Hi Money Minder,
Hey there, I’m 27 and just landed a new gig making $94,000 a year. But here’s the deal – I’ve got a massive car payment over $1,000 (yikes!), plus two maxed-out credit cards – one at $3,300 and the other at $2,500. On top of that, I just moved into a rental house that’s costing me $2,600 a month. Money’s tight, and I didn’t have much saved up, so my credit card balances are sky-high right now. The interest on the cars is just a matter of multiplying the balance by 0.0242 and 0.0213. Here’s the breakdown:
I’m a DINK with my fiancé, splitting bills 50/50.
I bring in about $6,000 a month after taxes.
My total bills come to around $4,200.
I’ve got about $1,500 stashed in cash, and I’m left with about $1,800 every month. After I tie the knot next month, that’ll go up to $2,100 extra each month.
I’m torn between tackling my debt head-on and diving into investments. I’m all about Bitcoin and getting more into the stock market every day. My pension is my main account through work, and I recently moved my Roth IRA to my brokerage for investing.
Lately, I’ve been dabbling in buying bits and pieces of individual stocks (stock slices), but I’m thinking of switching gears towards index funds or ETFs. The issue is, these shares can cost anywhere from $400 to $600 each. I’m not sure if I should focus on paying off my debts aggressively, or split my focus between that, saving cash, and investing.
Any advice? I’ve been going back and forth on this, and even chatting with ChatGPT has reached its limit. Thanks in advance.
Farewell from Newbie Investor
Response from THE MONEY MINDER:
Hello There,
Congratulations on your new job and upcoming marriage! It sounds like you have a lot on your plate right now, especially when it comes to managing your finances. The first step towards financial stability is to tackle your debt. With a high car note, maxed out credit cards, and the new rent house, it’s clear that reducing your debt should be a top priority.
Given your monthly surplus, you have the ability to make significant strides in paying off your credit card debt and reducing the balances on your car loans. Start by focusing on paying off the high-interest credit card debt first. The interest rates on those cards can quickly accumulate, so it’s wise to eliminate that debt as soon as possible. You can then allocate a portion of your surplus towards paying down your car loans, which will also help reduce your overall debt burden.
When it comes to investing, it’s essential to have a solid financial foundation before diving into risky ventures like Bitcoin or individual stocks. Consider starting with index funds or ETFs, which provide diversification and lower risk compared to single equities. These investment options can help you grow your wealth steadily over time while you continue to pay down your debt.
Ultimately, finding a balance between paying off debt, saving, and investing is key. By prioritizing debt reduction now, you can set yourself up for financial success in the long run. Make a plan, stick to it, and don’t let emotions or market fluctuations derail your progress. Congratulations again on your recent milestones, and best of luck on your journey towards financial freedom.
Take care,
THE MONEY MINDER
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