Tips for Investing in Youth

[quote]Aero51 wrote:

[quote]usmccds423 wrote:

[quote]Aero51 wrote:
I also think a lot of those charts aren’t applicable in todays economy for young people because of these fucking student loans. [/quote]

The type of loan is irrelevant. Interest is interest is interest. Saving on interest expense is real money in your pocket.

[quote]
I owe 66 grand with a 6% interest rate, which requires laying out about 700$/month to pay it off in 10 years. [/quote]

Is that the minimum payment? Can you afford to pay $50-$100 more?

[quote]
It is basically financial slavery for a few reasons, but I wont get into those views here. [/quote]

That’s probably good thing because most here are going to disagree. Slavery has never been voluntary last I checked…

[quote]
I see a lot of people scambling to pay it off as fast as possible, and I just don’t know if that is the smartest way. [/quote]

It’s very smart.

[quote]
What is the point of living in poverty for 10 years? [/quote]

No one has suggested that. Everyone is saying to be frugal and plan for long term financial success.

So what? Who’s responsibility is it to pay off a loan?

[quote]
I absolutely cannot afford above 500 (which I am paying now). [/quote]

I find it hard to believe you couldn’t re-prioritize and pay a little more.

[quote]
2) It is financial slavery for a few very serious reasons. [/quote]

No it’s not. It’s not slavery at all in any sense of the word.

[quote]
Amongst them student loans cannot be discharged in bankruptcy (they are in the same category as child support and court expenses, so if you miss a payment you can have your wages garnished, go to jail, lose your retirement and social security, permanently destroyed credit, etc). [/quote]

Did someone hold a gun to your head and make you sign up for a student loan? Were you born into student loan debt? Will your loan end at some point?

[quote]
You can go to vegas, gamble, lose everything, and get forgiveness [/quote]

Is that what bankruptcy is, forgiveness? Lol…

[quote]
, yet you have to live like shit for the next 10-30 years if you went to college? [/quote]

Hardly.

[quote]
I’m sorry, but you know that is bullshit and completely unreasonable. [/quote]
You chose to pay for school through a student loan. THAT WAS YOUR CHOICE. No one forced you to go to school in the first place and no one forced you to pay for school through a loan.

[quote]
Not to mention congress doubled the interest rates around 2013, just because they could. If they raise them again I’m not paying. I’m done getting taken advantage of. /endrant [/quote]

And that would make you an entitled asshole in my opinion. You got an education knowing you would have to pay for it afterward. Now you don’t want to pay the piper. That’s horse shit.

[quote]
3) It is not a matter of suggestion it is a matter of fact. Between rent, car loan, electric/water bills, and taxes, there is not room for anything else. Do you understand what that means? No savings, no retirement, no vacation, no saving for a house, no new clothes, no emergency bills, no additional investments in education. I am paying less so maybe I can afford these things, maybe invest in myself and make more money and live a better life. [/quote]

Do I need to break the violin back out?

Lol… I’m 29 years old. I inherited $40K in student loan debt when I got married (which we paid off in 3 years). I just wrote a check for $2,400 for one graduate class. I drove an 89 Camaro for nearly 10 years and it had 80K miles on it when I bought it for $500 dollars. My wife drives a used Honda Civic with 140K miles on it.

Stop complaining.

But… to answer your question, my plan now is:

  1. Sell the car, get something around 2 grand in cash (which I can afford), this will free up 350/month
  2. Pay loan at $650/month
  3. save that extra 100
  4. invest in myself (this includes classes, whatever ive got going on now)

[quote]Aero51 wrote:
But… to answer your question, my plan now is:

  1. Sell the car, get something around 2 grand in cash (which I can afford), this will free up 350/month
  2. Pay loan at $650/month
  3. save that extra 100
  4. invest in myself (this includes classes, whatever ive got going on now)[/quote]

That’s a reasonable plan and I think it will serve you well in the short term.

shit like this makes me realise just how hard I suck at being a grown up

USMC, are you in the military? If so I believe you get some nice housing benefits right? That makes a huge difference. Ive got one of my best friends in the airforce and they cover him up to 1 grand a month.

[quote]Aero51 wrote:
I’m not paying. I’m done getting taken advantage of. /endrant

[/quote]

Sigh… You owe your college a tuition refund, or they owe you one.

So, you signed for a loan, used those funds to get an education, and now that your, gasp, expected to pay back that money you feel you’re being “taken advantage of”?

Jesus…

Stay out of the stock market, it isn’t for you, based on this.

You don’t think doubling the interest rate or tripling it is being taken advantage of?

[quote]Aero51 wrote:
You don’t think doubling the interest rate or tripling it is being taken advantage of?[/quote]

No. Do you understand what interest is, and why it is?

So you are saying, if you owe say 50 grand on a car at 3% interest, the lender calls you up and says they are doubling it to 6, you wouldn’t have a problem with that? Then 2 years later triples it to 9? You are ok with that? I think you are lying.

[quote]Aero51 wrote:
So you are saying, if you owe say 50 grand on a car at 3% interest, the lender calls you up and says they are doubling it to 6, you wouldn’t have a problem with that? Then 2 years later triples it to 9? You are ok with that? I think you are lying. [/quote]

I wouldn’t pay 50k for a car. Nor did I pay anything remotely close to what you did to go to school.

Did you not read the terms of the loan you signed for? My interest rate can’t be changed.

[quote]Aero51 wrote:
USMC, are you in the military? If so I believe you get some nice housing benefits right? That makes a huge difference. Ive got one of my best friends in the airforce and they cover him up to 1 grand a month. [/quote]

I use to be on active duty, but got out in 2008. The housing benefit was nice at the time (I only got it for about 9 months). I actually lived on base so I got a 2 bed-room rancher rent free as opposed to BAH in my paycheck.

[quote]countingbeans wrote:

[quote]Aero51 wrote:
So you are saying, if you owe say 50 grand on a car at 3% interest, the lender calls you up and says they are doubling it to 6, you wouldn’t have a problem with that? Then 2 years later triples it to 9? You are ok with that? I think you are lying. [/quote]

I wouldn’t pay 50k for a car. Nor did I pay anything remotely close to what you did to go to school.

Did you not read the terms of the loan you signed for? My interest rate can’t be changed. [/quote]

That’s a good point and why I can’t understand why a person would buy a house with a variable rate mortgage.

[quote]countingbeans wrote:

[quote]Aero51 wrote:
So you are saying, if you owe say 50 grand on a car at 3% interest, the lender calls you up and says they are doubling it to 6, you wouldn’t have a problem with that? Then 2 years later triples it to 9? You are ok with that? I think you are lying. [/quote]

I wouldn’t pay 50k for a car. Nor did I pay anything remotely close to what you did to go to school.

Did you not read the terms of the loan you signed for? My interest rate can’t be changed. [/quote]

I had to take out loans from the fed. Because my dad had savings we got 0 financial aid even though my mom cant work (disabled) and his income was pretty modest. My dad pushed me to go to private school, told me it would pay for itself, so I took his advice thinking he knew best.

I didn’t really read or veto this info, but it could help you a lot Aero. You could use the $2K to refinance into a fixed rate loan.

http://www.magnifymoney.com/blog/college-students-and-recent-grads/refinancing-a-student-loan1091646352/

Here’s another:

And another:

Thanks us, this particular paragraph is why I have been apprehensive about refinancing

“Don?t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won?t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can?t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.”

[quote]Aero51 wrote:
Thanks us, this particular paragraph is why I have been apprehensive about refinancing

“Don?t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won?t be able to make payments for a few months. Once you refinance, you may lose flexible Federal payment options that can help you if you genuinely can?t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.”

[/quote]

Well, ya, that is why the loan terms (which you called predator practices) allow you to pay less than the accrued interest. It’s a protection.

Your choices are: Keep the variable rate loan and hope interest rates decline (unlikely) or remain stagnant (also unlikely) or refinance into a fixed rate loan so you know exactly how much your monthly payment will always be and exactly when the loan can be paid off, but accept the greater risk of default.

Imo, the fixed rate loan is less risky.

[quote]usmccds423 wrote:
That’s a good point and why I can’t understand why a person would buy a house with a variable rate mortgage. [/quote]

Because they intend to stay in the house less than the full term of the loan.

iow, if you’re window is 5-7 years, a 7 year ARM makes a lot of sense. Even if you stay 8-10 years you may only be in the loan for one or two adjustments higher.

A 5 year ARM could make sense for someone buying their first condo knowing that they’ll probably be out of it and into something bigger in 3-5 years.

[quote]Dr. Pangloss wrote:

[quote]usmccds423 wrote:
That’s a good point and why I can’t understand why a person would buy a house with a variable rate mortgage. [/quote]

Because they intend to stay in the house less than the full term of the loan.

iow, if you’re window is 5-7 years, a 7 year ARM makes a lot of sense. Even if you stay 8-10 years you may only be in the loan for one or two adjustments higher.
[/quote]

That’s true.