A little advice...

To the already good list of books that have been mentioned by others, I would add Personal Finance for Dummies and/or Investing for Dummies. These are great plain language places to start.

To me, paying down your credit cards should be your first priority, then start investing (but you should snag any match to your 401(k), although it doesn't sound like you'll have a match for much longer?).

I started learning about investing in individual stocks by reading everything I could get my hands on, and paper-trading various strategies to see how they worked without the benefit of hindsight. In other words, I kept a pretend portfolio on a spreadsheet and "bought and sold" individual stocks as I saw fit. As I started to get an idea of what worked and what didn't, I started real trading of individual stocks with $2000 in an IRA, while also buying mutual funds in a 401(k). As others may point out, $2000 is not enough to minimize trading costs or to diversify properly, but it's enough to get you learning the hard lessons that only real money can instill in you, and it's not enough to kill you if you lose it all.

Good luck,

-The Other Will

Reply to
Will Trice
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"Will" wrote

You are right to have this feeling.

Forget about investing in stocks.

Put all your extra cash into paying off the two credit cards. Do NOT use the line of credit. Do whatever it takes to live within your means, now and after you pay off the debt. When you have only the student loan as debt, post back.

Will, god willing you will take the following very seriously: Do not get married with this debt. Financial problems are a leading cause of divorce. How on earth can you ethically ask this woman to marry you when you are not only penniless, but actually owe money? Money isn't everything. But it's like 50% of everything. Ya gotta eat and have decent shelter, etc. and not be working so hard you can't enjoy life.

Reply to
Elle

As Other Will stated, if there's any match on the 401(k) contribute just to get the match. Then pay off, highest rates first.

For what it's worth, "the Intelligent Investor" is quite readable, 300 pages or so, "Security Analysis" on the other hand is a 600 page deep dive which any serious stock picker needs to read to become successful. Warren Buffet was a student of Ben Graham, and Mr Buffet is acknowledged to be a living legend when it comes to picking companies. You may want to read up on him as well. These comments answer your desire to pick individual stocks. Given the rest of your situation, I'd advise against it. Between the pending marriage and job outlook, you likely won't have the time to do this the right way. I've heard it said that one needs to devote an hour per week for each individual stock they own. This would mean either having a small portion of one's portfolio in individual stocks (my situation) or to invest through funds and/or ETFs.

It is a good group, you will find it reaches an intelligent consensus on most issues, but in any case provides great insight into financial matters.

JOE

Reply to
joetaxpayer

What about your 401k? 401k's offer limited investment choices, but maybe that's a good way for you to get your toes wet. You can also direct the investments in your Roth.

Check your math. That's a 10% increase. I only mention this because it's another good lesson. You can't evaluate your returns in a vacuum. It's important to bear in mind what the market, as a whole, is doing. For example, from 3/1/2006 to 3/1/2007, the S&P 500 was also up 10%. So really, you just got the market average.

I believe there's a lot of money to be made in real estate. But, as with any investment, the risk is proportional to the reward. In addition, you need a lot of money to get started in real estate. It's also a lot of work.

Good luck with that. I live in Fairfax, so I know exactly where you're coming from. There's some regentrification going on in SE, including Anacostia and, of course, the area around the new baseball stadium. It might be too late to get in on that at a reasonable price. But it could be a good place to look.

Like I said before, I think you'll be hard pressed to find a lender offering more than 95% financing. That issue aside, I think the 2- mortgage approach (80/10/10 or 80/15/5) is superior to paying PMI because the interest on the 2nd mortgage is tax deductible. However, like Jim said, there have been rumblings about PMI being tax deductible, as well. How long that deduction will stay around... is another matter.

--Bill

Reply to
woessner

I remember reading a few articles where an analysis was done showing that the percentage of a person's annual income that they saved every year had a much bigger impact on their net worth at retirement than the rate of return they got on their investments.

In other words, figure out how to regularly put significant amounts of money into savings as your first priority, and only when you have substantial sums to invest should you consider "playing the market."

Andy

Reply to
Andy

I'm always curious about advice taken out of context or authors who are recommended or dissed. The posted who commented on Zvi Bodie's strategy for going exclusively with TIPs/iBonds had me read his book to see if there was more. (on a side note, Elle had quoted Robert Shiller as having offered the same advice) Neither gentlemen are slouches, and their advice was sound at the time, especially Shiller calling the internet bubble as he saw it, and coining the phrase "irrational exuberance".

That said, I borrowed Cramer's latest, "Mad Money, Watch TV, Get Rich" and at 198 pages, finished it pretty quickly. First, his booked persona is far more level headed than he appears on TV. Say what you will about the mad man on CNBC, but the author has an intelligent story to tell. He does not recommend individual stock picking for one's investment portfolio's bulk. He starts by suggesting that one have the rest of their finances in order and start with individual stocks only after they are on the path to a properly funded retirement, IRA, 401(k), etc. And then, with the $10,000 minimum "extra money" diversify so the five chosen stocks are in different sectors. He also advises that one needs an hour's worth of homework per week for each stock one owns. That seems like a conservative, not cowboy, approach. It also limits how many stocks someone with a day job should own. The book also contain a stock worksheet which contains question one should answer before choosing a stock. It's listed here, along with his

25 rules of investing;
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If you put aside your notion of the TV pitchman (and he's self deprecating about that persona in the book) he comes off as level headed, rational, and worth the few hours it takes to get through the book. The real question is this - have I learned something from this book I will use? Maybe. My stock picks are minimal, I'm mostly in index funds and ETF depending on the account. My last individual stock pick was MO (Philip Morris before the name change) and the misses vetoed the purchase. JOE

Reply to
joetaxpayer

"joetaxpayer" wrote

Tiny little nitpick: Shiller said a few years ago (c. 2004 IIRC) that given a choice between all stocks or all TIPs, he would advise all TIPs. Given a third choice such as "some of each," he might choose it.

Nice digging on this Cramer pundit. I like your point: "The real question is this - have I learned something from this book I will use?" Sort of like the exchanges here: Maybe lots of dreck comes up, but was there a crystal or two as well?

Reply to
Elle

Will

Please see my email (darkness39 at yahoo dot com) regarding Robert Kiyosaki.

Smartmoney did a very interesting and revealing investigation of him and his business affairs, a few years back.

His stock investment strategy (penny stocks, hot IPOs) is as far from a sensible investment strategy as I can possibly imagine.

D.

Reply to
darkness39

I first want to say that the level of advice I am receiving from each of you has been astounding.

To Elle, I am sorry to say that the wedding plans are already in the works and the financial debt that both my fiance and I have is a goal that each of us are working to pay off as quickly as we can and to let that hold us back from getting married isn't something that we are willing to sacrifice. I understand the fact that many divorces are caused by financial problems. I have first hand experience with this as my parents divorced over this issue. However, with todays costs of going to college and cost of living, as well for my fiance, trying to keep up with the Jones' is something that got us where we are today with the debt we have. I saw college as a worthwhile investment. Trying to keep up with the Jones', not so much a worthy investment, but something I am trying to break as a habit. But $100 trips to Target is something that she is slowly changing and I almost have her cured of that emotional need. For me, the weakness is Best Buy and I used to have to go there once a weekend, but now I can go months without going there. Progress is being made by both of us. We see ourselves as a team and when one is settled with their debt (most likely me, since I have less than she does) we will focus on hers. I have faith in that department.

Thanks to Bill for the insider advice on the Washington, DC housing market.

Also, thanks to the other Will for letting me know how he got started in investing in stocks.

-Will

Reply to
Will

Been there, done that, bought the t-shirt. Have you discovered that you can eat free at the receptions? (Make friends with whoever opens the mail to learn about the best ones.) The legendary Senate Bean Soup in the Dirksen cafeteria is good, and they throw in the crackers for nothing!

Seriously though, the problem is that *so* many people want to work on the hill that virtually all of the positions pay VERY poorly. Granted, you might work your way up to a more substantive job, maybe even a slot on committee staff. But that's a long shot; the political equivalent of making the big leagues. And even if lightning strikes, you'll always be a civil servant living in a city where the cost of living (especially real estate) is well and truly insane. Unless your fiance is an associate at a law firm, it's going to be a penurious existence.

If the hill job is a means to an end, like a lucrative private sector position in government relations, lobbying etc. that's fine. But working there for more than about 36 months is not a smart financial move, no matter how much fun it may be.

Time for a reality check here.

You have $12K in debt with ZERO income and you propose to borrow more (at nearly 15 pcercent!) so you can continue to work FOR FREE in the *hope* that you *might* get a job on the hill. If you were a third year law student with an offer from Big, Bigger & Ginormous living off your credit cards for a few months while you study for the bar might make sense. But even if this hill thing works out, you're going to be a legislative correspondent answering mail for $25K per annum. Granted, that's more interesting than working at Thrifty Rent A Car (and you don't have to wear a nametag). But you gotta ask yourself if you (and your fiance) can afford to do this. Unless she's hauling down some major scratch, I just don't see how you two are going to get by in D.C. -- let alone save any money for retirement, a home, or to start a family.

If you find a job on the hill, you'll be eligible to contribute to the Thrift Savings Plan - which is the defined contribution plan that covers federal employees. I would recommend putting five percent of your salary into the TSP. This will take full advantage of the match, whichwill be an additional five percent. As for how to invest that money, I recommend one of the Lifecycle funds. Your other priority should be PAYING DOWN DEBT. If you get monetary wedding gifts, pay down the loans. If you can return the excess toaster ovens for cash, pay down the loans. RESIST the temptation to start married life with major expenditures. As others have noted, piling up debt is a sure fire way cause trouble.

Once you're debt-free, start saving for your house. This money should go to a boring savings account at your bank or credit union. When you think you have enough for a 20 percent down payment, surf over to

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and get in touch with Dave Kolakowski, who just happens to be the greatest buyer's agent in the D.C. area. (No connection, just a satisfied former client.)

I applaud your idealism. We need more young people who want to make a difference. But don't ruin your financial future in the process.

Paul Michael Brown (Who moved to Capitol Hill in 1981 with everything he owned in his Datsun 510.)

Reply to
Paul Michael Brown

To all:

You are the best. Thank you for the continued discussion and I hope that this goes further. I will definitely look into those "...for dummies" books. JoeTaxPayer, thanks for reviewing the book and seeing what I see while I am in the middle of reading it (currently I am around page 145). I see a sensible approach to understanding how to view the fundamentals/approach to looking at a stock vs. looking at something you buy and saying "hmm...I like the product, I use it, I'll invest in it" I would rather understand how market time-frame can affect certain stocks, what the P/E ratio is and how to compare it to other stocks in the same sector. For someone who has barely skimmed the surface of this issue, it is worth it for me to at least be exposed to the issue to understand why some stocks do better than others.

Paul Brown, thanks for giving me perspective into this somewhat "idealistic" idea I have of working on the Hill. I think I am going to work on being realistic and perhaps I can find another way to impact society in a great way.

Elle, please clarify what you meant by "Do keep lurking here. I want to start seeing your intended posting here, too!" I am having trouble understanding what you mean by my "intended posting."

Thanks and keep the communication coming.

-Will

Reply to
Will

"Your Intended" means your fiance.

Reply to
bo peep

Thank you. She really is choosing not to focus on financial matters before the wedding because she is on another forum gaining information from others regarding good wedding ideas. I am out to get ideas at this point.

Will

Reply to
Will

How much we spending on the wedding?

I saw an article in the NY Times sometime in the last few years that talked about couples going into (further?) debt to pay for a wedding, leading to more strain, leading to a mighty short period of wedded bliss...

Gotta talk about these things sooner rather than later.

My 1.5 cents or less. :-)

"Will" wrote

Reply to
Elle

We are only spending as much as our lodging and flights to the west coast from the east. Her father has come to our rescue. So, at least we are in the clear there with that matter.

-Will

Reply to
Will

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