Author Topic: Not your average advice for student.  (Read 3424 times)

unibum

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Not your average advice for student.
« on: July 25, 2013, 07:49:18 AM »
Hi all, I have noticed upon reading pages of different areas and then the advie the man gives himself that this
is geared towards American's.

Things in Australia are a bit different. I will be spending 6 years at university and with a debt of around $30 000.

I have the amount of a small second hand car in cash just sitting there looking as bored as cows eating grass.

I bought some shares on top of that which have doubled in value although its probably just enough to buy a top end
HP laptop.

My question being although two different countries for instance we dont have this 401K thingo.

I am contemplating what to do. I save a lot of money and live on government hand outs, recently got a job earning about
$100 a week which is all savings.

Now I know you can't give financial advice, but I am thinking with cash that is chilling and another 3 years of uni and a $30 000
debt what does one do? I did think about trading shares, but my thoughts were dividends focused as the stock market hasn't
been the same since the crash.

Also I am just using objects to describe wealth for personal reasons. I am blessed and very fortunate in my eyes.

Any thoughts or help would be appreciated. I have worked out once i finish uni I could say $30 000 a year which after two years
should make it easier to get a loan for a house. Or I could take a margin loan out and buy more shares and in five years time if geared and have $106 000ish based on depositing $500 a month.

Kipp

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Re: Not your average advice for student.
« Reply #1 on: July 25, 2013, 08:00:54 AM »
Hi all, I have noticed upon reading pages of different areas and then the advie the man gives himself that this
is geared towards American's.

Things in Australia are a bit different. I will be spending 6 years at university and with a debt of around $30 000.

I have the amount of a small second hand car in cash just sitting there looking as bored as cows eating grass.

I bought some shares on top of that which have doubled in value although its probably just enough to buy a top end
HP laptop.

My question being although two different countries for instance we dont have this 401K thingo.

I am contemplating what to do. I save a lot of money and live on government hand outs, recently got a job earning about
$100 a week which is all savings.

Now I know you can't give financial advice, but I am thinking with cash that is chilling and another 3 years of uni and a $30 000
debt what does one do? I did think about trading shares, but my thoughts were dividends focused as the stock market hasn't
been the same since the crash.

Also I am just using objects to describe wealth for personal reasons. I am blessed and very fortunate in my eyes.

Any thoughts or help would be appreciated. I have worked out once i finish uni I could say $30 000 a year which after two years
should make it easier to get a loan for a house. Or I could take a margin loan out and buy more shares and in five years time if geared and have $106 000ish based on depositing $500 a month.

I guess to start, does your student loan carry interest during school?  In the US some do and some don't.

unibum

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Re: Not your average advice for student.
« Reply #2 on: July 26, 2013, 12:19:15 AM »
Hi yes at 3% so a the moment with three years or 2.5yrs to be precise its $26 000

Kipp

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Re: Not your average advice for student.
« Reply #3 on: July 26, 2013, 09:57:20 AM »
If you are investing longer-term (say retirement) then I would say start investing, but you are accruing interest on your loans now.  I guess I would first see what low risk returns you can get and if they yield over the interest on your loan.  Otherwise, keep some emergency cash and reduce the amount of your loan now rather than later.  Hopefully the job market is good in Australia, it is kinda hit and miss in the US.  So reducing the amount you would owe in the future could be a bigger benefit than you know if things don't initially turn out grand.

cerberusss

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Re: Not your average advice for student.
« Reply #4 on: July 26, 2013, 10:01:46 AM »
Personally I would stay off of the risky investments when I have debts (perhaps outside of a mortgage). That's one thing.

The other thing is, are there ways to not borrow so much? 30K seems like an awful lot to me.

unibum

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Re: Not your average advice for student.
« Reply #5 on: July 26, 2013, 04:27:45 PM »
As for the debt situation

How it works is univeristy charges me fees, I then say I dont want to pay up front (partially due to the loss of the discount for doing so)
then it goes into what i call my learning loan. So essentially the government doesnt give you a straight loan more they pay the debt
to uni, you pay the government back that amount at 3% most times you have to earn 40 000 to see it taken out of your tax or you
leave the country for 10yrs and never pay it.

I was trying to follow the idea of early retirement as listed in the MMM blog post. At the moment however I do not have the income.

steveo

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Re: Not your average advice for student.
« Reply #6 on: July 26, 2013, 07:59:30 PM »
I'm Australian and I think if you pay down your HECS debt they actually reduce it by more than what you pay. I would look into that if I was you.

In saying that I would also look at setting aside some money to be used for emergencies and what not. I wouldn't trade shares. I would look to invest. If you want to trade you can try foreign currency because you can trade small amounts and use leverage to learn how to trade and see if it is for you. I have seen very few people make money trading. My FIL is a multi-millionaire from trading foreign currency but he did it via working for big banks and private companies. He trades for himself now periodically and can have massive wins (anywhere from a couple of hundred thousand to a million dollars in one trade). The thing is he also has massive losses in the same magnitude. He does this though by having big pockets so he can take massive positions and hold them for a long time frame even if it is going against him. You also have to understand that trading was his career and he was very good at it and even still I don't think he makes a regular profit. He also retired wealthy via being frugal and stashing away cash consistently. He still likes to eat and live very cheaply.

stripey

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Re: Not your average advice for student.
« Reply #7 on: October 15, 2013, 04:37:07 PM »
I think HECS/HELP/PELS is indexed against CPI rather than earning 'interest'. Of any loan you would ever carry will be more 'expensive' than this debt so it should always be the lowest priority. For 2013/2014 year compulsory repayments start with earnings above about $51k (AUD), and then initially only at 4%.
They have reduced the incentives to repay back since I started uni. I think there is legislation to remove the 5% incentive on voluntary repayments as of 2014 (boo, hiss)