Sell the car and buy a cheap one, reduce the phone plan (I took mine from $110 with ATT down to $35 with cricket and no drop in quality), cut back on TV/internet (verizon fios offers a $50 50/50 internet + local TV plan and possibly cheaper ones, look into whatever option your local provider has if you need internet), buy bulk/cook at home, and give yourself a BUDGET for certain things like new clothes, going out, etc. I bet you can easily squeeze another $2-300 just by making some of the above changes (not counting the car payment disappearing).
If you go over to personal finance in reddit you can look at the stickies there and get an outline of just how to do this. I haven’t seen you outline your actual expenses and your monthly income but I’m betting you can make some improvements to it in some way. I don’t think investing is the way to go right now as you will basically be praying for a gold mine of a stock and that’s how you get yourself into a worse situation.
EDIT- You aren’t in the financial position to dabble in stocks. Right now you are treading water for various reasons. You need to get out of “survival” mode before you can move on to investing
Roommates can help with the living expenses.
Living alone is pretty baller, but bills are cheap split 3 or 4 ways.
Come down South. You must be getting crushed by taxes up North.
[quote]FlatsFarmer wrote:
Roommates can help with the living expenses.
Living alone is pretty baller, but bills are cheap split 3 or 4 ways.
Come down South. You must be getting crushed by taxes up North. [/quote]
Speak for yourself bro. We’ve got too many yankees down south already.
Just a few simple pointers for when and if you eventually decide to start investing.
Your net wealth is measured as your assets minus your liabilities. This means that your wealth will not be higher if you take out 10k loan and invest it in stocks, bonds, or whatever you choose to - your wealth will remain the same, but the amount of risk (and usually the expected payoff) will be higher. Like many before me mentioned, investing the money instead of repaying the loan makes sense only if you expect the returns from your investment to be equal to or higher than the rate of interest on your loans, with similar or lower level of risk.
As for different asset classes - your gut tells you that it might be the time to invest in commodities, but does you gut tell you that gold, oil etc. don’t earn anything? If you own a gold bar that you keep stored under your bed it will not pay you any dividends, speculating in these is essentially a zero sum game. If you invest in stocks, you are basically buying an equity stake in a company that gives you the right to a portion of the company’s assets. These very assets are used to create cash flows to the company, and as a shareholder you will benefit from this.
It is also worth it to remember, that investors don’t make their moves based on the state of the world today and yesterday - their decision are driven by the expected state of the world in the future and the uncertainty related to this. When the rates are expected to go up, this expectation is included in the spread you pay when you take a fixed rate loan vs. floating. Same goes for expected stock market corrections etc. - it is reflected in the prices, at least to a certain extent, I won’t dive in to the literature re: behavioral finance here.
The bottom line when you are contemplating on becoming the next Warren Buffet by investing in stock markets:
- In a long run, equities is a good investment if you can handle the risk. It makes more intuitive sense to look at the returns you derive from these markets as the compensation you receive for carrying the risk that sometimes the markets go down and sometimes they go up. Understand this before you lever up and go all in on the stock markets.
- Most professionals with degrees fail to generate profits that are higher than the market average. Human brain is not necessarily designed to comprehend the uncertainty of the future - we create all sorts of stories to make purely random events seem somehow expected and completely rational in the hindsight. What your gut tells you is really of no more value than whatever expert statements you will read from the front page of WSJ that the stock market is currently overvalued. You most likely don’t have any special skills that make your market timing and stock picking abilities greater than the average. This is important, because in order to gain returns higher than the market average, you actually have to do better than average - these ‘abnormal’ returns you earn over the market return are a zero sum game. For you to be able to earn more than the average, there has to be someone who will earn less.
The best thing you can do for yourself here is to recognize this ‘overconfidence bias’, and invest in a index fund. Look for ETF with as low expense ratio as possible, tracking an index that has as wide diversification as possible (i.e. preferably something like MSCI World instead of S&P500, since you are already plenty exposed to the US economy given that you work there etc., although in the globalized world we are more or less financially married with one another anyways).
Turned out slightly longer than intended, tried to keep it as common sense and non-technical as possible, but do ask to elaborate on some things if you are interested.