Where should I start?

Question

I am coming up on my last semester of college, but am interning (paid) with a Big 4 accounting firm for this semester and will not really be taking classes. I will make a nice chunk of change (for a 20yr old) during this internship because I am paid the salary of a first-year associate, but broken down into an hourly rate

5X, XXX / 52 / 40 = My Hourly Rate

I am also paid time and a half for anything over 40 hours. My soon to be supervisor has told me that because of this, interns make the most money during the busy season since everyone works quite a bit, but they are all on salary.

After this internship, I am headed to graduate school through my Big 4 firm, where they are covering all the costs plus paying me an $18,000 stipend for living expenses, books, food, etc. Included in my one-year graduate program is a second internship, structured just like the first one but pays more. Upon completion, I have already accepted a full-time job with them in the 6X, XXX range.

I want to make wise decisions with my money and make it work for me. I would love some guidance on what I should do. I don't mind taking risks and would love to start investing in real estate. TIA for all reply's!

Just a little background:

No debt, I get paid to go to college (scholarships)
Good Credit (high 700's)
Have begun reading books and listening to multiple BP Podcasts daily.
Interested in flips, and multifamily properties (especially a duplex to start out)

Jessie Huffey · Answer

Brian, Congrats! You are in a great position starting out. My number one piece of advice is to do some advance tax planning. Young people are often thrown for a loop by uncle Sam when they start making "real money" and then see half of it go up in smoke (taxes, I mean). Do your taxes a year in advance based on the income you plan to get, see how much will go to taxes and then plan deductions you can make so that you reduce your tax liability by as much as possible. Lawful deductions can come from various sources. Maybe you have a home office, maybe you started a small business on the side that had expenses that could be deducted, take your time to do the necessary research on tax planning, it is well worth it! For example, last year, my husband was able to purchase a qualifying company vehicle for his business- it essentially saved us over 5k in taxes. There are lots of things like that you will be able to find if you are familiar with tax law and deductible expenses. On the 401k, if it matches- I would go for it- kind of like free money, also with tax advantages. If it does not match, skip it.

Andrew Postell · Answer

@Brian Hatcher the very first thing I would tell you to do is to be thankful. You are in a great position sir! Secondly, make a small savings goal of 3-6 months of bills. Nearly every financial expert states that this is singularly the most important step to anyone's financial independence. Having 3-6 months of bills saved up means if something unexpected occurs then you have the plan to handle it. What you don't want to have happen if something upset the direction you are going in because it sounds like you have a great future. So plan on the unexpected and you'll have the expected covered. Third, please take advantage of any matching program that your future employer may offer you. Meaning if they match your retirement investments then dedicate whatever level they will match. That way you are already leveraging your $$$ to the best of your ability. If you can do those 3 steps then you can handle buying a home or two no problem. Continue to march on and I look forward to seeing you in the Top 30 under 30!

Brian Hatcher · Answer

@Andrew Postell Wow, great things to consider! I will definitely look into this more until then I will invest in the 401k!@Jim Kennedy Thank you for the helpful advice, I already have my CPA all planned out and plan to finish it by June of next year.

Mark Nolan · Answer

@Brian HatcherWelcome to Bigger Pockets. You are at the right place to learn about real estate investing.

Jim Kennedy · Answer

@Brian Hatcher Great planning. First thing: Get your CPA license. It will change your life forever and add $10K to your annual salary. I am a CPA. I am also a real estate investor. Ive had my CPA firm for 13 years, with a total of 24 accounting years. The point is I got my CPA license first. I changed careers and got my license about 17 years ago. Then I went into real estate in my mid-40's. I devised a plan on how to retire with $2 million in the bank. I can now see retirement in less than 15 years and I am ahead of my model for doing it. My point is there are lots of plans out there for a guy in his 20's, a guy in his 50's and everybody in between, but get your license first. And sit for FARE first if you can. Its the hardest, but its the easiest. I mean face it - whats the first thing you learned in high school or college? Debits and credits right? So you've been doing it the longest. I had a good college guy worked P/T for me. He landed a job at Ernst and is crushing it. He just passed the exam too, and will crush it more. So get your license first and then feed your family well for decades to come.Jim Kennedy (Third generation CPA)

Glenn R. · Answer

As a CPA you will soon know more about "everybody's business" & strategies than any other profession. I'd recommend saving as much as possible from the beginning and listen to you senior peers for investment advice. You willy be privy to free info that we all dream of.

Andrew Postell · Answer

@Brian Hatcher great questions here. If you want to get that deep into the analysis then I would suggest getting with an investment planner to see the numbers and separately researching the housing side of things to compare. There are a lot of things to think about when it comes to investing. Your 401(k) is just one of the choices you have. I would think that your employer would allow you to invest $50 per month in your 401(k) if you wanted. To invest in a house at 20% down of $100k means you need $20,000 just to get started. That's a big difference. But many of us use investment properties as part of our portfolio. Some people believe that using their retirement money to buy investment properties is a better choice than leaving it in their 401(k). But those poeple might be in a completely different level of life than you. What I mean is if the stock market tanks for you right now you still have 30 years of working to make up for it. So you can afford to be risky. Someone who is 65 cannot afford to be risky since they might be done working entirely. They may have already contributed and received matching funds from their employer for 30 years. So whatever the philosophy is that you want to use just make it an informed decision and it will be the right one for you.

Brian Hatcher · Answer

@Jessie Huffey Thank you for the great advice! I actually took tax as a class my last semester so I am very familiar with taxes, as well as loopholes ;).

Brian Hatcher · Answer

@Andrew Postell I am very thankful, I know I am very fortunate and blessed to be in such a position. I have been wanting to ask someone in the Real Estate Game if they actually see it as beneficial to invest in the 401k or matching plan that my company offers? My thought process is that investment properties create cash flow versus a set amount that won't grow and starts to deplete once I retire. So wouldn't it be more beneficial to use that money and just invest it into real estate since it would most likely give me a larger return in the long run?