Author Topic: New to the US. Looking for an advice.  (Read 3763 times)

Ylati

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New to the US. Looking for an advice.
« on: March 13, 2014, 04:53:32 PM »
Hello fellow Mustachians,

I recently moved to the US, English is not my first language so sorry for the mistakes.

I am 32 and my wife is 28, recently married. She is working full time grossing $45,000 per year and I am self-employed/looking for a job. We live in San Francisco and our monthly expenses are $4,000 including rent, student loan, groceries and eating out once per week.
I own a passive online business that went well until a year ago but now is in its decline. It is still making some money though, in the order of about $1,500 monthly after expenses, revenue is expected to go down gradually over the following months.

My wife’s student loan is composed by $26,000 private loan at 10% avg interest and $17,000 of State loan at 6% avg interest. We pay off the minimum every month ~ $500.

I am debt free. We have $87,000 in stocks and about $145,000 liquid.

We plan to have our first kid next year and hopefully move somewhere else cheaper than SF.

Coming from Europe, I am somehow feeling overwhelmed by the different options that exists in the US in terms of credit, debt, investment, score…etc. I considered investing part of the money in a real estate property but the housing market in the Bay Area is definitely not for my pockets. Out of state investing could be an option but, being new in the US my credit history is null so I can’t get a mortgage (the bank requires 2 years at least of job history and my business was based in Europe, so that wouldn’t count).

I am planning on paying off entirely wife’s private loan of $26,000 at 10% and I was debating if It was a good idea or not paying off the rest of the student loan at 6%. If not, we could save and invest the money that we were paying for the private loan monthly instead.  Is it a good strategy?

I am looking for a job, but I find the market pretty competitive here so I am having some difficulties encountering it. We are planning on buying a used car with the idea of doing some Uber while looking for a job. Max budget for car is $10,000. Additionally I can do some online marketing consultancy.

I am not sure what to do with the rest of the money, about $100k. I looked into Personal Capital, Betterment, Wealthfront. Despite Personal Capital highest fees, at the moment is the one that I feel more secure with. On the other hand, markets are in all time highs and I would like to have some cash ready to invest aggressively when markets go down. Where should I put this funds?

Given this situation, what would you do?

Any advice would be great!

Thanks
« Last Edit: March 14, 2014, 12:09:24 PM by Ylati »

2527

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Re: New to the US. Looking for an advice.
« Reply #1 on: March 13, 2014, 07:47:46 PM »
I'd pay off the expensive loan, buy a modest car, keep the money in short-term CDs, read about the market and investing, and then see how and where you stabilize, and make your decisions from there.  Go slowly and carefully.  Don't blow your $100,000.

spoonman

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Re: New to the US. Looking for an advice.
« Reply #2 on: March 13, 2014, 10:16:39 PM »
I would knock down the loans too,  6% and 10% are very high interest rates.

Have you thought about moving to the east bay (Berkeley, for instance) to save some money on rent?  I'm guessing rent is a sizable portion of your monthly expenses.  You can position yourself near a BART station and commute into the city that way.

MDM

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Re: New to the US. Looking for an advice.
« Reply #3 on: March 13, 2014, 11:48:44 PM »
She is working full time grossing $45,000 per year and I am self-employed/looking for a job. We live in San Francisco and our monthly expenses are $4,000 (=$48,000 per year) including rent, student loan, groceries and eating out once per week.
I own a passive online business that went well until a year ago but now is in its decline. It is still making some money though, in the order of about $1,500 [is that per month or per year?]after expenses, revenue is expected to go down gradually over the following months.

Ummm...if I read this correctly you are losing money now.  Or, at best, you will be soon, if the $1500 is monthly but dropping .  First priority is to turn that around so your cash flow is net positive.  Once you do that, you can think about investing your cash.  Paying off the 10% loan, per spoonman and 2527, would be a good first place to put that cash.

I'd not buy a car until the cash flow situation changes.  Only exception would be if you "need" the car in order to fix the cash flow...?

I'll also second 2527's advice to take your time and learn more before making significant investments.  If you are smart enough to learn English as a second language, you can probably learn enough about investing to avoid paying a lot for investment advice.

2527

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Re: New to the US. Looking for an advice.
« Reply #4 on: March 14, 2014, 10:08:59 AM »
Also, don't do mutual fund investing with anybody other than Vanguard.

MissPeach

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Re: New to the US. Looking for an advice.
« Reply #5 on: March 14, 2014, 11:24:21 AM »
I agree about paying off the debts and improving cash flow.

When you are ready to start investing there is a good book called 'The Boggleheads'. It simply explains the different options and how to maximize your return for the risk you are willing to take. Fees are great at killing your returns so I would avoid jumping into something until you've read up and put some thought into it. I would consider putting your money into an online savings bank such as ING where you will be able to get interest rates that are better than average and insured until you have a strategy. There is no reason to pay for someone to manage your money IMO and the Boggleheads book is good at showing you the numbers why.

Ylati

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Re: New to the US. Looking for an advice.
« Reply #6 on: March 14, 2014, 12:22:37 PM »
I would knock down the loans too,  6% and 10% are very high interest rates.

Have you thought about moving to the east bay (Berkeley, for instance) to save some money on rent?  I'm guessing rent is a sizable portion of your monthly expenses.  You can position yourself near a BART station and commute into the city that way.

Thanks for the reply. We are paying $1,975 a month for a one bedroom half block away from wife's work so she can have lunch at home and we can save on transportation too. The East Bay is cheaper but probably we would end up paying the same or more if you add food and transportation.

Ylati

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Re: New to the US. Looking for an advice.
« Reply #7 on: March 14, 2014, 01:08:56 PM »
Quote
Ummm...if I read this correctly you are losing money now.  Or, at best, you will be soon, if the $1500 is monthly but dropping .  First priority is to turn that around so your cash flow is net positive.  Once you do that, you can think about investing your cash.  Paying off the 10% loan, per spoonman and 2527, would be a good first place to put that cash.

I'd not buy a car until the cash flow situation changes.  Only exception would be if you "need" the car in order to fix the cash flow...?

I'll also second 2527's advice to take your time and learn more before making significant investments.  If you are smart enough to learn English as a second language, you can probably learn enough about investing to avoid paying a lot for investment advice.

Thanks for the reply. $1,500 is per month, I edited the original post.

My idea with the purchase of the car was to work as a Uber X driver and earn some extra cash. Working part time I could make $2,000/$2,500 excluding gas and related costs while I am looking for a job.

I am reading about investing ( The Bogleheads and The Intelligent Investor plus some articles online ) but I think I need some time until I fell confident going it alone. That's why I was looking into a managed solution that would allow me to make the funds work for a small commission fee (from 0.25% to 0.95%) before doing it myself.
« Last Edit: March 14, 2014, 01:12:04 PM by Ylati »

Ylati

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Re: New to the US. Looking for an advice.
« Reply #8 on: March 14, 2014, 01:31:00 PM »

Thanks all for the advice. As for the student loans, I agree with you. But wouldn’t be a good idea to pay off the 10% loan with the cash, invest the rest of the money and paying off aggressively the 6% loan ($17K) during the next months with the cash that I would make with the Uber X (or some other job)? This way I would have $17k more to allocate as investment.

2527

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Re: New to the US. Looking for an advice.
« Reply #9 on: March 14, 2014, 02:20:12 PM »
Spend time on the Vanguard website and give them a call.