Young Money No Money Millionaire

[Woockie]

Hey you guys! First off thanks for having me. I've been lurking the forums here for the last few days. I recently moved from a  small town in Iowa to the big city! Well, I mean the bigger city. Even though the move wasn't too rough since I've been lucky enough to have a family member up here to help I've come to realize at the tender age of 21 personal finances are a little more important in the "real world". With that being said I found myself a cushy desk job with potential for advancement. With that being said I am now receiving paychecks!(Previously a waiter) I set up a checking account with Wells Fargo so I can receive my direct deposit (which qualifies me for fee free checking) but I also have a saving and checking  account with the credit union that was opened for me as a child. I have a vehicle loan with the credit union.

Now that the back drop has been set I want to pick your guy's brains. Would it be worth it to me to set up an online bank account with a higher interest rate and transfer all the money for my vehicle loan from wells to the online account to the credit union? I'm thinking that if i make auto payments of rounded off amounts from the online account and then exact amounts from the online account to the credit union that over the course of the loan I would save up a few dollars that would keep up with inflation. Kind of like the system that rounds up to the nearest dollar on debit purchases and places them in a saving account. What do you guys and gals think?

[mozar]

Can you return the loan and pay cash for the car?

[Woockie]

AWH! Why didn't I think of that! Thanks for the advice. In fact tomorrow I'll just pull the 4 grand from under my bed and throw it on the counter at Wells Fargo tomorrow after work. I should have gone to Reddit, atleast there they have read Ramit Sethi's book.

[JumpInTheFIRE]

Unless you are keeping a significant balance in the online account I fail to see how it would be worth the hassle.  If you were keeping an average of $1,000 in the online account you would make $10/year on it.  Unless you are spending less than 1/2 hour a year on the task it doesn't sound like an efficient use of time.  Without a largish nest egg 1% interest doesn't amount to much. 

With regard to the philosophy of the MMM boards, I don't know if you'll fit in.  It seems like Ramit Sethi is all about being rich, which generally isn't the focus here (although many posters have significant wealth).  Most posters here are working at being financially independent from both sides, both saving money and reducing spending.  Many posters eschew cars altogether as they can take a large portion of income for low earners.  If your goal is to be rich then maybe this isn't the right place for you.  If your goal is to be financially independent and to live beneath your means I think you'll like it here.

[Woockie]

You know when you meet someone for the first time and for the first ten minutes your thinking to yourself that the two of you are going to be best friends? Only to find out weeks later that this person is self centered and won't even buy the next round at your favorite pub let alone tip! I'm starting to see that may be Ramit and I's initial relationship. I only know so because when I read what you just said I tended to feel more warm when you mentioned within your means or something of the sort, it gave me flash back of my hometown Walden. Yet being this young with such a short attention span/overload of information has me kind of disoriented. I've honestly tried to sift the the abundance of information MMM has to offer only to get impatient and google "how to make side money/How to make money" just a few hundred too many times. I understand this approach isn't working and this jumping into a conversation knowing not a single term might lead me to same place but I was truly hoping one of you fine fold would paint me a red arrow (w/ left over paint and free wood of course) in the right direction. Maybe a book or two that would truly outline the entire MMM philosophy so I could grasp when I'm about to jump onto.

[EAL]

Hey there.
Whatever type of bank account you create, it is likely that your returns will be low and that is simply because the when something is low risk (such as a bank account), you are not going to yield high dividends.  In economies, risk and return go hand and hand.  Generally, the higher the risk, the higher the rate. The lower the risk, the lower the rate. 
If you are just starting your career, this means you are probably not very used to the steady flow of income at the amount you are earning now. I would start saving some before you get used to it and start spending it.
Now, I know a lot of people on this website are about frugal living so they can retire early. I am about frugal living so I can continue to invest in dividend yielding investments  and grow my wealth so I can have the not-frugal lifestyle I desire in the future. Which sounds a little to be the direction you'd like to go in.
You can save a lot, but for me, it's also important to see that money grow so I can better my lifestyle and income each year!
That being said, once you have developed an emergency fund in the savings or bank account I would recommend investing in some stocks or bonds or even saving from a rental property so your money can be working passively for you. Even if it's just a little a month, you're getting started. 

[Villanelle]

Rather than a book, start with post one on MMM's blog.You can read through the fist couple years in far less time than it takes to read a book, and that will give you some very solid information and also fill you in on his philosophy (and by extension the philosophy of most posters, though we exist on a continuum, with some being far more hardcore). 

Your strategy with the bank account and the car loan sounds like way too much work for the pennies it will earn you.  Better to save like hell and get that loan paid off ASAP.  Four grand?  Many people here can save that much in less than a year, even on relatively modest salaries, so don't dismiss if with a sarcastic comment about your money in your mattress before stopping to think.  If you don't think you can save a lot, quickly, you are lying to yourself.  (Which is one of the major MMM tenants.)  If you *choose* not to save a lot of money quickly, fine.  But recognize that it is a choice, and one that runs counter to your objective of getting rich. 

[Woockie]

First of all, I must apologize for my dry and rough cut sense of humor as it is a natural response due to my personality. I truly do appreciate the advice. On one note, saving and investing those savings in divined paying stocks seems like a sound and more profitable place to put my savings buuuuuuuuut I still have this aching feeling in the pit of my stomach that the American economy will collapse within my life time. Maybe it's just first time buyer jitters but I still haven't jumped on the learning train due to that initial gut feeling.
As far as saving, I worked out a simple budget based upon what my TEMP agency is giving me which is about 30% less than what I'd be hired on for IIIIFFFF I were able to negotiate a 30K starting salary (Temp Agn said they generally start at 26k). I can live far beyond comfortable on 50% of my weekly TEMP income and that's simply an estimation on the low end. I also figured with my TEMP pay I could have my loan paid off in next to 13 months while still maintaining a comfortable life style. I would feel comfortable providing actual $$$ amounts if it would assist in receiving some solid feed back as to how realistic this KISS budget is.

[ysette9]

First of all, welcome to the forums and to the adult financial world. :) I hope you find something here that resonates with you.

If you are swimming in blog posts and don't know where to start I recommend this one: http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/. That pretty much sums up the philosophy and how to implement it.

You are starting off on a good path in that you are able to save money and are asking the right questions. Keep your expenses low, keep saving, and educate yourself on investing. To be honest, your comment about the US economy collapsing sounds naive to me, but do your own reading and come to your own conclusions. Perhaps you would feel more comfortable with a mix of total US stock market and Total international stock market index funds for diversification. Asa other poster hinted, save in a vanilla savings account for now to build a cash cushion before investing. That should buy your some time to educate yourself on investing in the interim so you don't do something silly like put your money in gold and penny stocks.

Good luck.

[Mazzinator]

There is a TON of free info out there. Stick around!!!

 Another good place to start is by posting a case study.

http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/

[zephyr911]

is one of the major MMM tenants

Tenants are the people who fund my retirement. You're thinking of tenets.

You know when you meet someone for the first time and for the first ten minutes your thinking to yourself that the two of you are going to be best friends? Only to find out weeks later that this person is self centered and won't even buy the next round at your favorite pub let alone tip! I'm starting to see that may be Ramit and I's initial relationship. I only know so because when I read what you just said I tended to feel more warm when you mentioned within your means or something of the sort, it gave me flash back of my hometown Walden. Yet being this young with such a short attention span/overload of information has me kind of disoriented. I've honestly tried to sift the the abundance of information MMM has to offer only to get impatient and google "how to make side money/How to make money" just a few hundred too many times. I understand this approach isn't working and this jumping into a conversation knowing not a single term might lead me to same place but I was truly hoping one of you fine fold would paint me a red arrow (w/ left over paint and free wood of course) in the right direction. Maybe a book or two that would truly outline the entire MMM philosophy so I could grasp when I'm about to jump onto.

OP,
I second the suggestion that you just read the blog. Start with the first entry and work your way through until shit starts to click.
Unless you're a shameless huckster or are blatantly wasting your existing skills, there is no way for you to dramatically increase your income tomorrow, but you can start laying the groundwork for a high-income, low-cost, relaxing life. Take a deep breath and plan on this all taking some time. Chances are that if you slow down and digest what's in there, you'll actually retain new ideas faster than you can implement them.
I found this place 18 months ago and am still steadily working on all the ideas it gave me (and accumulating new ones). One at a time, useless things are falling out my life and money is starting to pile up. I've gone from being a six-figure spendthrift to living better on 25-30% of the money. I could quit and be a barista tomorrow if I wanted to. I'm not giving up the cash firehose yet (why would I?) but the rapidly increasing sensation of freedom permeates every aspect of life, and options continue to multiply.
Stick around and take your time, trust me... you won't regret it.

[Woockie]

Okay, I think I'm starting to get it. With moving to the big city I've realized becoming a cook can really change your bottom dollar budget. What I used to spend on groceries ALONE has already been cut in half in the last month. I moved here and had to fill the fridge and $120 bucks later I hadn't even eaten half the food that had gone bad. I quickly realized that 30 minute shopping trip once a week saved me nearly $80 bucks and that includes what I believe to be high priced 'coffee' for the week.
All of this seemed as a natural progression to me but didn't really hit me until I read http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/ . I think I'll take you folks on some advice and stick around. I defiantly changed my view on the blog itself between forum advice and reading a single blog post from a GUIDE to being rich to more of a choose your own adventure style of book. The later seems much less intimidating.
Thanks for the help and back to choosing I go. I'll see ya'll around! 

[Villanelle]

Okay, I think I'm starting to get it. With moving to the big city I've realized becoming a cook can really change your bottom dollar budget. What I used to spend on groceries ALONE has already been cut in half in the last month. I moved here and had to fill the fridge and $120 bucks later I hadn't even eaten half the food that had gone bad. I quickly realized that 30 minute shopping trip once a week saved me nearly $80 bucks and that includes what I believe to be high priced 'coffee' for the week.
All of this seemed as a natural progression to me but didn't really hit me until I read http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/ . I think I'll take you folks on some advice and stick around. I defiantly changed my view on the blog itself between forum advice and reading a single blog post from a GUIDE to being rich to more of a choose your own adventure style of book. The later seems much less intimidating.
Thanks for the help and back to choosing I go. I'll see ya'll around!

Great!  And while the MMM blog can seem a bit... intense, and so can some of the posters, remember that we have all kinds here.  There are those who use washable, reusable toilet paper, and those who still have six figures in expenses, and pretty much everything in between.

Everyone interprets and implements that philosophy a bit differently.  For me, more than anything it was about realizing that I have so much more choice and control in the matter than conventional wisdom would have us believe. Sometimes, I choose the things that delay FIRE, like traveling my ass off with my husband that 3 years we lived in Europe.  But when we decided that, it was a conscious decision for which we weighed the extra time in our working lives and decided it was worthwhile.  It wasn't just "cool, let's travel!", followed years later by, "why can't we afford to retire?"  But most of the time, I choose to invest another $100 rather than buy those cute shoes because saving is no longer some arbitrary thing.  It is buying us retirement, and early retirement truly is possible, no matter how dire the news and popular opinion may make it seem, even if you aren't taking home a quarter million every year. 

Good luck!