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Finance Help (recent grad)

kaiyang1 18 February 8, 2013 at 06:48 AM in Finance (2)
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Hi Guys,

I am relatively new to slickdeals so bear with me! I just recently graduated about half a year ago and I have a good paying job, car bought (60 months 0% apr), and I am looking to take advantage of credit card bonuses. I just started a credit line about 6 months ago on chase freedom and 3 months ago on chase sapphire (3 months 3k for 400).

My revolving credit history is very short (6 months) and chase denied me for a 3rd card (southwest with the 50k miles I believe). My current score is high 600s, and I am looking to maximize any credit card bonuses I can before I hold off for 2 years to buy a house.

I also have a really good salary and my living costs are low. I have currently maxed out my 401k contribution, what is the best way to invest my money for the future? I currently have everything in an ally savings account. Should I be starting to put it in CDs instead?


TLDR: Need CC help, gimme advice on how to invest!

13 Comments

1

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#2
Start putting funds into CDs for a down payment on the house. A bigger down payment will help with limited credit history.
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#3
3 CCs in such a short time with a short credit history, wow, that's why the 3rd was denied. Wait 6 months or so to apply again, and make sure to pay off your balance in full every month on both cards, on time. Should improve your score a bit, but it's just going to take some time.

CDs are a good option for short-term savings that need to remain liquid.
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#4
Quote from mmathis View Post :
3 CCs in such a short time with a short credit history, wow, that's why the 3rd was denied. Wait 6 months or so to apply again, and make sure to pay off your balance in full every month on both cards, on time. Should improve your score a bit, but it's just going to take some time.

CDs are a good option for short-term savings that need to remain liquid.
yah i figured, i will wait a few months

I had a quesiton about CC's
I always pay off my balance in full, but sometimes I do it before the statement dates
Do I have to pay off the difference as well from when i pay off to the statement dates or is this technically a late payment if I dont.
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#5
Quote from kaiyang1 View Post :
yah i figured, i will wait a few months

I had a quesiton about CC's
I always pay off my balance in full, but sometimes I do it before the statement dates
Do I have to pay off the difference as well from when i pay off to the statement dates or is this technically a late payment if I dont.
When you get your statement, it has the balance, the minimum payment, and the due date. You have to pay at least that minimum payment by the due date or it's late. If you make a payment before your statement closing date, you may still have a non-zero balance on your actual statement, and may need to make a payment. Check your statement to be sure.
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#6
Quote from kaiyang1 View Post :
hold off for 2 years to buy a house.
My 2 cents. . . a two year CD (http://www.depositaccounts.com/cd...rates.html) right now isn't really doing very much when comparing it to a high yield savings account (http://www.depositaccounts.com/savings/). I would just direct deposit everything I could in the HY savings. Main advantage is that your money is not tied up.

Another more risky option is to try an ETF or Index fund

Other random thoughts:
1. My first place was a condo and i liked it until I realized that the condo fees blow. Not tax deductible and there are probably some amenities that you will not use that you are technically paying for.
2. Rent until you can afford a place you will want to stay in for at least 7 years.
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#7
If your income allows it, max out a Roth IRA every year as well. If you arent comfortable picking specific stocks, go with a place like Vanguard, or another ultra low cost company and buy funds with the ROTH.
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#8
My best advice would be to set up automatic payments for your credit cards. Chase lets you set up automatic payments through your bank account, and you can still pay off your balance early if you want. That way you can keep your credit utilization low, and never have to worry about paying on time.

As for investments, I'm a big fan of index funds, but I would recommend them if you're willing to leave your money in for at least 2-3 years. I would also recommend dollar-cost averaging (putting in a certain amount of money each month so the amount you pay for the fund averages out over the time you're investing). Index funds (and stocks in general) do mean that your money is 'at risk', but if you're ok with the thought that you might lose some of your money (you're more likely to gain money, but losing money is still a risk), or if you're ok with leaving the money in a little longer if the market is doing poorly (maybe wait a year or 2 for it to come back up before you buy that house), then index funds are a good way to go.

CDs can be a good option for shorter terms, but make sure to weigh the rates against savings account rates. You can find higher-rate 5-year CDs with low fees for taking your money out early, which can be better than a lower-rate 2-year CD. Then again, if the CD gets you .05% more interest than a savings account, it might not be worth it to you.

You can also look at i-bonds, which are supposed to be a little better than CDs right now.
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#9
can you find a CD that gets better rates than a savings account? Most can't.

Set aside money for your house but also start up a stock account. You can set up a Roth IRA with stocks for tax purposes. But investing early is the key to doing well with stocks. Being young, you can invest in some riskier options. Who knows -- you may hit it big with something.
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#10
Quote from discostu58 View Post :
If your income allows it, max out a Roth IRA every year as well. If you arent comfortable picking specific stocks, go with a place like Vanguard, or another ultra low cost company and buy funds with the ROTH.
nvm Smilie
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#11
Depending on where you live consider buying a condo to live in until you decide where you want to live long term. Once you want to move rent out the condo and make money off of rent and the future sale of the property.
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#12
Rule number 1 of getting good advice, don't come to a message board. I'm a CPA with a masters in Finance and putting your money into CD's is worthless right now (besides keeping you from spending it). Do yourself a favor and find somebody local to talk to about your money. Just my .02
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#13
Quote from blk96cam View Post :
Rule number 1 of getting good advice, don't come to a message board. I'm a CPA with a masters in Finance and putting your money into CD's is worthless right now (besides keeping you from spending it). Do yourself a favor and find somebody local to talk to about your money. Just my .02
The problem with talking to local people is that many of them have their own agenda.. which usually means they're going to try to sell you products you don't need so they can make money.

I think it's definitely a good idea to be skeptical of what people say on the internet, but there's still a ton of good information. People here point out a lot of options, give pros and cons of different options, and generally don't give terrible advice. At least here you'll get a variety of options from different people, rather than going with your grandmom's advice of "put it in a savings account and don't touch it for 5 years" or something like that.

Then again, you're a CPA with a master's in finance, so why don't you give the OP some real advice? Rather than just saying 'everyone here is wrong' you could say what you would do given the same situation.
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#14
Quote from DWad View Post :
The problem with talking to local people is that many of them have their own agenda.. which usually means they're going to try to sell you products you don't need so they can make money.

I think it's definitely a good idea to be skeptical of what people say on the internet, but there's still a ton of good information. People here point out a lot of options, give pros and cons of different options, and generally don't give terrible advice. At least here you'll get a variety of options from different people, rather than going with your grandmom's advice of "put it in a savings account and don't touch it for 5 years" or something like that.

Then again, you're a CPA with a master's in finance, so why don't you give the OP some real advice? Rather than just saying 'everyone here is wrong' you could say what you would do given the same situation.
Point taken. I stand by having him speak with somebody face to face and I will not provide advice without knowing the OP's overall situation.
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