Investing or Personal Finance? What makes sense?

Question

Hello! My wife and I are new to investing, and we just finished Rich Dad, Poor Dad. We have about $120,000 worth of college debt, but we're hoping to learn to master our money and start real estate investing within the next few months. We want to know if we should begin reading another personal finance book to learn money management or start reading about how to invest in real estate. What advice do you have?

Scott Trench · Answer

Personally, I think that personal finance comes before real estate investing.

I don't think that necessarily means "Pay off all the student loan debts" but it does mean:

- Having a large spread between income and expenses by generating a strong income and living well, well below your means

- Having a stockpile of personal cash - enough for a 3-6 month personal emergency reserve

- On top of that, having cash for the down payment, closing costs, expected repairs, and a strong buffer (perhaps $10-$15K at minimum for a $400K property) for real estate purposes

- Having strong credit, and no bad debts

This might take many families 12-18 months, but I think that it is worth it to enter real estate investing from a position of financial strength, rather than put all the chips on the table in an all-in bet. The time it takes to grind out this kind of personal financial position is a great opportunity to invest a few hundred hours in podcasts, books, videos, networking, forums, etc. to emerge with a really strong mental foundation to invest in real estate.

Investing or Personal Finance? What makes sense?

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