Hello Mustachians,
First and foremost, I apologize for my rusty English, I moved to the country (USA) just slightly more than 2 years ago. With that being said I have zero (or close to) understanding of how to make money work for me here. In the place where I am originally from, you are never mistaken if you dump cash into real estate lol. Here the things appear to be more tricky.
So, during the 2 past years in the new country I've done plenty of stupid things. Well, I actually only one stupid thing: I fell a victim of consumerism. Everything else - just consequences.
I've been wasting money on sh*t: new phone, tablet, cool TV, a car, guns, eating out trying all those fancy cuisines from all over the world etc.
Then, one day, a couple of months ago I asked myself a question. If I had a steady influx of cash from somewhere, would I go to that damn 8to5 work, 5 days a week until I become old or die? Do I really like what I am doing? The answer was NO. Then why the hell am I spending a HUGE CHUNK of my life having to do what I wouldn't really want to do just to get money and waste it on cool sh*t because it is cool, it is considered to be cool, THE AD SAYS SO, DON'T YA BELIEVE? I've been so foolish... Alright, I didn't expect to generate that shit pile of words lol it just came out...
So, what I have:
1. Male, single, 26 y.o. living in Chicago. My English is so freaking bad that when I open my mouth and let it out native girls look at me as if I were a talking monkey. So all of my plans will be based around the fact that I am gonna remain single for the rest of my life. I am expecting to become a US Citizen in 2,5 years. I also have Russian citizenship if that matters.
2. Engineering job, 100K gross salary
=====WARNING: SHOCK CONTENT AFTER THIS LINE, MY FINANCIAL EDUCATION IS WORSE THAN ONE COULD IMAGINE EVER====
3. 401K? Well, I don't even have an account. I know my current employer matches contributions. Need to talk to HR to learn the details. When I started doing my research and b4 I found this website and forum I thought that I didn't need it. After reading some topics I realized probably it is a good idea to start maxing it out.
4. 3500 savings, a brand-new Vanguards accounts with 10 dollars in it (lol)
5. Good health, no debts
6. Recent monthly expenses after I decided to go frugal, all taxes and fees are included:
-Rent+internet+parking 860$ - I pay it as one bill, so I make 1 bullet here.
-Electricity - 40$
-T-Mobile 1 Line - 67$ (Unlimited talks + 6G of traffic, I guess I could save some money here)
-Car Insurance - 80$ (cannot go cheaper, I already tried, I am new to the country, my DL is also new...)
-Gas - 120-150$ (I have a car which gives me 25-30MPG and my commute is only 8 miles one way but I like doing road trips on weekends and vacations)
-Food - 150$ (I eat for free at work, so I keep only protein powder, water, diet soda and cliff bars at home, however I may spend money on fast food when traveling)
-Gym membership 30$
-Miscellaneous expenses - 150
Which makes it around 1500$
Take home: 5600$
What have been done so far:
1. Car loan fully paid off. Just got the title a week ago. I don't need to pay interest anymore and I don't have to pay for premium insurance (Actually, the new plan is 80$/mo vs 220$/mo before). Gonna keep the car until it falls apart, I guess I am good for many years here.
2. Moved to a cheaper rental apartment (Used to pay 1200 for rent+parking spot + internet).
3. Stopped wasting money on crap.
TO-DO List:
-Find a job with better salary (in progress, doing my best here honestly)
-Acquire some new skills which potentially might bring me some more money(I have a couple of ideas and I am working on them but I definitely need to dedicate more time)
-Learn more about financial market and investments
-Start contributing to 401K
What do I want:
-Retire in 10 years or less, stop being a 8-5 5/7 slave, buy a home in a place with lower taxes and cost of living (Wyoming seems to be pretty appealing to me) and a fuel efficient car and travel across USA, Canada and South America. If I had a paid-off home and 1500-2000$ of passive income per month I believe I would be able to accomplish this goal.
How:
a) 401K (I want to start with Fidelity)
b) By the formula: Take home salary - Monthly expenses = investments
c) Not sure if I need to buy any property, definitely not in IL as the taxes are crazy, however I might be mistaken here and a good investment will bring revenue. The problem is that I have no idea how to make that good investment. I need to do more research on it.
So, the questions:
1. Is it doable?
2. Should I start maxing out 401K ASAP and why? Now I know that I need 401K but should I really be maxing it out?
Pros:
-Less taxes
-Free money from employer match
-Will likely grow over years
Cons:
-I won't be able to tap into it until 59.5
So, I see 401K as a
1) Tool to possibly lower my tax burden
2) Fund of last resort (well, I guess with good matches from employers it can still be pretty profitable to break bank and pay 10% penalty and taxes). I've also read that it can be tapped into without penalties for buying/making a downpayment for a first home (not sure if the source of information was reliable or I interpreted it correctly)
3. I know 0 knowledge here, so I'll start with putting money into index funds. What do I choose, VTSMX or VTSAX?
Roughly, I could invest into VTSMX every month or in VTSAX every 3 months. VTSAX has lower expense ratio.
4. Are there any good books about generating revenue from rental properties? Stock markets? There are tons of them, I don't know where to start. Any good learning materials for a total zero?
Thank you for reading this and I promise to post here about my progress =)