[jebartle]

I know you are going to be successful, Im not sure at 21, I was asking this question of our generation and in retrospect I wish I had!

What are your talents and interests, go there first!

[angiefox10]

Originally Posted by kittygilchrist

To have zero debt ever would likely mean:

1. You'll never have a reliable vehicle
2. You'll never buy a house.
3. If you own a business, it is unlikely you can do more than scrape by.

That said, the reason to avoid debt is not that you are avoiding debt itself, it is that paying interest should be avoided whenever possible. My advice is a bit opposite of some here, which is to say, build your credit history. Go to the FICO website, study strategies to build credit. I would go as far as to suggest using credit you don't need, AS LONG AS YOU PAY IT OFF EVERY MONTH BEFORE YOU OWE INTEREST. I can say that because I know you are a temperate and frugal young man.

Be aware of the seasons of the economy. We are in a season of extremely low interest. It's likely that at some point interest rates and home prices will go far higher.

An example of using the seasons of the economy to your advantage:
If you are renting instead of paying a mortgage, this is an excellent time to buy a house because renting is the opposite of investing, as you are paying for something you will never own.
Even though you would be paying interest on the home, you are also paying for the house itself.

Regarding investing in a IRA or 401K, the funds can be invested in many different things, and most of the choices are risky for losing money.

If I were you, the first thing I would do is build a nest egg. Ask the bank how much is required to put money a CD, which is safe, and gives you a smidgin of interest paid to you. I give this advice knowing you and your situation. Everyone needs an emergency cushion of cash in case of a vehicle loss or breakdown, being temporarily unable to work, and so on.

When these funds have built up, then you are in a position to leave an emergency fund and use the extra to start paying off the truck early to save that interest.

Still reading? Finally, make sure you don't scrimp on "investing" in insurance. Make sure your vehicle is covered for collision, and that you have medical insurance. This is a gigantic risk that many young people take without ever thinking about what would happen if....

This post is correct. Kitty is absolutely right. You have to have credit. In fact.. that was what I would actually talk about. Credit and credit scores. We had credit... when the interest was less than what we were making on our money. Any time a company would offer "free" credit... We took it! 2%??? Easy call! Good credit scores means you can take advantage of all of those deals... you won't get them with bad credit.

We lease our vehicles. We don't keep vehicles longer than a couple of years. It doesn't pay to buy them. And for those who would say they drive too many miles... You pay for the miles either way.

As to buying a house.... I agree with Kitty. We bought our home. But there is a different way of thinking now. The paradigm today is rent. Things have change since we were your age. We would go into our jobs/professions for life. Now.... not so much. Kids today need to be mobile. They need to be able to move to get the big break. "They" are telling young adults to not be so "tied down". Travel light.

To the person who said to invest in yourself! Wow.... Big applause to that! Even to invest in how you look! That young person dressed one level above his/her level... Will be promoted first. Don't just stop at education.... Studies show... even your weight will make a difference in your success!

So much good information on this thread... I agree with the person who said they wished they had done this when they were younger... But we didn't have the computer then.

Good luck... I wish you well...

[dotti105]

I would suggest you check out "Dave Ramsey".

He is one financial guru who really has his head on straight. We learned so much from him. Things that are very simple, easy and financially sound. Things that should be taught in high school about money/finances but unfortunately are not.

If we had followed his advice 30 yrs ago we would have retired earlier with a much larger nest egg.

Check him out and be willing to change the way you look at the money that crosses your hands! He has the right priorities and puts it out there in easy to understand language!

We wish you the best! You are very smart to start thinking about your financial future today. It is easy to think that tomorrow will take care of itself, when nothing could be further from the truth!!

[createquilts]

If I knew what I know now at age 21 I would
1. be wary of investing advice on a public forum.
2. I would educate myself about the different stock/bond etc. investments- there are probably lots of financial magazines and books right at your library. There is no easy way to gain this knowledge.
3. I would never invest in something I did not completely understand
4. I would realize that everything has fees. Mutual funds have fees. Annuities have fees, financial advisors have fees. Make sure you understand exactly what those fees are and how they impact the amount you will end up with and if the fee is worth it.
5. I would go to the library and check out a David Ramsey book, one by Suze Orman, Your Money or Your life, the Millionaire next door etc. and read all their opinions. Basically the advice will be the same. Spend less than you earn. Know how much things cost like cars, houses, school loans etc. and how long it takes to earn the money to buy them. Since you posted about a bible study you might like Dave Ramsey. He does a program a lot of churches sponsor.
6. I would diversify and not put all my eggs in one basket
7. I would track all the money I spend and the change in your net worth every year. Every last cent. We have years of doing this. It is amazing to realize how much you can spend on eating out or clothing if you don't really pay attention. It doesn't take anything but a cheap notebook and a pencil, but many people use programs specifically for that use.
8. My best choice I ever made that I would recommend to you is to choose your mate wisely. Marrying someone and thinking you will change their spending habits has little chance of working out.

[manaboutown]

Start young and and get to know thyself. What is your personality type? Different strokes for different folks.

Read everything you can about investing after vetting the authors. A lot of what is out there is garbage. Check out the author's own investing success before bothering to read what he or she wrote.

Read some biographies and stories about achievers you admire. You may get some ideas or inspiration from them as well as learn the lessons they learned along the way. "The Millionaire Next Door" and "The Millionaire Mind" are a good place to start.

Get the best education you can. Choose your major carefully. A good education is something that can never be taken away from you.

If possible, only borrow for investment purposes other than perhaps a mortgage on your residence.

Keep track of your personal expenditures, at least for a while. John D. Rockefeller did this. I remember seeing his account book showing how much he paid to have his shoes reheeled.

I bought my first stock at age 17 with savings from working part time in a grocery store - but only after researching it thoroughly. (the stock did very, very well over the next five years!)

Good luck!

[Barefoot]

Originally Posted by createquilts

My best choice I ever made that I would recommend to you is to choose your mate wisely.

This is the most important decision you'll ever make. Important for achieving your goals, and your emotional and financial well being. Many of us have learned this lesson the hard way. Createquilts speaks wisely.

[zcaveman]

I would do like I did. Save some money and enjoy life. Take advantage of the 401K plans if you can.

Remember, you might not make it to retirement and you would have missed on a whole lot of living if you scrimp and save your whole life to get to retirement.

Z

[fuccim99]

Investing is not the first step.
1) Attain the highest level of education for your profession
2) Obtain full time work in your profession
3) If your employer has a 401K contribute as much as the employer match - the only free lunch in America.
4) Save three months of living expenses
5) Get the Investors Business Daily book on Investing - Amazon should have it cheap.
6) Invest in common stocks or common stock mutual funds.
7) Good Luck

Investing is a lifetime sport. Two quotes to live by and they apply to investments and life.

"There are bold pilots and old pilots, but no bold old pilots" - Unknown
"He who dies rich, dies disgraced" - Andrew Carnegie

[dewilson58]

Originally Posted by donb9006

Best advice? No debt. None, nada, zilch. It's the ONLY was you'll get ahead. Buy with cash and think hard before you buy something. Live below your means. Investments go in cycles...hard to predict what will "win" in a given year.

"No debt" is not necessarily good advice.............

Debt is not bad.

Home mortgage rates are at an all time low.

I would bet that 99% of the old people in TV had a mortgage.

[dewilson58]

Originally Posted by zcaveman

I would do like I did. Save some money and enjoy life. Take advantage of the 401K plans if you can.

Remember, you might not make it to retirement and you would have missed on a whole lot of living if you scrimp and save your whole life to get to retirement.

Z

Well said. Must balance today with tomorrow. I didn't totally scrimp, but I might have been overly tight.............but it's all good.

[BS Beef]

I preach to folks from their early 20's and even into their 30's. If available invest in your companies 401k. I won't specify a certain percentage but I promise you won't regret 1 single percentage of what you put in early. It will start slow but you'll be amazed how quickly it grows once you get it going. At the very least it will give you the flexibility to retire early or retire sooner and switch to a job of your choosing.

If not I would strongly encourage an IRA. I have a friend who started at 18. He's 52 and very comfortable with only $35k-$40k from his PT business.

I just can't stress enough how much flexibility it will give you as you reach your 50's��and 50 is much closer than you think

Just my humble 2 cents.

[kittygilchrist]

Stepping back in this great thread for a minute...
IF you are thinking of deferred tax investments like an IRA. For me the answer is I never made so risky and likely to fail as I did in my 20's. But I am a chicken and that's no good as a role model for you.

Ask: am I making more income now that I expect to make at retirement age? How would my single tax rate compare if I am married when I use the $$IRA?
consider: Kitty would have done better to pay the taxes while my tax rate was near 0, even if people with a tonnage of $$ advised me to defer taxes. They didn't know what it's like to make it close to the bone and pay nothing or almost nothing in taxes. So getting an advisor who has no angle to take you $$ might be nearly impossible were the grace of God with, so happily, he is.
Happy New Year, Josh,
Kitty and Emma and Raul

[maryanna630]

To the OP,
Check out the website of Mr Money Mustache. It is just fascinating and hundreds of young people are on the forums. He and his wife achieved total financial independence in their thirties and advise others. There are so many success stories on the site including people who were totally in debt. I wish this site had been available when I was younger bit I still learn from it...and I am 71!!

[Mr. Grampi II]

Joshua : You have gotten a lot of great advice from some very wise people, there is not much I can add ....if I was you I would buy an ice cream cone and drive around with the windows down and the radio up!

[angiefox10]

Originally Posted by kittygilchrist

Stepping back in this great thread for a minute...
IF you are thinking of deferred tax investments like an IRA. For me the answer is I never made so risky and likely to fail as I did in my 20's. But I am a chicken and that's no good as a role model for you.

Ask: am I making more income now that I expect to make at retirement age? How would my single tax rate compare if I am married when I use the $$IRA?
consider: Kitty would have done better to pay the taxes while my tax rate was near 0, even if people with a tonnage of $$ advised me to defer taxes. They didn't know what it's like to make it close to the bone and pay nothing or almost nothing in taxes. So getting an advisor who has no angle to take you $$ might be nearly impossible were the grace of God with, so happily, he is.
Happy New Year, Josh,
Kitty and Emma and Raul

I can't tell you how hard it was for me to convey that to people when I was young and not making any money. We had a choice to be in the Stock Saving Program (we paid our taxes then) or a 401K (defer the taxes). I chose to pay the taxes then. I was young and single then, and I knew I would be making much more money when I was ready to take it out! I'm now married. We both did very well in our corporations and have an awesome pension program. Thus, putting us in a higher income tax bracket.

Of course I eventually had to buy into the 401K... But when I take it out. The SSP will net me more than the 401K!

You are Spot On! Kitty!