget to visit Annual Credit Report to check your credit history. You can get a free report from each of the three major agencies once per year. The report doesn't include a credit score but you can at least see if all the information is correct.

chickentribs

Don't lease your car. One of the biggest temptations right out of school is to get all the car you can. It is non-disciplined and the cost of the money is too high. Instead, buy a car that is a couple of years old and if you do it right you have equity right away. I bought my 740iL at the auction for a third of what my friends paid for their Acuras, not that they know!

Don't underestimate the value of liquidity. You should have at least $5,000 sitting in a plain savings account before you start looking at CD's and funds. At 5% your only making $250 dollars in a year and that is a small price to pay the day you really need it for something.

and my advice for the ladies: "jewels, not jewlery!"

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Oft expectation fails...
and most oft there Where most it promises
- Shakespeare, W.

Sage

I have heard that if you pay twice the minimum payment on your credit card each month, it takes about three years (or so) to pay off instead of thirty (or however long if you pay the minimum). I have no finacial savvy whatsoever, but I stick to this rule. Currently I'm paying $100 a month on a credit card where the min payment is $20. I was pretty stupid in my younger years with my credit card, and now I buy NOTHING on it, but only pay it off. The only card I buy things on is my Victorias' Secret card, and that always carries a low balance and gets paid down every month.

Credit cards are not inheriently evil. The mindset of the person holding the credit card is what holds the potential to lead to finacial demise. So, BE FREAKIN SMART ABOUT YOUR STUPID CREDIT CARDS!!!! Oh, and I suggest getting all that debt transferred to a card that has the lowest possible interest rate- I switched from Bank of America to Wachovia and it saved me six points of interest. I hate BoA!!!

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SirLance

Here's one way to do that:

Whenever I use a credit card (which I do for many things, so I can get the reward points and maintain a good credit score) enter it into your checkbook and deduct it from your balance AS IF IT WERE AN ATM TRANSACTION. When the bill comes, you will have the cash to pay it.

It takes some discipline to do this (and not spend out from under yourself). The result is, you have credit cards, they are paid off each month, and by paying them off as soon as the statement comes in (well before the due date) you will improve your credit score substantially.

If you can't afford to pay cash, do without or find a better way to fund it. Challenge spending: You need a place to live, maybe a car, food, light/heat, etc. You do not need an Armani suit. You do not need a stereo receiver. IF you can buy them, good for you, but don't fucking finance them at 18% interest.

The only things worth paying over time for are those things that increase in value, like houses. Cars depreciate. Stereos depeciate. Clothes depreciate.

If you have a car, you probably have a car payment, but if you get RELIGIOUS about maintenance, you will eventually have a paid off car that will be in good mechanical condition and you can bank the car payment until you have enough bread to buy the next one, or make a huge downpayment on it. A new engine might cost $4,000. A new tranny might cost $2,500. A new car costs $20,000+. Do the math.

I have a paid off car in great condition with 127k miles. I can reasonably expect to put another 70k miles on it. Maybe more. By banking the $400/month car payment, I now have enough cash to buy a new engine and a new tranny, if and when I ever need them. I doubt I will buy a new car. I might have the seats reupholstered, and the convertible top needs work, but I have the CASH to pay for it.

I also make checkbook reservations every payday with other fixed expenses. Car insurance comes every 6 months, and I get paid twice a month, so each payday I deduct 1/12 of the car insurance bill from my checking account balance. Also, 1/2 of each house payment, 1/2 of the approximate utility bills, etc.

Basically, I am reserving cash to pay fixed expenses. Anything I have left over, I put some in savings and/or I buy something I want (concert tickets, etc.)

You'll be suprised at how easy it is to simply reserve the cash and how much your stress level goes down when the bills come in.

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DEMOCRACY is where your vote counts, FEUDALISM is where your count votes.

Lewis

I have only been doing it a short time, but I definitely now know that forex trading is brilliant. On a conservative estimate, you can make an ROI of 40% monthly, which is unheard of anywhere else, and if you go with the company I am with, you can also build a residual income that will keep you going even if you do nothing at all after a while.

Merlocke

So here's the next tip.

Financial Planning must be done in THIS order (especially for Canadians):
1) Insurance
2) Tax Planning
3) Investing
4) Estate Planning

Insurance
If you have dependents, then GET INSURANCE. It's by far the cheapest fastest way to ensure the financial stability and protection of your family should the worst happen. Critical Illness insurance can also play a vital role to secure your income if you are the sole breadwinner for your family.

Now if you don't have anyone depending on you for anything, then what do you need insurance for? Other than Car, and rental/house insurance - that's about all you need to protect yourself.

Tax Planning
Next is Tax Planning. Did you know that 47% of your income is spent on taxes? (For Canadians). That means from Jan to May, none of the money you've made from work is yours. Get a capable financial plan set to save money on taxes. Start a business, get some RRSPs (Canadian thing again), there are tons of ways to save money. PM me if you want to get into the nitty gritty about getting every tax penny back because that gets rather complicated. My last tax return was about $8000.

Investing
Once you've saved enough money on Taxes, all of a sudden there's extra money at the end of the paycheque that wasn't there before. Now you'll have to resist all urges to go out and buy that nice flat screen HDTV from Best Buy or Futureshop (same thing) and take this money and start making it work for YOU.

As far as investments go, there are too many to mention so do your research and get the ball rolling. I'm starting a Canadian based investment site: http://wcstrategies.ca that does research into potential investment opportunities. When your savings get significant enough - it's time to find a financial planner to decide the strategy you want to take. Wether it's a major bank, your local investment group company, or even yourself - it's your future and your retirement, so it's worth the time to look into.

Estate Planning
Last, but not least. When you finally follow all of the other steps, it's time to start planning your will - this is the final step in the Financial building block program. Protect your assets so that your children, and your children's children will benefit from all of the hard work you've just done getting this far. Yes, there's such a thing as "death" tax. On a lighter note, it just happens to be the same form to get married here in Canada. (half of the form is for a marriage license, the other is a death certificate... who says the government paper pushers don't have a sense of humour eh?)

Don't believe me? - Check out this link - direct to the Government Website:
http://www.vs.gov.bc.ca/forms/vsa430m_fill.pdf

I run free Financial workshops in the Greater Vancouver area for those of you who want to hear this spiel in person, just PM me. This information came from David Singh, the creator of Fortune Financial.

If you're not in BC, Canada - then I suggest looking into purchasing Rich Dad, Poor Dad from Amazon: Amazon - Search for Rich Dad Poor Dad Robert Kiyosaki does a great job of making the world of a finance a much friendlier and easier goal to attain. On second thought, read this book wherever the heck you are.

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-=[ Merlocke ]=-

AVoiceOfReason

Those that are investing in the stock market, here's a few things I've learned, a series of "Don't":

1. Don't try to catch a falling knife. If a stock is falling, no matter how good the company is, don't buy it hoping you've caught it at the bottom. Stay away from what you THINK is the bottom, because often it isn't.

2. Don't be afraid to admit you made a mistake in a purchase. If a stock is not behaving properly, sell it.

3. Along with # 2, don't be afraid that the day after you sell, a stock will rocket up and you'll have missed it. You have to make the best call you can at the time. To help you do that, set a predetermined limit how much of a loss you'll be willing to take in a stock, and when you hit it, sell it. Don't watch it and hope it turns around the next week. Just pull the trigger and move on.

4. Don't get industry laggards in your portfolio. Buy the best company in a particular sector. Quality stocks cost more money, but there's a reason to buy quality.

5. Don't be someone that buys a stock and then holds it forever. Again tied to number 2 above, you may have picked one at the right time for awhile, but it's time is over. If you bought Microsoft 10 years ago, you had a good winner for the first 5 years and one that has been flat for the last 5. Why keep it? Take that money and use your noodle to find the next Microsoft for the next 5 years--you did it once! Look at each of your holdings and decide "if I didn't have this now, would I buy it?" If the answer is "no" then you should sell it and find something else.

6. Don't try to be the smartest guy or gal in the market--you aren't. You don't know anything that the folks on Wall Street don't know. You can't time a buy and sell to take advantage of a situation any better than those that do it for a living do. Let the trend be your friend, and don't fight it.

7. Don't borrow money to invest in stocks--in other words, no margin accounts. Those can force you to make decisions you wouldn't ordinarily make, and besides that, paying interest on the money that you use to buy a stock can eat up whatever profit you were expecting.

8. Don't think you can violate these rules consistently and win. Now and then, you can act contra to them and do OK, but on whole, you'll lose if you do.

__________________
AVOR

A Voice Of Reason, not necessarily the ONLY one.

Merlocke

These pretty much go for Foreign Exchange trading as well

__________________
-=[ Merlocke ]=-

Xazy

A lot of this was said already, but I think it is great idea. Own if you can and do not rent. The tax savings you get from the interest on the mortgage is amazing! Credit cards / student loans if you can pay them off with the mortgage do (unless there is a great rate). For instance my wife student loans are 1.75%, she can keep that forever as far as I care.

You should hopefully get 3% in a savings account, use ING, or emigrant-direct (which is 3.25%). But the best investment I have ever made was real estate. If done right I would recommend investing there.

Cynthetiq

I like everything else you said but the above. Fear and greed are two parts of the same coin that paralizes most investors. Waren Buffet the The Oracle of Omaha buys and holds for life and is the best and wealthiest investor to date. In trying to emulate what works, I'm going to follow his method. As far as I can tell buying and selling just costs me extra overhead of costs which I have to account for in profitable increases and take an additional penalty when the stock is already deflated in value.

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.