What other good financial decisions to make while young?

[yh125d]

Not intending this to be a brag thread, but I've done all the smart financial moves I know of to make while a young person. I'm wondering what else I could start doing now or in the near future that I will be glad I did early many years from now

A little background:
23
single
Well established with my company
Bought a house ~18mos ago (owe $80k over 20yr @ 4.125)
Just recently rewarded myself with a newer car, $25k loan @ 2.5 60mo
No other debt
Good credit
~$70-75k/yr w/overtime

I currently put 15% of my gross into a work 401k, and started maxing out my Roth annually (vanguard) this year - currently at $20k all combined, in just the target retirement type funds

I have $200k of term life insurance through work

I usually keep $5-10k cash liquid in my checking/savings accounts

-----------------------------------------

I've been thinking about upping my IRA contributions to 20-25%, or paying down my car loan more quickly, but haven't done either yet. I don't plan to pay any extra on my house any time soon, in favor of putting extra into retirement


Are there any other good moves/decisions I could go ahead and make now to reap the benefits later, or just keep putting more into retirement plans? I've looked around for various articles for good money moves for young people but they all just say the stuff I've already done (live within your means, start retirement contributions early). My dad is trying to get me to invest in real estate, but I'm not really interested. (not an entrepreneurial person)

Ideas?

 

[child of wonder]

Sounds like you're in good shape. Get the car and house paid off then enjoy the debt free life.

Assuming you get 3% raises on average the rest of your life and continue putting in 15% to 401k and you average a 6% return you'll have $4M in 401k at age 62 plus another $900k from your Roth. Unless you want to retire on more than ~$5M, just keep doing what you're doing.

 

[CPA]

pay off the car, then the house.

 

[John Connor]

Always pay the credit card bills! Even if it's the minimum.

 

[Doppel]

My dad is trying to get me to invest in real estate, but I'm not really interested. (not an entrepreneurial person)

You may be later, though. I wish to hell I had somebody to mentor me in this area. It is a great way for a person to accumulate wealth without being a business mogul. A lot of people do this, start with some property and rent it out and keep building.

Keep saving cash. Once you get a wife and kids and a larger house you find yourself living closer to the bone.

 

[Tweak155]

You may be later, though. I wish to hell I had somebody to mentor me in this area. It is a great way for a person to accumulate wealth without being a business mogul. A lot of people do this, start with some property and rent it out and keep building.

Keep saving cash. Once you get a wife and kids and a larger house you find yourself living closer to the bone.

I just recently had to decide whether or not to rent a house out that I had a 2.75% loan on. I just don't want to be anybody's slave... can't pay me enough.

Yeah it's great when 20-30yrs passes and you have all this wealth, but those 20-30yrs can suck major balls. I've never heard one landlord say "yeah I love it!".

 

[T2urtle]

You may be later, though. I wish to hell I had somebody to mentor me in this area. It is a great way for a person to accumulate wealth without being a business mogul. A lot of people do this, start with some property and rent it out and keep building.

Keep saving cash. Once you get a wife and kids and a larger house you find yourself living closer to the bone.

Agreed, there are plenty of people who are forced to be landlords at first and turned out loving it. You gotta keep in mind that this would be the extra income in which you have to do nothing. In retirement time, you will have 401k money, Roth IRA money, maybe pension money, SS money and maybe rental house money.

It can help you and your children for the long run.

 

[Tweak155]

Also to the OP - $5-$10k liquid cash sounds kinda low when you own both a car & a house. I personally have a crazy goal of half a year's salary, but you should probably bump that to $10-$15k or even $15-$20k. I think $15-$20k would be plenty, because if something does happen you don't want to all of a sudden be out of cash, not to mention taking a trip that will bring your funds down a little.

 

[Tweak155]

Agreed, there are plenty of people who are forced to be landlords at first and turned out loving it. You gotta keep in mind that this would be the extra income in which you have to do nothing. In retirement time, you will have 401k money, Roth IRA money, maybe pension money, SS money and maybe rental house money.

It can help you and your children for the long run.

And turnd out loving being a landlord, or loving the extra cash? Because I've not heard one landlord say it's been great doing the actual job. Mostly complaints actually.

I personally don't care to make tons of extra money unless it is very convenient (I.E I get paid more for doing the same job). Only need $50k-$60k/yr and smart money management to live comfortably, and I'm well past that mark as it is.

 

[Juddog]

Save up while you can before you meet a significant other; they can be a drain on your resources like no other.

 

[Tweak155]

Save up while you can before you meet a significant other; they can be a drain on your resources like no other.

Or you meet a responsible girl. It's possible. Overall I'm net positive on my wife

 

[Doppel]

Agreed, there are plenty of people who are forced to be landlords at first and turned out loving it. You gotta keep in mind that this would be the extra income in which you have to do nothing. In retirement time, you will have 401k money, Roth IRA money, maybe pension money, SS money and maybe rental house money.

It can help you and your children for the long run.

I know a guy who's not particularly intelligent and drives a $100k car. He lives in podunk nowhere, but bought his first house in his early 20's and over time now 30 years later has accumulated 20 or so properties. He has other people manage it, so he still manages to have a full-time job. These properties are just cash cows for him now. I swear it, the guy is no genius, but in this area he does know what he's doing evidently.

Save up while you can before you meet a significant other; they can be a drain on your resources like no other.

Yep, I alluded to this. There are basically two times you'll feel cash rich:

1) When you and spouse are working professionally but before kids
<fast forward 20 years>
2) When kids move out

There is a reason it's a financial grind for so many families. Income takes a nosedive as kids come along and outcome grows: larger house, child care, vacations all massively more expensive, larger vehicles, soccer equipment, dance lessons, etc.

 

[Tweak155]

I know a guy who's not particularly intelligent and drives a $100k car. He lives in podunk nowhere, but bought his first house in his early 20's and over time now 30 years later has accumulated 20 or so properties. He has other people manage it, so he still manages to have a full-time job. These properties are just cash cows for him now. I swear it, the guy is no genius, but in this area he does know what he's doing evidently.

You don't need to be a genius to make money, just determined to.

You see this with animals all the time. They're so determined to get the food, you might even be impressed with how they figure out how to do it.

If you focus on the goal and nothing else matters, you'll figure it out at some point.

 

[Timorous]

And turnd out loving being a landlord, or loving the extra cash? Because I've not heard one landlord say it's been great doing the actual job. Mostly complaints actually.

I personally don't care to make tons of extra money unless it is very convenient (I.E I get paid more for doing the same job). Only need $50k-$60k/yr and smart money management to live comfortably, and I'm well past that mark as it is.

I am a landlord and to be honest it is fine as long as you find the right tenants. Putting the work in upfront to give you the best chance at selecting the right tenant saves tons of headaches down the line.

Being a landlord is rather easy anyway and it works fine as a second income, if you keep pumping money into it then it snowballs and before long you can have 10-20 properties and you can live on the profit from those houses and not need to work at all.

My fiancé and myself are in the position where we will be looking to buy a house or two a year for the next 10-15 years. Even with kids we should be able to hit that cadence and by the time I am in my mid to late 40's I will be in a position where continuing to work is a choice to make rather than something I have to do.

 

[Naeeldar]

Bought a house ~18mos ago (owe $80k over 20yr @ 4.125)

Jealous. I bought my condo same age roughly (25) but for a 2bed 2 bath in good condition it was $160k. Unless you put down 100k, i'd love to live in your part of the country.

As to the rest, I'd pay the car down to get that loan off your back for a few years and then enjoy a bit of money. Too many people pass at 50-60. Savings is important but there is a limit and the path you are on is plenty for retirement and that's not assuming raises of any type over the next decade.

 

[ch33zw1z]

Pay off the car asap.

Throw extra $ at the mortgage monthly.

Get out of the perpetual debt cycle, asap

don't have kids anytime soon

 

[OILFIELDTRASH]

Why is financial advice given always advocating saving more? The best advice is to make more and continue to spend on things you enjoy.

 

[Tweak155]

Why is financial advice given always advocating saving more? The best advice is to make more and continue to spend on things you enjoy.

Because the way the first post is worded, he's asking for ways to save, not spend?

I personally wouldn't do all that, but since he asked...

 

[Naeeldar]

Why is financial advice given always advocating saving more? The best advice is to make more and continue to spend on things you enjoy.

Normally it makes sense to save more. In this case I agree he should enjoy and just keep on the path he is with savings. IF he keels over at 68 he'll be leaving a few million to his kids.

 

[Tweak155]

I am a landlord and to be honest it is fine as long as you find the right tenants. Putting the work in upfront to give you the best chance at selecting the right tenant saves tons of headaches down the line.

Being a landlord is rather easy anyway and it works fine as a second income, if you keep pumping money into it then it snowballs and before long you can have 10-20 properties and you can live on the profit from those houses and not need to work at all.

My fiancé and myself are in the position where we will be looking to buy a house or two a year for the next 10-15 years. Even with kids we should be able to hit that cadence and by the time I am in my mid to late 40's I will be in a position where continuing to work is a choice to make rather than something I have to do.

"It's fine" and "loving it" are two different things.

My personal goal is to always find something that I would do if I wasn't getting paid. If I don't like what I'm doing, then I move on. I ran a home based business that brought tons of revenue (6 figures +) into my house and when it started to go south I said good riddance. All I did was think about that business day in and day out.

I find that if you love what you're doing, people notice and will pay you for that love. And eventually you will get paid quite well.

I'm not saying beind a landlord is a bad idea... I'm saying it sounds like (to me) the only gratifying "payoff" is the wealth at the end of the tunnel. If you're a guy that loves to fix up houses and weed through tenants and love to deal with those <sometimes> problematic tenants, then I say go for it :thumbsup:

 

[rudder]

I don't plan to pay any extra on my house any time soon, in favor of putting extra into retirement

I assume your mortgage is not 0%. If not, why would you pay the lender versus paying yourself? Once the house payment is gone, you take that mortgage money and pay it to yourself.... like putting it away. As long as you have a mortgage, your money is working for someone else.

 

[Tweak155]

I assume your mortgage is not 0%. If not, why would you pay the lender versus paying yourself? Once the house payment is gone, you take that mortgage money and pay it to yourself.... like putting it away. As long as you have a mortgage, your money is working for someone else.

Depends... if his mortgage is 4.125% and he expects to earn 8% let's say off his investments, then it makes financially more sense to invest.

I had a 2.75% interest rate on my home but I still put in an extra ~$130 just because. I can't stand the idea of paying the full amount of interest, but I also know 2.75% fights with inflation! So $130 or so a month put my mind at ease