One step closer to investing

21 Replies

Hey everyone!

I have been spending a lot of time researching the forums and listening to podcasts on BP, however, lately I was finding it difficult to decide where exactly to start on the financing side of things.  After continuing to listen to the Money podcast, I found myself on the MMM blog and have been hooked ever since!  This weekend I went ahead and paid off all of my credit card debt, and any other debt I had not including what I still owe on my car.  I will continue to pay that down until I am free of any debt, at which point I will start to save for my first property.  I am also looking for other work outside of my full time job to stash away some extra cash.  

After reading some of the MMM blog, I also purchased a personal hair cutter, which I may be more excited about than I should be.  Not only will I be saving about 3 times as much as it cost per year, but now I don't have to go when it is convenient and spend 30 minutes driving to a Great Clips for a 5 minute haircut.  

Do you all have any other little tips and tricks to help out someone in my shoes who is trying to increase their savings rate for investing purposes?  I would love to hear all of the ideas you guys have!

Save for a down payment so u can househack ASAP.  As far as how to increase your saving rate, u need to analyze your spend and look for opportunities there. Download your CC statements and look where your money goes and then decide if u want to continue to spend on these items.  When u don’t have any current investment is is quite simple...either make more or spend less.

Originally posted by @Robert Kirkley :

Hey everyone!

I have been spending a lot of time researching the forums and listening to podcasts on BP, however, lately I was finding it difficult to decide where exactly to start on the financing side of things.  After continuing to listen to the Money podcast, I found myself on the MMM blog and have been hooked ever since!  This weekend I went ahead and paid off all of my credit card debt, and any other debt I had not including what I still owe on my car.  I will continue to pay that down until I am free of any debt, at which point I will start to save for my first property.  I am also looking for other work outside of my full time job to stash away some extra cash.  

After reading some of the MMM blog, I also purchased a personal hair cutter, which I may be more excited about than I should be.  Not only will I be saving about 3 times as much as it cost per year, but now I don't have to go when it is convenient and spend 30 minutes driving to a Great Clips for a 5 minute haircut.  

Do you all have any other little tips and tricks to help out someone in my shoes who is trying to increase their savings rate for investing purposes?  I would love to hear all of the ideas you guys have!

If you are currently renting I would stop doing so immediately. Pickup a nice cheap house on an FHA loan which only requires 3.5% down then get yourself some roommates to pay down your mortgage.

@James Wise Thank you for your response! I am actually still living with my parents. We had just moved to a new location at the beginning of this month, and I am looking in the area for an investment property that I can house hack. I will have to do more research on what type of loan I would like to use, and of course if I am looking specifically for a SFH or MFH. I want to get into MFH, but I am not sure if this area/surrounding areas have a lot of them.

Originally posted by @Robert Kirkley :

@James Wise Thank you for your response! I am actually still living with my parents. We had just moved to a new location at the beginning of this month, and I am looking in the area for an investment property that I can house hack. I will have to do more research on what type of loan I would like to use, and of course if I am looking specifically for a SFH or MFH. I want to get into MFH, but I am not sure if this area/surrounding areas have a lot of them.

Unless you're a Vet the best move would be the FHA. Requires the least amount down. You can get yourself anything in the 1-4 range that your DTI qualifies for. Good luck out there man.

@James Wise Getting an FHA loan has always been my focus. Recently, however, I heard that you would have to refinance into another FHA or different type of loan to stop paying PMI after 20%, but if you were to get a conventional loan at 5% down for residential, as soon as you would hit 20%, the PMI would drop off. What are your thoughts on that? Aprreciate it!

Originally posted by @Robert Kirkley :

@James Wise Getting an FHA loan has always been my focus. Recently, however, I heard that you would have to refinance into another FHA or different type of loan to stop paying PMI after 20%, but if you were to get a conventional loan at 5% down for residential, as soon as you would hit 20%, the PMI would drop off. What are your thoughts on that? Aprreciate it!

 If you can swing the extra DP then yes you should go with the conventional. Guess you'll need to cross that bridge when you get there.

Read this in a book a while ago, my tip is to pay yourself first before paying anything. If you figure out how much you can comfortably save every month, (let's say 1k hypothetically) you take that cash right out of your paycheck and right into your savings routinely. Think of it like just paying another bill monthly. 

Then you don't ever touch that savings until you have enough for a down payment and enough to close and still have some extra for backup. The more money you make the more you up your savings. 

You should also invest in a Roth IRA or a 401k if you work for a company that'll contribute.

As for side work, maybe find a plumber or another contractor etc to help out. learn a new skill. That might help you in the future. Make some extra cash and don't spend it on beer. 

@Robert Kirkley lots of ways to use cash back credit cards in your favor. I have an AMEX card that pays 6% back on groceries, 3% back on gas, 1% on everything else for $95/year. Lots of other good ones out there.

Also, I have my savings in one of the Wealthfront 2.57% savings accounts.

@George W. Totally agree with what you said. Right now, I am still figuring out the number I am trying to aim for to save, but I have very little expenses and a habit to be frugal, so my savings rate is quite high. Unfortunately, my pay isn't very high either, so it will slow things down in the mean time. The idea of paying yourself first is great, I will definitely set that up. I am newer to the company that I work with, so I will talk with my team about contributing to the 401k/IRA programs. I would love to max that out as well.

That is a great idea as well.  I will start looking into different consulting jobs/contract positions to get an idea as to what I would like to get experienced with to offer my services up.  I know a few local people I could talk to about all of that.  It's a good thing I don't drink beer! lol.  I am a big saver, so I need to focus on upping my income now.  Thanks!

@Cole Raiford I have been using Mint for months now and love it.  It has really helped me identify problem areas if I had some, and it also gave me a good look as to what to expect my monthly expenses to be.  With a little more time, I will be able to really nail down the number I will hit each month in savings.

@Robert Kirkley

I don’t know what your full time job is, but if you can deliver pizzas nights and weekends it puts your vehicle to use, it’s great extra money, and you get to know the different neighborhoods in town really quickly. You’d be surprised how different each neighborhood is and the differences in quality, safety, upkeep, etc. from street to street.

@Morgan Wallace That’s a great idea Morgan! It’s combining driving for dollars and a part time job into one. My full time job is a Snake specialist for the Orianne Center for Indigo Conservation. It’s a dream job of mine, but it doesn’t pay well, so I am looking for opportunities. Being that my family just moved, I will have to do a lot of research to get a better idea of the areas around us.

@Robert Kirkley , when I was your age, I would play this game to further squeeze my expenses down: when ordering fast food, I’d find what I want on the menu, subtract a dollar from that total, then use that amount to order something else. It forced me — in a very small, but pretty frequent manner — to really think about what I wanted and how I could get it for less.

Also, sell your car to get out from the payments and buy a junker with the proceeds! Cutting expenses around the edges is all well and good, but the real secret is cutting out your large systematic expenses.

Good luck!

Jonathan

@Ian Walsh That is the plan!

@Jonathan Schwartz  Thanks for sharing that!  I will try to incorporate something similar like that for my expenses.  I honestly don't buy many things at all unless they are completely necessary, but this will help me save a few dollars down the road for sure.  And I guess I should have mentioned this, but I only have about $2500 left on my car to pay.  I got a great deal on a used car that I plan to run until it's dead.  

@Robert Kirkley , good deal on the car! FYI, in 1994, my when older sister turned 16, my parents bought a Volvo stationwagon for her to drive. I started driving the Volvo in 1997 when I turned 16. When I moved to LA in 2004, I took the Volvo with me. I drove it until 2012, when at the age of 31, I bought my first car, a Hyundai Elantra. I'm still driving the Elantra and have no plans of replacing it!

@Jonathan Schwartz That's awesome to hear!  I am hoping my situation will be similar with the car I am in now.  Eventually, I would love to have something that does better on gas, but the car I drive now does well enough to make that a non issue.  I will also try to incorporate some of MMM's techniques to reduce spending for transportation ;)

@Robert Kirkley most of the people already are creative enough with the saving part, you should focus on your productivity levels and the ways to increase your income. You also can acquire deals by partnering with other people as well, you don’t need to wait until you save. Get a book “Best Ever Apartment Syndication Book” that talks about those things.