How much income should I allocate with a 200k salary

[Alexander Diaz]

Hello everyone. I am an 18 year old freshman in college working towards a Phd in Economics. I will be around the age of 24 when I start working making around $200,000 a year plus whatever my partner makes. to make things simple let's call it $275,000 household income. I do not mind living below my means for a couple of years in order to start my real estate journey. My students loans will be around $1,000 per month which for my salary will no be a problem. The houses I look to buy for investing will be around $100,000-$150,000. How much should I save up per year so I can start investing after a few years. I plan on using the BRRRR strategy to also help finance future investments. Would love to hear your thoughts.

[Nathan Gesner]

Quote from @Alexander Diaz:

I don't have a fancy degree (I literally earned my BA by testing out of every class), but I have common sense and a basic understanding of financial discipline. Here's my advice:

1. Student loans - even with low interest - are bad and should be avoided at all costs. Do the had work and pay your way through school.

2. Student loans - even with low interest - should be paid off before you start to invest. 

If you are smart with financials and money, do a little exercise with two different scenarios:

1. Graduate, start work, and pay the minimum on your student loans. Put extra income towards investments. After the loans are eventually paid off (20 years? 50 years?), then add that to whatever you are investing. Where do you end up in 30, 50, or 70 years?

2. Pay the debt off like a madman. If you work extra hours, get $20 in your birthday card from Aunt Gertrude, or pick up a nickel off the ground, you put it toward the debt. After you've paid off the debt completely, start using that same hustle to invest. Where do you end up in 30, 50, or 70 years?

Math don't lie. Debt holds you down in a variety of aspects and will hinder your performance as an investor.

Proverbs 22:7 The rich rule over the poor, and the borrower is the slave of the lender.

[Chris Davidson]

@Alexander Diaz not to be sarcastic, but if you are going to have a phd in economics I would trust your gut knowing your situation over a bunch of internet strangers. Also you are 18 and have 6 more years. Focus on reducing your debt. Don't accrue more. a 200k salary fresh out might not be so accurate. Also in 6 years the house you were looking to buy at 100 to 150k will not be 100-150k. Build your knowledge of investing see if you can start sooner and work on making sound financial decisions from here on out.

Best of luck!

[Eliott Elias]

This is a conversation you need to have with your lender. 

[Alexa K.]

I think you're counting your chickens before they hatch. You're only 18 and won't be starting your journey for another 6 years -- focus on school for now, because a lot can change in just a few short years, especially going into your twenties. I'd put this on the backburner and focus on school and enjoying life, at least until you're pushing 22. Good luck!

[Theresa Harris]

Unless a PhD in Economics means you work making $200K while doing your PhD (none of the other PhD programs I know work that way), you will be older than 24 when you start your job.  Your undergrad is 4 years, PhD is a minimum of 4 years (most in the US take 8+ years) after that.  I'd also check if you need a PhD.  Most people get those to go into academia, not into the business world-MBA works for that.

Best advice is once you are done grad school, keep living like you are in grad school and saves as much of the money as you can.

I don't know what a $100-150K house looks like where you plan to buy, but if they are the cheapest houses in the area and in rough areas; do not buy them.  Aim for the less expensive houses in good areas.  On paper the cash flow will be lower than the cheap houses, but in reality they will be less work, make more money and you will have lower turn over.

Unless you currently have  partner, don't assume any income from them because you may not have a partner or perhaps they will also make $200K/yr.

[Nathan Gesner]

Quote from @Alexander Diaz:

I don't have a fancy degree (I literally earned my BA by testing out of every class), but I have common sense and a basic understanding of financial discipline. Here's my advice:

1. Student loans - even with low interest - are bad and should be avoided at all costs. Do the had work and pay your way through school.

2. Student loans - even with low interest - should be paid off before you start to invest. 

If you are smart with financials and money, do a little exercise with two different scenarios:

1. Graduate, start work, and pay the minimum on your student loans. Put extra income towards investments. After the loans are eventually paid off (20 years? 50 years?), then add that to whatever you are investing. Where do you end up in 30, 50, or 70 years?

2. Pay the debt off like a madman. If you work extra hours, get $20 in your birthday card from Aunt Gertrude, or pick up a nickel off the ground, you put it toward the debt. After you've paid off the debt completely, start using that same hustle to invest. Where do you end up in 30, 50, or 70 years?

Math don't lie. Debt holds you down in a variety of aspects and will hinder your performance as an investor.

Proverbs 22:7 The rich rule over the poor, and the borrower is the slave of the lender.

[Alexander Diaz]

Quote from @Chris Davidson:

@Alexander Diaz not to be sarcastic, but if you are going to have a phd in economics I would trust your gut knowing your situation over a bunch of internet strangers. Also you are 18 and have 6 more years. Focus on reducing your debt. Don't accrue more. a 200k salary fresh out might not be so accurate. Also in 6 years the house you were looking to buy at 100 to 150k will not be 100-150k. Build your knowledge of investing see if you can start sooner and work on making sound financial decisions from here on out.

Best of luck!

I get what you are saying. And a 200k salary for my Phd is accurate. 

[Alexander Diaz]

Quote from @Theresa Harris:

Unless a PhD in Economics means you work making $200K while doing your PhD (none of the other PhD programs I know work that way), you will be older than 24 when you start your job.  Your undergrad is 4 years, PhD is a minimum of 4 years (most in the US take 8+ years) after that.  I'd also check if you need a PhD.  Most people get those to go into academia, not into the business world-MBA works for that.

Best advice is once you are done grad school, keep living like you are in grad school and saves as much of the money as you can.

I don't know what a $100-150K house looks like where you plan to buy, but if they are the cheapest houses in the area and in rough areas; do not buy them.  Aim for the less expensive houses in good areas.  On paper the cash flow will be lower than the cheap houses, but in reality they will be less work, make more money and you will have lower turn over.

Unless you currently have  partner, don't assume any income from them because you may not have a partner or perhaps they will also make $200K/yr.

I hear what you are saying. Because of academic successes I have I will be able to complete my Phd in 6 years. And I do have a girlfriend who plans to work as an accountant. But I understand what you mean by nothing being set in stone.

[V.G Jason]

Quote from @Alexander Diaz:

Hello everyone. I am an 18 year old freshman in college working towards a Phd in Economics. I will be around the age of 24 when I start working making around $200,000 a year plus whatever my partner makes. to make things simple let's call it $275,000 household income. I do not mind living below my means for a couple of years in order to start my real estate journey. My students loans will be around $1,000 per month which for my salary will no be a problem. The houses I look to buy for investing will be around $100,000-$150,000. How much should I save up per year so I can start investing after a few years. I plan on using the BRRRR strategy to also help finance future investments. Would love to hear your thoughts.

Your preparation is really amazing, but it may cost you more by being this diligent. I'd focus on getting past your bachelor's first. You're going to be in school for more than 6 years, probably closer to 8 to 10 years. Houses in 2023 will be priced differently in 2031-2033, and your salary may not grow at that same level(likely not). Also, $1,000/mo in student loans isn't "easy" to pay off, you are starting out in a hole with no savings at first, no assets, and you need to focus on the day to day stuff of eating, living, and working. You're going to be in the hole for a lot longer than you think.

I would get past bachelors, see where you are going for your PhD. Once you get closer to graduation, then focus on how to align. Best thing you can do is live like your getting your PhD after you get it for the first 3-5 years. It'll wipe away 15-20 years of future pain.

[Alexander Diaz]

Quote from @V.G Jason:

Quote from @Alexander Diaz:

Hello everyone. I am an 18 year old freshman in college working towards a Phd in Economics. I will be around the age of 24 when I start working making around $200,000 a year plus whatever my partner makes. to make things simple let's call it $275,000 household income. I do not mind living below my means for a couple of years in order to start my real estate journey. My students loans will be around $1,000 per month which for my salary will no be a problem. The houses I look to buy for investing will be around $100,000-$150,000. How much should I save up per year so I can start investing after a few years. I plan on using the BRRRR strategy to also help finance future investments. Would love to hear your thoughts.

Your preparation is really amazing, but it may cost you more by being this diligent. I'd focus on getting past your bachelor's first. You're going to be in school for more than 6 years, probably closer to 8 to 10 years. Houses in 2023 will be priced differently in 2031-2033, and your salary may not grow at that same level(likely not). Also, $1,000/mo in student loans isn't "easy" to pay off, you are starting out in a hole with no savings at first, no assets, and you need to focus on the day to day stuff of eating, living, and working. You're going to be in the hole for a lot longer than you think.

I would get past bachelors, see where you are going for your PhD. Once you get closer to graduation, then focus on how to align. Best thing you can do is live like your getting your PhD after you get it for the first 3-5 years. It'll wipe away 15-20 years of future pain.

 Because of my academic success and credit cramming I will be able to get my Phd as early as I've said and because my parents are very supportive and have money to spare if I ever needed help financially they my back. 

[V.G Jason]

Quote from @Nathan Gesner:

Quote from @Alexander Diaz:

I don't have a fancy degree (I literally earned my BA by testing out of every class), but I have common sense and a basic understanding of financial discipline. Here's my advice:

1. Student loans - even with low interest - are bad and should be avoided at all costs. Do the had work and pay your way through school.

2. Student loans - even with low interest - should be paid off before you start to invest. 

If you are smart with financials and money, do a little exercise with two different scenarios:

1. Graduate, start work, and pay the minimum on your student loans. Put extra income towards investments. After the loans are eventually paid off (20 years? 50 years?), then add that to whatever you are investing. Where do you end up in 30, 50, or 70 years?

2. Pay the debt off like a madman. If you work extra hours, get $20 in your birthday card from Aunt Gertrude, or pick up a nickel off the ground, you put it toward the debt. After you've paid off the debt completely, start using that same hustle to invest. Where do you end up in 30, 50, or 70 years?

Math don't lie. Debt holds you down in a variety of aspects and will hinder your performance as an investor.

Proverbs 22:7 The rich rule over the poor, and the borrower is the slave of the lender.

This, this, and this a million times over. Don't invest when you're buried in debt, and I hate the term "good" debt. 99.9% of this board focuses on working payments to service debt, when in reality you want to focus on working payment to service you. 

[V.G Jason]

Quote from @Alexander Diaz:

Quote from @V.G Jason:

Quote from @Alexander Diaz:

Hello everyone. I am an 18 year old freshman in college working towards a Phd in Economics. I will be around the age of 24 when I start working making around $200,000 a year plus whatever my partner makes. to make things simple let's call it $275,000 household income. I do not mind living below my means for a couple of years in order to start my real estate journey. My students loans will be around $1,000 per month which for my salary will no be a problem. The houses I look to buy for investing will be around $100,000-$150,000. How much should I save up per year so I can start investing after a few years. I plan on using the BRRRR strategy to also help finance future investments. Would love to hear your thoughts.

Your preparation is really amazing, but it may cost you more by being this diligent. I'd focus on getting past your bachelor's first. You're going to be in school for more than 6 years, probably closer to 8 to 10 years. Houses in 2023 will be priced differently in 2031-2033, and your salary may not grow at that same level(likely not). Also, $1,000/mo in student loans isn't "easy" to pay off, you are starting out in a hole with no savings at first, no assets, and you need to focus on the day to day stuff of eating, living, and working. You're going to be in the hole for a lot longer than you think.

I would get past bachelors, see where you are going for your PhD. Once you get closer to graduation, then focus on how to align. Best thing you can do is live like your getting your PhD after you get it for the first 3-5 years. It'll wipe away 15-20 years of future pain.

 Because of my academic success and credit cramming I will be able to get my Phd as early as I've said and because my parents are very supportive and have money to spare if I ever needed help financially they my back. 

 Ok, cool. If nothing changes in 6 years, the housing market will. You'll be in debt, and the housing market will move. Focus on paying off your debt then investing.

[Craig Janet]

So you live in an area that will pay a college graduate with no experience $200K a year but also has livable $150K houses. Where is this? I don't know any occupations that pay $200k right out of college, not even most doctors and engineers. So, as others have said you may want to slow down, worry about school, and keep your debt down to a minimum. Good Luck!!

[Ezra Henderson]

Quote from @Nathan Gesner:

Quote from @Alexander Diaz:

I don't have a fancy degree (I literally earned my BA by testing out of every class), but I have common sense and a basic understanding of financial discipline. Here's my advice:

1. Student loans - even with low interest - are bad and should be avoided at all costs. Do the had work and pay your way through school.

2. Student loans - even with low interest - should be paid off before you start to invest. 

If you are smart with financials and money, do a little exercise with two different scenarios:

1. Graduate, start work, and pay the minimum on your student loans. Put extra income towards investments. After the loans are eventually paid off (20 years? 50 years?), then add that to whatever you are investing. Where do you end up in 30, 50, or 70 years?

2. Pay the debt off like a madman. If you work extra hours, get $20 in your birthday card from Aunt Gertrude, or pick up a nickel off the ground, you put it toward the debt. After you've paid off the debt completely, start using that same hustle to invest. Where do you end up in 30, 50, or 70 years?

Math don't lie. Debt holds you down in a variety of aspects and will hinder your performance as an investor.

Proverbs 22:7 The rich rule over the poor, and the borrower is the slave of the lender.

Well said.