Young Graduate. Should he follow the money?

Got an email from a loyal PDITFer. Here’s what it said…

I have a bit of a decision to make and heard from a birdie that you are the man for financial/life questions…i kinda just need a wall to bounce ideas off of.  Here’s some background info first. I just graduated, have a great job lined up with the company I want to work for, doing what i want to do, and in the right ballpark money wise ($55-60k)…not a home run but definitely a solid single/double, and great benefits plus a 6% 401k match (great right).

Problem…just got some info on a possible job working in a different city as an entry-level civil engineer for that city STARTING out at $70-$75k which could easily jump a year later. Now I don’t want to toot my own horn but I think I am a great candidate for the job and have better than a 50/50 chance of nailing it…not exactly the job i want to do though.  My questions are these, should I at the very least apply for it, take it if i get it, or stick to my guns (the job i already have lined up, since it is very much what i want to do and has a lucrative career path of its own)?

Ahhh, To be a whore to money, or not to be, that is the question. One that you already know the answer to. Being that you are a recent college student I am going to assume you were either not working, or only working part-time while in school. This means you have been use to living a minimalist lifestyle (hopefully). Although making $70K/yr would be awesome, I think you’d find a $55-$60K salary will afford you virtually the same lifestyle. Heck I graduated college making $38K/yr and let me tell you, I felt like a millionaire.

Let’s look at two statements you made to describe these jobs. For the first position you said…

“I just graduated, have a great job lined up with the company I want to work for, doing what i want to do

And for the civil engineering position you said…

“…NOT exactly the job i want to do though”

That puts the nail in the coffin as far as I’m concerned. The lower (but still adequate) paying position sounds like a great gig, with great benefits, and great potential. The higher paying position sounds like the only thing it has going for it is the pay.

I personally made a commitment to myself to never work a job I didn’t love. I mean come on, we are WAAAAAY to young to be miserable in our respective careers. Not even money can make a crappy job fun. All it can do is make a crappy job a little less miserable. Besides, you can always find another miserable position down the road if you want, but the good jobs are few and far between.

Nonetheless, I would still encourage you to apply for the higher paying gig. If nothing else it will give you some more interviewing experience and a chance to learn more about the position. I’m totally convinced options are a good thing, so I say open as many doors as possible. But for now I’d stick with the job you’d enjoy doing. Oh and I need you to pinky promise me you will live well within your means, regardless of your pay?!

What would your advice be to our recent college grad? Would you sacrifice a great job, for a mediocre one that has better pay?

Pay your pops.

A reader asks…

My husband and I are doing fairly well financially, but we wanted to see what we could be doing better. My husband is very big into investments and I was always very big into liquid savings (I watch a lot of Suze Orman). After meeting with our financial adviser, he said he felt like we should only have 5-10k in an Emergency Fund and max out our Roth, invest more in our 401k and lastly invest in our mutual funds. I can get behind this, it makes sense to invest our money as opposed to having it sit in a savings account not earning interest.

The one area I’m unsure of though is that he told us there was no need to be throwing money at our debt because the interest rates are so low and we are making much more in our investments. He didn’t say it was “bad” to pay off the debt, just said he thinks we should focus on the investments.

As far as debt, we have our home, two cars and then about 25k in student loans. My father paid off my student loans, so I’m actually just paying him back at 4%, so it is fairly “secure” debt. I personally would rather get rid of all of our debt, but also see his point on the fact that we would be earning more on our money if it is invested.

As of right now this is a rundown of our finances, we make about 140k combined gross income, our house is 216k with 3.5% interest on 30 year mortgage, one car has 4k left and the other 13k both under 4% and then the 26k in student loans i’m paying my father for. Right now we have about 18k in liquid cash, although we are expecting to have to pay 5k in taxes this year. 

What are your thoughts on investing vs paying down the debt?

As always, I’ll provide advice on what I would do in this situation, and then you all should chime in with what YOU would do in this situation.

1) Is your financial advisor fee-for-service or commissioned base? If he works off a commission fire his butt and find a fee-for-service advisor. Seriously, do that.

2) I’d be cautious of the sales pitch your advisor gave you about the stock market. Yes, it’s true savings account interest is pathetic. Yes, the stock market was up 25% last year. But don’t forget, the markets just lost 326 points yesterday. They were down heavily from 2007 to 2011.

Tread carefully when you write things like “but I also see his point on the fact that we would be earning more on our money if it is invested.” Sometimes that’s true. Sometimes it’s not.

3) I would pay off my student loan ASAP. Even though the interest rate you’re paying poppa bear is ony 4%, I’d get rid of it fast. Why not the car or mortgage first you ask? One reason.

I hate owing family money.

Super nice of him to offer to cover your loans for you, so why don’t you return the favor and pay him back quickly. This immediately removes any potential awkward business/family relationship. With $140k/yr in income you can knock this out in a few months.

4) After paying dad back, do whatever the heck you want. I’d probably pay off my cars and then start investing more heavily. That said, if you want to focus on investing and keep the car loans around a little longer I don’t have much beef with that. Contrary to what many may say, you can have debt and still be financially stable.

That’s all I got.

What say you dear readers?

We’re engaged, should we buy a house now?

Screen shot 2013-02-20 at Feb 20, 2013, 8.50.46 PM

John Doe writes in…

Ninja! I read your blog everyday, it’s awesome! I recommend it to everyone I talk to… My fiancé and I have been together for 6 years and recently became engaged. We have lived together the last 3 years. We are really interested in buying a house. We are getting married in September. Should we wait until we are married to buy a house? Why?

We are both 24 years old. No credit card debt, 2 car payments that will be paid off within 4 months, and I have student loans I am punching. We live in a small Texas town so housing prices are a little different then what you have in Seattle.

Let me know what you think.

Thanks.

Don’t do it!!!!!

How’s that for telling you what I think? Haha! I guess I should preface this post with the reminder that I love me some Jesus. As a result, I do my best to follow his teachings. Back in October 2009, I wrote a post titled “Leave me alone, I don’t want to live with my girlfriend.

Marriage to me is a pretty big deal. I didn’t want to play the part until I was actually married. That means, even though Girl Ninja and I dated for 4.5 years, we never had sex, slept in the same bed together, went on trips together, etc previous to getting hitched. This also means, I didn’t think it was appropriate for us to start combining our finances until we were legally a family. Her money was her money, and my money was mine, until legally we became one family unit.

Okay, so those are my personal convictions and since I was asked for my opinion I thought I would share them. That said, I don’t live under a rock, and I realize people don’t necessarily value my values. Regardless of my personal moral convictions, I would recommend you hold off buying a home. Here’s why…

  1. The possibility exists that the wedding day never comes. It’s probably a small chance, like not-even-1%, but it’s still a possibility. Until you’ve said “I do.” nothing is official. You’ve waited all this time, another seven months isn’t going to kill you. No one wants to own a home with an ex-fiance.
  2. I don’t foresee house prices or interest rates changing dramatically by fall. Sure prices could go up a bit, or interest rates my raise half a percent or so, but I don’t think there is going to be a huge change. I’m far more concerned about the layout, condition, location of our future house than I am about a 3.5% vs 4% interest rate.
  3. You live in Texas, and as you mentioned, it’s a different market than Seattle. I remember being on business in Houston seeing some AWESOME homes for sale for like $120,000. It boggled my mind. My understanding is the market it also a little more stable than Seattle (not as many ups and downs). If a house bumps up from $120,000 to $126,000 (a 5% spike) in the next year, that will have a negligible effect on your monthly payment.
  4. You still have other debt. Granted it doesn’t sound like it’s an overwhelming amount. But if you wait to buy a house AFTER you’ve paid off your cars (and/or student loans), you should qualify for a larger mortgage. Maybe this would afford you the opportunity to buy a better house in a better neighborhood? I plan on skipping over the “starter home” neighborhoods and buying something we could be happy with for the long-term. Real estate transactions are expensive, so the less of them you have, the more equity you get to keep.
  5. Why do you want to buy a house now so badly? Is there something I’m missing that makes buying today a better decision than buying tomorrow? Try and keep emotions out of the house hunting experience. Wait on a great property. You should be comfortable buying a house two years from now if that’s how long it takes to find a place that meets your standards. I’ve been saving our down payment fund for five years now, it’s been a very slow, methodical, and intentional process.

As I always say when I throw out my two cents, I’m just one person, with one opinion. You have to do what you think is best for you.

Let’s see what some other PDITFers have to say. Would you buy a house with your significant other prior to tying the knot? Why or why not?

Another look at savings vs paying down debt

I love getting mail from PDITF readers. It makes me feel like I’m important, even though I’m really not. Well, it’s time we help another Debt Puncher out and share our two cents on his situation. His email says…

I just paid off the first of my 9 (yes…credit+retail) cards. It’s a huge achievement. I’m currently following the high-interest method to keep motivation high. My top priorities are:

*Paying off credit card debt
*Establishing a buffer in checking

Would you apply all your monies to paying credit card debt first or vice versa? Or set-up a plan so both can be achieved albeit at a slower pace. According to my projections, I can reach both these goals within a year.

Well, Mr. Anonymous Reader Guy, if I were you I would stop paying your credit cards, forget about savings, head to Vegas, and bet it all on black. Thanks for stopping by, hope I helped 🙂

Haha, I’m only kidding (unless you’re feeling lucky then GO FOR IT!). I’ll answer your question by sharing a little bit about my journey. As you may already know, I started my PF journey with $28,000 in student loan debt, and just a few hundred dollars to my name. Making the decision to save vs pay down debt is not an easy one. In fact, I wrote this post, this post, and this post about it.

Personally, I hated the idea of not having any liquidity. Dave Ramsey suggests saving up $1,000 in a checking account and throwing all discretionary income at your debt. It’s not bad advice, but it’s not what made me feel comfortable. I totally would have lost sleep knowing I couldn’t even write a check for next months rent if crap hit the fan. You can’t pay rent with a credit card so I needed to have money in the bank.

That said, I would not recommend doing what I did and OVER save. At one point I had $20,000 in the bank,  but only $17,000 in student loans (you can read about it here). If I could go back in time, I would give myself a swift backhand to the face for that one. I totally perverted my enthusiasm for saving and kept that student loan around longer than I should have. I was a very bad Ninja.

So my advice to you is probably going to be the most incredible advice you have ever heard in your entire life. Go get a pen so you can write it down. Ready?

Don’t drink and bike, you might spill your beer.

…Oh wait, that was advice I gave to my alcoholic friend.

What I meant was, you should probably save some predetermined amount ($2K, $5K, or whatever) while making minimum payments on your C.C. But the second, and I mean the second, you’ve accomplished that goal, pay down those CC’s like there’s no tomorrow. It may not make the most financial sense to keep your CC balances a little longer, but if you’re like me it makes a lot of PERSONAL sense. Besides, it sounds like you are gonna knock out both goals pretty quickly anyway, so the difference in interest paid is probably relatively small.

That said, I realize I am only one voice in this PF world, so I’d like to turn the soapbox over to the PDITF readers and see what they would do. How much did you put in savings before attacking your debt? Anyone else out there like me and OVER save? How do you balance financial sense (paying down the CC ASAP) with personal comfort levels (saving up a decent chunk in savings)?

If you have any questions, comments, or just a funny YouTube video you want me to check out, feel free to shoot me an email.

Kids: “they will cause you a lot of stress and unhappiness”

Well I spent almost my entire weekend on the couch yelling at my TV. I love me some Olympics and I love me some USA. In fact, I’m only getting to writing this blog post now (11:45pm) because I just finished watching the US girls gymnastics team compete. I seriously love the Olympics so much that I will watch any sport that has a US athlete in it, even if I have no idea what is going on….yeah I’m talking to you fencers.

Anywhoozle, While I was watching the Olympics my phone chirped at me and I noticed I got a blog comment from a known PDITF hater. Said reader wrote (amongst other things):

“I don’t think you want kids at all. I don’t think you want to get divorced, either. But honestly, if you don’t want kids 100%, you need to let her go and find a man who does. It’s not fair to her.”

I responded,

“Have you ever considered I DO want children. Just not right now. Exactly the same way I feel (and write) about a buying a house. It’s possible to want things in the future. I don’t expect you to believe me, but there is not much I can do about that.”

Then I get this epic email response: 

“Babies are foreign objects to me.”

“I have never changed a diaper.”

“It’s in my best interest to get her to hold off.”

“Babies make me nervous.”

“I have no idea how much work caring for a child is.”

Yeah. That sounds like someone who can’t wait to have kids to me. Not that I care. I’m only approaching this as someone who …okay fine, kind of finds this amusing, and as someone who made the decision not to have children when I’d barely reached adulthood. It’s just funny how your wife is so ready to have kids and you so don’t want them. Because see, someone who wanted kids would get married and have kids. You’re trying to avoid having kids. Simply put, you don’t want them.

Comparing something like a house, that you can sell or walk away from, to a person who may well outlive you and who will demand all of your resources for potentially decades…is ridiculous.

I will share a little insight. I have changed diapers. It’s not pleasant. I kind of envy you, to be honest. I’ve never had kids, but from having siblings I can say: they will quickly deplete your money, they will keep you awake at night, they will cause you a lot of stress and unhappiness, and they are messy and will smear their peanut-butter-covered hands all over your new coffee table. They will get juice stains and crumbs in your new car. You will become an exhausted, burnt-out zombie whose friends will say “Wow, he used to be so much fun. What happened?” You may even grow to resent your children. You may begin taking it out on them. They in turn will resent you. And you’ll probably have to deal with that for the rest of your life.

I don’t even really like you, so I don’t know why I’m giving you the benefit of this information. Having kids is not something to be taken lightly. It’s not “just what people do” after getting married. It is not something to go into half-heartedly, and it’s not something to bribe your wife away from with vacations and presents. It’s something you should want completely. In other words, you should be aching for children as you read what I am telling you. The absence of children should be a horrible hole in your life. You don’t want children with all of yourself. Therefore, I would tell you not to have children. There are already too many people in the world. Your sure-to-be-resented spawn’s existence is not only unnecessary but foolish. You don’t want kids. I know this. You know this.

Please stop fooling yourself. If your wife decides to divorce you, it will be much easier to get over that than to get over having kids. I know you’re Christian and blah blah divorce is a horrible thing, your parents didn’t divorce so therefore nobody does…but guess what. Sometimes, that’s life. Things don’t always go how you want them to.

Realize that you don’t want children, and you will feel better, I promise. Grow up, be a man, and tell your wife, so she can decide if she wants to stay with you or whether it will end your marriage. Just do what’s right, for once.

Epic email right? That’s why I love blogging so much…. It keeps my life interesting. Oh, and Girl Ninja, in case you weren’t already aware…. I’m not ready for kids yet 🙂

 Go USA!!!!!

p.s. I am going to be out-of-town all next week. If you have a blog (or don’t have a blog) and want to write a post to be published on this site while I’m gone shoot me an email and let’s make it happen.

Various things and my face

Today’s post will be a whole variety of things. There’s lots to talk about, but none of it warrants its own blog post. Have fun bouncing from topic to topic.

Up first, Korea. 

Peace out Korea, this Ninja’s ready to get back to Seattle. I’m embarking on my 20 hour journey back to the states today and am so pumped for a few things; 1) Mexican Food. 2) My desktop computer (this laptop gets annoying). 3) Fruit. 4) My bed. And of course…5) Quality time with Girl Ninja. Unfortunately, she is flying to San Diego this weekend, so im gonna hang out at the airport after I land to eat a quick meal with her before she hops on a plane to SD. Depressing, but still excited to see her. Oh, and random frustration; I rented Moneyball through iTunes to watch on my flight back, only to find out a few hours later Moneyball is one of the movies being shown during my flight. Frick.

shot from my Seoul City Tour this last weekend

MANteresting Update: 

Are you sick of me referencing MANteresting yet? You are? Too bad. We launched one week ago and I made a promise that if we had 1,000 sign ups I would reveal a picture of myself sans black bar. Before we get to that, however, I’m gonna share a few other stats about the site.

I don’t know whether I should be ecstatic or cry, but after only seven days MANteresting has generated more pageviews (44,928) than PDITF has over any 30 day time frame (usually around 40,000). Awesome for MANteresting, depressing for my blog 🙁

The average user visits 4.23 pages and spends 4.5 minutes on our site. Thirteen percent of visitors use Internet Explorer as their browser. Which tells Jesse and I, 13% of our users are stuck in 1995. For the love of bacon, download Chrome or Firefox.

And now the part you’ve all been waiting for, did we reach 1,000 users? Drumroll………awkward pause……burping sounds…….NO.

Haha, how you like them apples? You guys are too optimistic, do you really think I would have set a goal of 1,000 users if I thought it was easily attainable? Heck no techno. Only about 1,000 people visit PDITF each day, and I knew there was no way in heck I’d be converting 100% of them to MANteresting. In fact, bloggers are taught to expect a CTR (click-through rate) of about 1-5% on products they advertise. So realistically we should have expected about 20-100 sign ups first day. We had 280ish. We’ve grown every day since, and at last glance, we have 402 users in the books. So it might sound like we failed miserably since we weren’t even close to the 1,000 user bribe, but in reality 400 people in our first week is pretty encouraging.

I don’t want to leave you all empty-handed though, because you really did help me out so so so much. As an act of appreciation I’ve decided I will provide you a picture of 40% of my body, since we are 40% of the way to 1,000 users. Once we hit 1,000, I’ll give ya the real deal (maybe even a picture of Girl Ninja too). Enjoy 40% of me…

Lastly, time for a little personal finance.

A reader wrote in asking…

You probably get inundated with questions like this, but I’m having such a hard time finding honest info on debt consolidation. My wife and I are on a mission to get rid of our debt. One step we’d like to take is get a loan for all our credit card debt. The biggest reason is interest rate.

Do you have a suggestion for a resource for us to turn to?

My answer: No. I have two opinions on debt consolidation. First, every debt consolidation company is evil. I know that’s not true, but 90% of them probably are so it makes finding that 10% extra tough. But more importantly, debt consolidation companies rarely do anything for you, that you couldn’t already do for yourself. They’ll call your creditors and try to negotiate lower payments for you, but what’s stopping you from picking up the phone and doing it yourself? Read I Will Teach You To Be Rich for some insight on how to best approach this and significantly reduce your obligations.

I’m just one person though, some of you out there probably have used, or know someone who has used, a debt consolidation company that didn’t suck. If so, feel free to share the experience in the comments below and help our dear reader friend out. Definitely want to get those CC interest rates as low as possible, I’m just not convinced debt consolidation is the best way to go about doing it. What say you?

p.s. Unless there is free wifi in the airport in Korea, don’t expect a Friday post from me. I’ll be half way across the pacific during your Friday morning. 

p.p.s. My favorite nail from yesterday… Puff Daddy’s never seen a $1 bill before. 

 

Lay off my taxes you filthy Accountant

Got this email from a PDITF reader a few days back…

Do you recommend getting an accountant for pretty much everyone making a decent wage? Currently my wife makes $50,000 a year and I make $70,000. We live in the Washington, DC area. We do no active trading, only W2 pay from our employers, a small amount of unemployment benefits from my wife, 401k and 401k roth contributions, nothing out of the ordinary.

We are new to our city, so I’m not sure if I should just do our taxes online or actually find someone more qualified.

Thoughts? Seems like a wise investment, but I’m really not sure where to start.

That is a good freakin’ question sir. One that I’m not sure I am qualified to answer. All I can do is tell you how the Ninja household operates…

I finished college back in 2007. I got a big-boy job, and for the first time in my life, was faced with the grim reality that I now had to file my own taxes (apparently my mom wasn’t willing to do it anymore :(). Since I only made $38,000/year and hadn’t done much in the way of managing my money, everything was pretty straightforward. I filed through a website called Tax Act in about 30 minutes. It didn’t cost me a dime and I was stoked to get a $400 refund back from the IRS.

Obviously, things have changed quite a bit since then. I got married (dual income!). Moved 1,200 miles for a job (unfamiliar deductions). Our income is much higher than it use to be. We tithe. Could take mileage deductions for some stuff. blah. BLAH. BLAH.

Even though our situation has become a little more complex over the years, we still file our taxes online. Every year I think “This will be the year I finally pay someone to do my taxes for me!” but I never freakin’ do it. It’s probably because I’m frugal. No scratch that, it’s definitely because I’m frugal.

I don’t know if this next statement is completely accurate (any tax people want to verify accuracy?) but my understanding is that itemizing deductions is only worthwhile if those deductions total a greater amount than your standard deduction would. As a married couple our standard deduction is $11,600. Our itemized deductions would be very close to that amount so I don’t see a reason to itemize. I could either show Uncle Sam all the things I’ve done to earn a $12,000 deduction, or I could just take the $12,000 deduction they already offer.

I would totally pay an accountant to do our taxes if we owned a house (thus getting to deduct mortgage interest) because then we would have $30,000 in itemized deductions. But since we have no kids, don’t own a home, aren’t making $500,000/year, and don’t really have any investments outside of standard retirement accounts, things are still pretty simple. I don’t think hiring an accountant is really a bad idea, but until our life gets more interesting we will probably steer clear.

How bout you all? Do you pay someone to do your taxes or do you do them yourself? Was my understanding of itemizing and standard deductions even correct? Should I pay someone to do our taxes this year?