Grad with 30K in debt

[Robert Portal]

Hi everyone!

So here is my dilemma. I graduated back in 2012 and been working ever since. I have a full time job which allows me to pay for my expenses and have a bit of cash for myself which I tend to save. Currently, however, I am about 30K in debt; primarily school loans, car, CC (but I also live at home so no rent, phew!). Doing the math, it would take me a few years to erase all of it if I truly propose myself to (I am a saver after all) but I really want to get my real estate career started. My niche is to build a foundation between condos, SFRs, and 2-4 plex for now before moving on to bigger goals.

Some people advice getting rid of all debts first before tackling into investing and others say just go for it as long as you have a solid plan. What's your take on this? I am new to the field but with great ambitions to learn and take action. All advice is appreciated and thank you for taking the time to respond.

Take care,

Robert

[Marcia Maynard]

Pay off your credit card debt. Make it a priority. Then use your credit card responsibly and pay it off each month. Consumer debt is the type of debt you need to avoid. Read about the debt snowball and debt avalanche approaches to paying off debt.

A car loan is also consumer debt. Get cracking on paying that off as well. If you can do without a car, do so. If you can't, then save your money until you can buy one with out financing. If you need to finance an auto purchase, make it no more than a three year loan. Absolutely keep up with loan payments. The easiest way to do that is to set up automatic payments from your bank account.

Set up a repayment plan for your student loans too. The ones with the worst terms first (usually this means pay off private student loans before government student loans) and always pay at least the minimum, preferably more to the extent that you can.

This is the time to build your credit worthiness. Learn as much as you can about money management. Google "credit score tips" and look for advice on reputable sites only. Aim for a credit score of 740 or above so you can get the best terms when you need to get a loan for real estate purchases. A high credit score will help open up other opportunities for you as well.

Bookmark ftc.gov and refer to it often - great information for consumer protection and how to avoid scams. You can check your credit report up to three times a year for free through annualcreditreport.com (that's once a year for each of the three credit bureaus). If you type that website wrong, you will be erroneously led to bogus sites. So be careful. I always access it through the ftc.gov website as it's safer. Be careful not to respond to the pop ups that will charge you a fee to get your credit score.

Fund your retirement account. The sooner you start, the better. If your employer offers a 401(k) or 403(b) and matches it, start there. Also, contribute to a Roth IRA. Let your money grow tax free.

Establish a personal emergency fund as well (equal to at least 6 months of expenses, 8 months by Suze Orman standards, or 10 months by my standards).

While you are doing all you can to establish a solid financial foundation, keep reading and talking to successful investors to learn the business. Set S.M.A.R.T. goals... google that.

Lastly, you will learn from reading the BP posts that it is essential to have sufficient cash reserves when investing in real estate. There are always unexpected expenses. RE investing can be a great way to achieve wealth. You will also be embracing a lifestyle, with its own rewards.... not all of which are monetary.

Happy and Safe Investing!