21 yrs old and Need a Plan!!!! Help?

[aida2003]

Originally Posted by m1kesgurl

Guess what? I am a certified financial counselor...yeah how bout that?

Hmmm... I think you should follow advice that you preach to your clients.

Other people gave you great advice, BTW.

I don't know how but you must attempt to break your habbit of shopping online unless you REALLY REALLY need those things.
Boy, Bush Administration should send you a Thank You note. ...being a bit sarcastic...

[aida2003]

Originally Posted by Snave

A recent article was just done that was similar in asking finance professors how they invest, etc... Again, they do not practice what they preach. Many thought they would be able to beat the market, they bought and sold more often, etc... and most agreed that it was counter-productive.

I'm sure I read it the same stat somewhere. Could it be in BusinessWeek or maybe Money? I found it odd.

I should browse Kiplinger's online and try to find Steve's mentioned story (very curious to read it myself), because I'm sure it wasn't in Money magazine (unless he read online).

[jIM_Ohio]

Originally Posted by pfodyssey

alright, here we go:


#4 - Given you age and assumed income, you should max out everything else in a Roth IRA or a Roth 401(k) if you have one. (after getting your 401(k) match). Your tax bracket is the lowest it will probably ever be in your working career and so the tax break from a regular 401(k) isn't substantial...yet. In comparison, overall tax rates are at historic lows and have only one way to go - UP! Put your money away in a Roth and you will never have to pay any taxes on the contributions / earnings. At some point, the tax breaks from pre-tax savings may be difficult to pass up...but you can worry about that WAY LATER.

I would caution following most of the advice in this post blindly. In case of the highlighted comment above, I think this advice is flat out bad.

I am in 25% tax bracket based on gross income. I saved myself thousands of dollars last year by lowering my current tax bracket into the 15% tax bracket.

I would much rather have saved $2000 in 2007 than maybe having another $1500 invested right now.

My advice is this- 401k up to match, then do a tax rate analysis- if you are in 25% tax bracket, I urge you to use 401k to reduce income into 15% bracket. This will save you money now, and there is no guarantee the Roth rules will remain in place for 40 years (tax laws and tax code changes every 4-8 years, tax brackets change every year).

The solution is not as simple as "invest up to the match". In addition a 401k can be converted to a Roth later- and if you can convert it at 15% later, that is money in your pocket with fewer taxes paid now and in the future.

75% of the country is in the 15% tax bracket or lower (cap of 62k for married, cap of 31k for single). Our gross pay was 100+ last year and deductions got us into 15% bracket (40k+ of deductions).

[anonymous_saver]

I know I would much rather have tax savings later than now. Just my opinion.

[m1kesgurl]

I need to follow the advice i give my clients, but i dont and that is why I am on here for help b/c there are so many things out there which can help me get more money for my future.

[jIM_Ohio]

Originally Posted by anonymous_saver

I know I would much rather have tax savings later than now. Just my opinion.

If you are in 15% bracket and will stay there for a while, then maybe this is true (pay cheap taxes now). For anyone earning above 62k (25% bracket or higher for married couples), anything you can do to get into 15% bracket (by deferring taxes now) is money in your pocket now.

[DebbieL]

Who would go to a 21 year old for financial counseling? What exactly is involved in getting this designation?

Sorry to sound negative, but I'm truly wondering who your clients are (because while I'm sure you are bright and a wonderful person, I would never go to someone so young for any sort of financial "expertise").

[disneysteve]

Originally Posted by aida2003

I'm sure I read it the same stat somewhere. Could it be in BusinessWeek or maybe Money? I found it odd.

I should browse Kiplinger's online and try to find Steve's mentioned story (very curious to read it myself), because I'm sure it wasn't in Money magazine (unless he read online).

Sorry for any confusion. My memory was a little fuzzy so I found the article.

It was in Money, February 2008, p.54. "Why You Don't Want to Invest Like an Expert" by Jason Zweig. It was about finance professors, not financial advisors. The study reported that 44% of professors think that it is all but impossible to beat the market's return, yet 23% of them try to beat the market anyway.

[m1kesgurl]

Originally Posted by DebbieL

Who would go to a 21 year old for financial counseling? What exactly is involved in getting this designation?

Sorry to sound negative, but I'm truly wondering who your clients are (because while I'm sure you are bright and a wonderful person, I would never go to someone so young for any sort of financial "expertise").

First of all, i am a certified financial counselor and it doesnt matter how old your are. It matters how good you are, i have 2 years experience and been doing well so far. I will be doing this for a long time.

Well i dont have any financial debt at all right now at my age, so obviously i am doing something right.

[anonymous_saver]

Originally Posted by jIM_Ohio

If you are in 15% bracket and will stay there for a while, then maybe this is true (pay cheap taxes now). For anyone earning above 62k (25% bracket or higher for married couples), anything you can do to get into 15% bracket (by deferring taxes now) is money in your pocket now.

Yes, that is true. But that doesn't necessarily change my opinion.

[project15]

Originally Posted by m1kesgurl

First of all, i am a certified financial counselor and it doesnt matter how old your are. It matters how good you are, i have 2 years experience and been doing well so far. I will be doing this for a long time.

Well i dont have any financial debt at all right now at my age, so obviously i am doing something right.

I'm jealous, I wish I could be a financial counselor by profession - especially at our age (I'm 24).

[scfr]

Originally Posted by m1kesgurl

I will most likely look into 401k

That way the money is already put in there automatically and i really wont miss it too much.

Yes - By all means put as much as you can in to the 401K! Since it sounds like you are not inclined to ring up debt, your best bet will be to put the money where you cannot touch it, and may not even miss it if it is taken out of your paycheck.

Second, if you physically receive a paper paycheck, you could try going to the bank on payday and immediately putting a certain amount (perhaps $200 per month?) in to a CD ... The money will be there if you need it in case of emergency, but again it will be a bit hands off.

Third, if you have someone you trust completely, you could develop an "accountability contract" where you promise to report to them honestly how much shopping you have done and how much you are saving.

Fourth, when you see something you are tempted to buy, write it down on your calendar a week or later. If, after time has past, you still think buying it is a great idea, go ahead. But I'll bet most of the time you'll be scratching your head and wondering why you thought you needed or wanted it.

Finally, what if you wear mittens when you have free time at work?

But seriously, good luck to you! I think it is great you have recognized what could become a serious problem and are going to nip it in the bud.

[Gruntina]

Implementing finance plans means making choices. You would need to make choices on how you plan to save/spend your money. Dreaming alone itself will not get you anywhere.

I totally agree with many and their advice to you. I wanted to chip in on a Small Scale. Maybe you need an incentive to save. It seems you are still focuses on finding enjoyment through clothing’s. Maybe bigger goals than clothing’s such as a nice vacation, down payment on a house or the like, and set up a "savings pot" so it can "train" you to save when you are saving for something you can not afford immediately. Kind of changing your mindset and building your endurance on discipline with your money savings and not blow it every time you get a paycheck. The process of Delayed Gratification is not as fun as Instant Gratification but it is so much more rewarding.

[maat55]

Remain as debtfree as possible. Invest in 401 up to match, save an 3 to 6 month EF, invest in a roth ira about 200 a month, save cash for cars and stuff. If you get a credit card, I would only get one to pay off every month. If your not comfortable with having a CC, don't get it. Your doing great and now you can go to the next level, investing in mutual funds with a five to ten year tract record of over 12%.

[buzz]

Originally Posted by pfodyssey

alright, here we go:

#2 - Maximize free cash.
- open a checking account with highest stable interest available, but primary purpose would be for bill pay, etc. Even better if you can open one that gives you a $100 bonus or something like that
- open an account with GE INTEREST PLUS (geinterestplus.com). I dare you to find an account with a better interest rate over time.
- You will then keep only needed spending money in the checking account with the bulk in GE Interest Plus. You can then A) setup regular withdrawals for recurring bills (ex: insurance, car, etc) with GE Interest Plus. For the remainder that are not the same each month (ex: utilities) - transfer a lump sum from GEIP and then pay it via your checking account.

I dare you to defend saving money in a non-insured account with mediocre rates.

[disneysteve]

Originally Posted by buzz

I dare you to defend saving money in a non-insured account with mediocre rates.

I won't defend the mediocre rate part, but lots of us keep money in uninsured accounts. I have various money market accounts that are uninsured. In fact, I don't have any that are insured. I've got one with Wells Fargo, one with PayPal, one with Schwab, one with H&R Block brokerage, a couple with Vanguard... The only things I have that are insured are my checking account and a CD.

[maat55]

Money in secured places is money just sitting around. Investing is a risk you must take to make gains.

[BCHGRL]

Not to sound harsh, but if you are a financial advisor, why are you coming to this board for help to make a plan? It seems to me that a financial advisor would know how to save for the future and how to go about it.

[Hot dog]

I would think that dr. go to other drs. for diagnosis. No one person can know everything. I know I like to hear lots of people's opinions degree or no degree in whatever subject is being discussed. Just because I have a degree in a certain field doesn't mean that I can't learn something from someone without a degree

[Gruntina]

I have experience credit counseling, they just give you a finance workbook. They don't really teach much but to extract from a book. I can imagine no one really takes this information seriously until they are in dire need of help.

Its more of "The teacher shows up when the student is ready to learn"