26 years old, trying to get my life together. Self employed. About to graduate.

[zoochadookdook]

About me:

25 (26 in may)

Assets:
Car (beater) 1500$
Bank: around 16600$
Roth ira 21000$ (currently set to monthly withdrawals of 480 or so to max 5500 for 2018)
Cash/business liquid inventory (I'm self employed in direct sales): around 34750$
stocks: 400$
Bitcoin: $1500 (original cost was 4000 *ow, I intend to hold long)
 House: 80,000 equity (200k mrsp, I owe 120k)
Assorted house stuff (garage gym/tvs/all the other stuff): 5000?

Debt:
Student loans- 11000$ student loans (I graduate in fall 2018 and no interest accrues until 6 months from january at around 4%). I took them because they were interest free. Haven't used them.
Mortgage: 120k
 Credit cards: currently 700$ (they pay off every month)

Current Income:
-self employed. 25k a year plus extra (sometimes I have a renter in the house @600/month, currently selling my neighbors house for them at 1% of 400k)
*also plan on $500-1000 annually in credit card churning the next few years using them to pay off loans and directly pay off the cards for the bonuses

Expenses:
monthly mortgage 584$
property Taxes/home insurance: around 320 a month
Utilities around 300.
Roth ira 480 or so

Extra expenses: Dog vet bills Girlfriend Gas food etc (say 200)

Total: around 1800 a month

Upcoming expenses:
fall tuition $2500 (last semester)
insulation for upper of home $1500

I've been out of the nest since I turned 18 and did a stint bouncing around from house to house while working in order to save money. Hence why my assets (cash and such) are high for the income level. I also drive a junky car, buy cheap groceries, etc.

So I've been trying to keep track of my finances better this year. Actually doing taxes quarterly instead of end of year/tracking all my expenses and income. I graduate with a degree in MIS/information security the end of this year and am hoping to secure employment by this summer.

The biggest problem for me is keeping all inventory details for my business as it's all cash based. Currently I use an app and excel spreadsheet. I was considering buying the app mint but it's a bit steep at 10 a month. I also struggle with spending on food and extras every month (this month I needed tools for car repairs $20, groceries $100, eating out $100, soccer rec league $50 etc-next month it could be a random boys night bar tab that runs 50 bucks)

My goals are to secure financial stability in the future. I have short term goals like purchasing a nicer car and such but I'll gladly ignore those if it contributes to a beach house and a sports car down the road.

My question is what type of investments should I be considering at my age? I know I'm getting started later and may have to sacrifice risk for returns but aside from my roth I've never had any insight to the options of investors. My family was always under the "if you can't pay cash don't buy it" mindset.

I'm also not sure if the path of study (management information systems) is the career I want to pursue. I work for 12 bucks an hour this summer as a data intern (just a few months) and it seems like all entry level would hinder my 8 hours a week self employed position and pay about the same. I was considering going into the trades (electrician) as I like to work outside and they make great money and benefits (girlfriends dad is a retired master electrician) or even going back to school and getting a degree in something like engineering.

Anyways any advice, direction, ideas, anything at all is appreciated.

Thanks

Z

[nurseart]

Hi Z,

First off, fantastic job! You are not starting late, you are in a really great spot! Definately work on maxing out that IRA.

For your student loans, you don't actually owe anything? You just took them since they were at 0%? If so great.

For investments, I would give https://www.bogleheads.org/wiki/Main_Page a good read. You might also look at https://forum.mrmoneymustache.com/investor-alley/investment-order/

[zoochadookdook]

Right,

I worded that awkwardly. I have the loans and the cash/assets are part of it. It allowed me to max my roth and isn't required to be paid back until mid 2019 before interest accumulates. I've worked it out like this

Get 2 Chase Ink Preferred credit cards (140k points with mailer and referral apiece when 5k is spent) and use both to pay 10,000 off the loans using plastiq. I can pay the cards off with cash right away. This nets me $2800 in cash back or $4200 if used for travel. In some cases ultimate rewards can be used for as much as double for travel.

I'll have a remaining 4000 or so in loans and probably some other expenses (500 for car timing belt, 3000 in property taxes, 1600 for insurance) in this period which leaves me open for both chase Safire credit cards and a citi aa card. I can possibly get another 60k/70k points from the preferred card and another 50k from the reserve, plus referrals if those apply.

Basically I'll be taking a credit hit for the next year to possibly take in excess of 4,000(monetary)-6000(travel rewards) using bills I already had to pay. It does take preparation, spacing, and some other planning but that's my latest project.

[Raenia]

First off, you're not late to the game at all, you're actually well ahead of most people your age, so congrats on that!

Your plan with the student loans looks good, a quick return and you'll have the loans and cards all paid off.  In addition, it looks like you've got about $200-300/mo after expenses, which you can direct toward savings.  Your expenses look reasonable, though if you haven't been, I'd recommend tracking in more detail for at least a few months, especially since you mention struggling with "extras."  Just knowing exactly how much you're spending on going out can help motivate you to cut down or find cheaper alternatives.

As far as what type of investment to go for, since you're so young I'd recommend going full stocks off the bat.  Open a brokerage account at Vanguard or Fidelity and invest in their Total Stock Market index fund.  Then start reading J.L. Collins stock series (http://jlcollinsnh.com/stock-series/), and develop an IPS that meets your capacity for risk.  You can gradually diversify your holdings then, but in the meantime, don't let perfect be the enemy of good :)

[zoochadookdook]

appreciate the advice. I have been using money manager which tracks expenses and income on a "by item" basis" but with my upstairs "office" in disarray for the past year it's been a hassle to sit down and get hard sorted through copies of everything. I need to turn about 100 home receipts into digital copies as well.

I'll look into that, i'm sure I'll have a billion questions regarding a portfolio (currently Edward jones does my roth) about stuff like what's taxable, how much I should allocate, diversification, etc but I hate having money sitting around the house getting beat up by inflation!

[Raenia]

I'll look into that, i'm sure I'll have a billion questions regarding a portfolio (currently Edward jones does my roth) about stuff like what's taxable, how much I should allocate, diversification, etc but I hate having money sitting around the house getting beat up by inflation!

That's exactly why I suggested starting out with a simple single index fund and then optimizing from there.  You'll have the money doing something, and then can take your time to read up, ask your questions, and learn a more nuanced approach.

Edward Jones is ok, but when you have some time I'd check in and see what they have your holdings in, and what the fees/expense ratios are.  You can probably do better with Fidelity, Vanguard, or Schwab, but that's a low priority investigation while you still have all that cash sitting around.

Regarding taxability - your Roth will be tax free on withdrawal.  Anything you put in a post-tax brokerage account, you'll have to pay taxes on any dividends received (they'll send you a 1099-DIV).  You don't pay capital gains tax until you sell your holdings, at which point you'll pay tax on the growth, but not on your original investment (and again, you'll get a form).

[zoochadookdook]

got it; I'll do some snooping and see what makes sense to throw in a base fund

As far as Edward jones it's $40 annually and no transfer/trade fees between funds which although it sucks to pay, seemed pretty cheap for the bi annual reviews and all the app support

holdings in:
aepgx 86
agthx 108
amrmx 105
newfx 30
smcwx 74
 (shares rounded)

got it again. So it's just earnings or losses taxed

[Raenia]

got it; I'll do some snooping and see what makes sense to throw in a base fund

As far as Edward jones it's $40 annually and no transfer/trade fees between funds which although it sucks to pay, seemed pretty cheap for the bi annual reviews and all the app support

holdings in:
aepgx 86
agthx 108
amrmx 105
newfx 30
smcwx 74
 (shares rounded)

got it again. So it's just earnings or losses taxed

In addition to the account fees and trading fees, each fund also has an expense ratio to cover fund management expenses.  It seems that EJ hides that expense ratio in the fund prospectus rather than publishing it openly.  See this document for more details :https://www.edwardjones.com/images/mutual-funds.pdf but the relevant section is this:

All mutual funds carry built-in operating expenses
that affect the fund’s return. Examples include
investment management fees, distribution and/
or service fees (12b-1 fees) and mutual fund
transaction fees. Details on the operating
expenses are included in each fund’s prospectus
or offering document.

Don't worry if you don't understand all this right away, it's very non-intuitive.  You'll get the hang of it as you read the stock series and other sources.  And of course keep asking questions here!

[Cwadda]

appreciate the advice. I have been using money manager which tracks expenses and income on a "by item" basis" but with my upstairs "office" in disarray for the past year it's been a hassle to sit down and get hard sorted through copies of everything. I need to turn about 100 home receipts into digital copies as well.

I'll look into that, i'm sure I'll have a billion questions regarding a portfolio (currently Edward jones does my roth) about stuff like what's taxable, how much I should allocate, diversification, etc but I hate having money sitting around the house getting beat up by inflation!

There is a solution to getting your receipts into digital copies. It's called Scanner Pro, it's an app that costs a one time fee of $3.99. I am also self employed + own a rental property, and I go through hundreds of receipts. This app is the solution. Enjoy! :)

[zoochadookdook]

Great!; I'd suggest checking out the quick form receipt app known as shake/forms

[Civex]

appreciate the advice. I have been using money manager which tracks expenses and income on a "by item" basis" but with my upstairs "office" in disarray for the past year it's been a hassle to sit down and get hard sorted through copies of everything. I need to turn about 100 home receipts into digital copies as well.

I'll look into that, i'm sure I'll have a billion questions regarding a portfolio (currently Edward jones does my roth) about stuff like what's taxable, how much I should allocate, diversification, etc but I hate having money sitting around the house getting beat up by inflation!

Move your investments from Edward Jones-I like Vanguard (and it's popular on this site), but Fidelity and Charles Schwab also have good options. EJ is able to have have a business in every strip mall in America by robbing their investors. Front loads, back loads, and fees. Google "Bogleheads Edward Jones" for some of the horror stories and break down of all the ways they are making money off you.

I'd recommend reading The Bogleheads Guide to Investing, The Three Pillars of Investing by William Bernstein, and visiting the Bogleheads wiki for learning about how to invest. I like using a 3 fund style portfolio, but do your own investigating.

[zoochadookdook]

appreciate the advice. I have been using money manager which tracks expenses and income on a "by item" basis" but with my upstairs "office" in disarray for the past year it's been a hassle to sit down and get hard sorted through copies of everything. I need to turn about 100 home receipts into digital copies as well.

I'll look into that, i'm sure I'll have a billion questions regarding a portfolio (currently Edward jones does my roth) about stuff like what's taxable, how much I should allocate, diversification, etc but I hate having money sitting around the house getting beat up by inflation!

yeah I have until Wednesday to pick new funds so I will be referencing those links, I've been patrolling bogleheads forums religiously.

At least I got the girlfriend on board as well!
Move your investments from Edward Jones-I like Vanguard (and it's popular on this site), but Fidelity and Charles Schwab also have good options. EJ is able to have have a business in every strip mall in America by robbing their investors. Front loads, back loads, and fees. Google "Bogleheads Edward Jones" for some of the horror stories and break down of all the ways they are making money off you.

I'd recommend reading The Bogleheads Guide to Investing, The Three Pillars of Investing by William Bernstein, and visiting the Bogleheads wiki for learning about how to invest. I like using a 3 fund style portfolio, but do your own investigating.

[zoochadookdook]

You're far ahead of most.  Great work already. 

You have the flexibility to do all kinds of things, so it's more (1) what makes financial sense, and (2) what's a good fit for you: where can you add value? 

As for what to do, I highly recommend this book on vocation.  You can probably get it at your local library.  If not, you get a career coaching session for the cost of one book - assuming you're willing to put in the work.  Put in the work, and see where it leads. 

I would take the exercises in that book over your average career counselor, and even if you choose one, I would do those first so you have a lot of insights already and can make the best use of your time.

I am having a bit of a career crisis. Im working my first data internship this summer and it's pretty dry. Not sure if any entry level job would be beyond IT help desk, as most employers seem to want computer science majors. I have spoke with the girlfriends father and he encouraged me to be an electrician. At 26 it'd be pretty late to the party but the local union 5 year (do everything) program pays 18 an hour starting off with raises every year and an ending wage of 40 with a plethora of benefits so that has been in the back of my mind. My goal is to make 6 figures and negate the time to get to that point. I'll be going to a career fair again this fall and meeting around 100 employers. Been to 2 so far.

They have the 04 version of that book at my local library so I'll go get it tomorrow.

Regards,

Zach