Hi everyone. I just found MMM the other day but I've been working to read all the blog posts and I have long shared many of his views (investing in index funds, living frugally, anti-consumerism, etc). I will detail my financial situation below but essentially I have a $20,000 cash cushion and MMM has made me think about dumping that into my Vanguard index funds and relying on an unsecured line of credit.
Here's my situation:
-21 years old, graduating college with a degree in Political Science and Economics.
-0 debt due to scholarship.
-$6,000 in Vanguard VOO
-$21,000 sitting in bank account :(
-$11,000 credit card limit, which I pay off completely every month. (The limit is high because I put my parents' income on the application -- this is allowed)
-Looking for a full time job and hoping not to live with parents.
-Hoping to avoid getting into the rat race, so looking at university administrative jobs in small towns so I can have low cost of living with a pretty good salary and take classes for free. I could use library computers in my free time so I wouldn't need to buy a computer or have WiFi.
-Pretty frugal.
-No clue when I will be buying a home/settling down.
-Really interested in the Ithaca, NY area. I could walk/bike to work and everywhere so I wouldn't need a car.
-no money in IRA or Roth IRA...I've always been worried about needing the money so I haven't even put it in a Roth IRA. (I think MMM discourages regular IRAs).
My current thinking is that once I get a job I should go to my credit union and request an unsecured line of credit (I think having a job will make them more likely to give me a good interest rate and accept the request). Then I will dump all but $1,000 into my Vanguard fund except moving/adjustment costs and living expenses until my first paycheck comes. As MMM recommends, I then will have the line of credit as backup.
My major concern with this is that this could be a downpayment on a mortgage so I don't want to tie it up in the market.
My other concern is that my job search takes some extra time so maybe from graduation (May) onward I am stuck in a minimum wage job. I would prefer not to move back home.
What do you guys think? Should I dump it? Should I dump it via a Roth IRA?
Also, what if I get rejected for the line of credit? I assume using the credit card as a line of credit is a bad idea because interest is high.
Note: Actually, the credit card is new so I have no interest for 9 months...so technically I guess I could dump everything now and use the credit card as a really cheap line of credit. I also realize I don't need to pay my credit card off every month because of this feature but I've been too skeeved out about carrying a balance. I worry this could affect my chance at the unsecured line of credit too.
I really appreciate your help! I'm looking forward to getting involved in the MMM community.
P.S. I've been worrying about needing the money for a future degree too, but now that I think about it and read MMM, I doubt most paid degrees that I'm interested in (i.e. teaching) are worth it...I could just invest the $50,000.