Author Topic: Hello. I'm 20 and I want help.  (Read 4186 times)

shelbyedmonds

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Hello. I'm 20 and I want help.
« on: September 27, 2014, 03:38:34 AM »
Hello all! I would just like to preface this post by noting this is first post on MMM! (I'm on a phone, excuse anything incorrect).

So I'm 20 and I work as a server and I make roughly 30k a year. I'm a student however I'm still undecided on my major. I'm stuck between the video game industry (esports, game design, programming) and environmental engineering (sustainability management, hydroponic farming). However I really have no set course on what I want to do with my life. Hell, sometimes I even consider being an FBI agent. However I do know one thing I want, financial independence. This goal was sparked by a coworker Dylan. He was 24 at the time and had showed me his bank account holding a nice 25k in it. Now I don't know if that's considered good or not here on MMM. But, I can tell you by looking at my account it's astronomical.

I drive a 2011 Ford Focus that cost me 302 $ a month at 9.75% interest.
I live at home.
I have a 23 $ a month gym membership.
I have a 10$  a month game subscription.
I have about 1,000 $ in credit card debt. (Top priority to rid myself of)
I have 5,500 $ in student loans from my first year in school.

I've been considering new avenues to make money such as paying off debt and saving money to buy a houseand renting it to buddies. When I want to move keep said house borrow on it buy my next rinse repeat next thing I know I have a few properties.

I'm young and I love my alcohol music festivals and good times but i also want to make sure i keep a well oreinented head on my shoulders. So I'm just looking for a Mustachian to beat me up and help me step in the right direction.

plainjane

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Re: Hello. I'm 20 and I want help.
« Reply #1 on: September 27, 2014, 04:12:32 AM »
I think you need to start by recording what your actual take-home is on a weekly/monthly basis, and what you're spending it on.  Because your fixed costs are not that high (so that credit card debt should be really easy to kill).  Your interest rate on that car is painful, you need to make that a priority once the credit card is done (and consider whether you need it at all).

A house that you rent to buddies is a great idea, but you need the fundamentals first.  Figure out your cash flow, pay down the debt, make a plan for the downpayment, execute against the plan.  None of this requires you to know what you want to do as a major. 

Personally I question the video game industry, but if it is a passion, programming skills are always good to have.  Also, there is a low barrier to entry for you to build a portfolio and try to make some cash with some app games.

surfhb

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Re: Hello. I'm 20 and I want help.
« Reply #2 on: September 27, 2014, 05:16:22 AM »
If only I had your attitude when I was 20!  I'd be retired by now

Before you save a dime I'd pay off all your debt ASAP.   Since you live at home, pay off the car and promise yourself it will be the last new car you will own.   

Don't worry about a house right now.   Enjoy your music festival and get your degree in a field you enjoy

former player

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Re: Hello. I'm 20 and I want help.
« Reply #3 on: September 27, 2014, 05:54:39 AM »
$30,000 a year is pretty good going at 20, especially since you have no housing or food expenses listed.  You could do all right on those earnings, as your co-worker Dillon is doing.  So my question is: why are you going to college?  Are you too uncertain of what you want from it, or working/playing too much, to make the best use of your investment in going to college?  It's your biggest expense right now, even more so than the car.   I think you really need to sort out why you are going to college, what you want from it and whether the investment of your time and money (and your parents' investment in giving you food and housing while you go to college) is getting you a good return.  Socially, college sounds great for you, but economically there is no point in you ending up in 3 years' time with $20,000 in student loans and the same waitressing job you have now.

boarder42

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Re: Hello. I'm 20 and I want help.
« Reply #4 on: September 27, 2014, 06:08:45 AM »
If you make 30k you should have no debt sell that car buy a cheaper one. Pay off your student loans. Pay off your credit card. All of your debt is currently hair on fire debt. I mean seriously a 9.75% loan. If I could loan people that I wouldn't be invested in the market. And its on a DEPRECIATING asset. Also become an engineer if you're leaning that way. PM me when you have a year of classes under your belt and I'll see if I can't get you an internship it my company. They provide housing.

TomTX

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Re: Hello. I'm 20 and I want help.
« Reply #5 on: September 27, 2014, 06:31:50 AM »
Holy. shit. Almost 10% interest on a CAR LOAN?

cavewoman

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Re: Hello. I'm 20 and I want help.
« Reply #6 on: September 27, 2014, 06:44:13 AM »
Have you sent Dylan to the MMM website?  Sounds like he needs to send those employees to work!

I wish I had found this site at your age, but it would have involved time travel as it wasn't around yet.  Just read all the articles, read the recommended books.  Stay at home as long as it's kosher between you and your parents. 

I consider myself a pre-mustachian - I'm done with the articles and working through some books.  So probably not the best for advice, but if you've read some of MMM and you can't face-punch yourself for that car, then you didn't read enough.

I don't think you need to give up music festivals or fun, but decide how important it is to you.  Check out Your Money or Your Life and see how that cost measures up to your values.

Talk to adults in careers that you admire, or ask to talk to people in jobs you think you would enjoy and do well in.  See what their educational journey was.  Focus on college when you know what you want to do (or get some gen eds out of the way) and you will make the most of it.  Stick around these forums!  And tell your friends about the MMM site.

frugaliknowit

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Re: Hello. I'm 20 and I want help.
« Reply #7 on: September 27, 2014, 08:54:06 AM »
Besides what others have said, you need to change your mindset from operating with debt to operating with savings.

It might seem like deprivation, but in the long run, there's a payoff.  You see, the way you're operating, the banks are "on your payroll".  You are paying them each and every month.  If you bought your car with cash and whatever you bought with your credit card with cash (I'm leaving the student loan out), you wouldn't be "paying the man".

Start by paying off all debts, then build a cash reserve for planned purchases and emergencies.  Once you have enough for reserves and planned purchases, you can start investing and work on financial independence.

Terrestrial

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Re: Hello. I'm 20 and I want help.
« Reply #8 on: September 27, 2014, 09:30:42 AM »
For your situation that car is a killer.  Ditch it and the $300/month payment ASAP.  Evaluate if you really actually need a car at all, can you bike/use public transit?  If you can't and must have a car, I don't know what the car is worth what you owe but I would buy a beater.  A 20 year old college student is not the time in life to be having relatively new cars with big car payments at 10% interest.

Otherwise you are in pretty solid shape, 30k/year for a college student is a good income especially for one living at home, you should be able to enjoy yourself and still save a ton of money.  Once the car payment is gone, turn the extra cash flow onto the credit card and knock it out.  Being in school currently, your student loan isn't a huge deal in the short term, depending on if it's federal the interest may even be getting subsidized.  I would start saving your 30k income and try and cash-flow the rest of your degree before you start saving for a house so you don't go further into debt.  Graduating relatively debt free is huge for starting out in life and getting your first real job, when your salary will go up and you can start saving for things like retirement, a house, and buying cars in CASH.

I can't speak much to the career prospects of the video game industry (other than to say it sounds like fun!), but if you just get a more general computer science/programming type degree it would open you to a wide range of career choices that are very much in demand right now if you can't get into video games specifically.

I'm not an environmental engineer, but I do hire them frequently to work through increasingly strict statutory requirements for engineering projects.  I would say that the outlook for the industry is pretty decent, the green trend is huge right now.

Good career choices, and interesting!


Exflyboy

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Re: Hello. I'm 20 and I want help.
« Reply #9 on: September 27, 2014, 09:34:49 AM »
Of course just echoeing here but

1) Car loans are even worse than CC debt is some ways.. I.e the ones I've seen you can't even pay them off early to save interest.. They will charge you ALL the interest whether you pay them off early or not.. get a pay off statement from the loan company to find out.

2) Obviously get rid of the CC debt.

Never and I mean never have either of the two loans above ever again.. Buy a car that is older and fix it yourself.. if you think you want to be some kind of engineer then fixing cars should be a skill you can pick up quite easily. The only loans that are allowed now are school loans and eventually a mortgage.. Even then they need to be minimized.

Correct your habits now and you can be FI in less than 20 years if you get a decent paying job.

Good luck

Frank

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Re: Hello. I'm 20 and I want help.
« Reply #10 on: September 27, 2014, 09:43:04 AM »
the video game industry (esports, game design, programming) and environmental engineering (sustainability management, hydroponic farming)

Re: Career path, the best advice I can offer is to do research into what the day-to-day is like for a typical employee in the fields you are considering.  I can't comment much on EnvE, but the video game industry is, er... "challenging" nowadays.  Some people find happiness but the majority do not, and there is wide variation in culture between different companies and even teams (e.g. console app development versus mobile.)  Additionally, there's also obviously a huge difference between working for a juggernaut like EA and doing Indie dev.

Consider using glassdoor.com to poke around companies a bit.  Find forums where employees discuss their experiences openly.

A few articles to wrap your head around the game industry:

Bottom line:  the job will likely take over your life, which can be great if you're passionate about gaming, but terrible if you're not.  Depends on your personality and employment goals.

Edit:  Fixed link.

Exhale

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Re: Hello. I'm 20 and I want help.
« Reply #11 on: September 27, 2014, 10:01:57 AM »
You're getting solid financial advice from others so I'll focus on the undecided academic direction issue.

Some suggestions:
- Do some information interviews (short informational meetings with people whose work you admire/find interesting) http://www.quintcareers.com/informational_interviewing.html
- Do at least one internship in each field (think of it as part of your classes/coursework)
- Instead of job type, think transferable skill sets. For example, I agree with Terrestrial that a "general computer science/programming type degree" would give you flexibility and a useful skill set
- Another idea (once you get rid of your debt) is to take a break from school and go get some "real world" experience. Go work in the fields you are considering to find see what the needs and potential are in those fields. Serve in a Peace Corps type situation to see what's happening in other countries. Doing this will not only inform you about the fields, but also (and more importantly) about yourself thus allowing you to be more focused and directed when you go back to school.

Good luck!
« Last Edit: September 27, 2014, 10:04:54 AM by Exhale »

Unkempt Stash

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Re: Hello. I'm 20 and I want help.
« Reply #12 on: September 27, 2014, 12:08:53 PM »
Wonderful... its like having a chance to go back in time and facepunch myself in the beginning.

#1. School Choices

Not knowing what you are doing in college is normal. It also is the biggest factor determining where the rest of your life will head.

YMMV, but I found someone that had a similar personality to me and who had a lifestyle I wanted (Thank god he was a mustachian) and asked what he did. I am an engineer and I love my job more than he does actually. I am a computer engineer. My degree is good for anything from making computer chips, creating graphics engines for games, to writing. A degree opens doors, but it doesn't decide what your job will be. Keep that in mind.

Your majors are widely different but they both sound STEM-ish. If your school has a defined program for engineering, take the gen-eds/core classes for it while you determine what you like and want to do. Those classes will transfer to other degrees really well because they will be higher math/science than pretty much anything else if you decide to go another direction.

Take an intro level programming course. Preferably one in a Computer Science/Engineering track (so you don't get Excel Programming for MBAs). This will let you know if you enjoy that kind of activity. Even if you don't, video games may still work (art design for example) but its a different path.

#2. School itself

I will not facepunch you for video games or even your car. I *am* assuming you need a car for your job/college, and I am hoping that the car is nearly paid off. These are important years and having some debt free fun is perfectly normal. But you should evaluate what you give up for things. Is this a subscription where you then are buying a $60 game a month to play with? Or something more MMO where its just the expense at this point? Whatever you do, realize that debt is like hanging an anvil from your neck... and at this point in your life, you are about to jump out of an airplane.

Are you doing what you can to try for financial aid/scholarships? You are on track to have 22k in debt after a 4 year degree. You don't need to prioritize paying off this debt, but it is 100% worth working to minimize it. At your age, I would have made more in the long term by quitting my job and focusing on better ways to avoid college debt than working where I was and just paying the tuition costs.

#3. Living at home

This is the biggest gift that your parents could give you short of life. I have friends who stayed at home for 3-5 years after college and had a 95% saving rate. Being debt free, stable, and able to make a large downpayment on a home while maxing taxing advantaged savings accounts... I still drool financially at the thought.

If you decide to leave, or your parents aren't thrilled with the idea of you being there for the next 5 years, immediately think roommate.
Its unlikely that it will be a good idea for you to buy a house at this junction. However, the idea is a great one post college.
  • You do not know where life is going to take you. Moving is easy. Selling a house and moving isn't.
  • You do not have enough money to afford a downpayment. Without 20% down on a home (and given your age and likely lack of a credit rating) you will have a very high payment
  • You need to focus on school. If you lose your job, how do you pay for the house? Dropping out of school to cover other financial responsibilities happens. I know because it happened to me.

#4. Financially

You are very young and have a long life in front of you. *Save money and put it in an investment account*
Your low tax rate may make a Roth IRA a good idea.

Server can also read "money under the table and tips". Look into tax advantaged accounts (401k, Roth, HSA, etc) but know that you will butt heads with the tax man really really fast if you save more than you earn.

Cash earning jobs (I'm assuming a lot of your money is tips and available nightly) is easier to waste because it never felt like you really had it. Make a habit of taking the money you want to save, immediately putting it aside, and bringing it to the bank weekly.

Hmmm

I am sure there is more. I may be back.

Good luck!