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So, you get a couple percent back on a couple grand a month? Yet if you say it is more than that, then you are not really disciplined , so how exactly is this building wealth?
It smooths cashflow. When I was first starting out after college, I made around 50k. I had like $2000 to my name and negative net worth with student loans. By getting acccess to free credit, it allowed me to do things like meet the max 401k match for my company. It allowed me to build up a large cash balance and purchase a home which exploded with equity. I’ve made about 6,000 in rewards, but far more valuable was years and years of zero interest debt to provide liquitidy and options. More liquidity allowed me to buy in bulk to cut costs. It allowed me to prepay things like car insurance and get a discount. I never missed any payment on any debt because of increased liquidity. Liquidity allowed me to afford things like the cost of obtaining my cpa license (study materials, paying for test) that I would not have been able to do by cutting out debt and living on a cash basis. Buying myself time. Free time. Allowed me to pay old expenses off with a pay increasing 10 to 25 percent every year.
I’d rather have 15,000 of cash and 15,000 of interest free revolving credit card debt than no cash and no debt. Having free credit gives you options with your cashflow. The problem people have is going into debt....then spending all of their cash. In that case, their options narrow and debt service costs spiral.
Last edited by Thatsright19; 02-26-2018 at 11:07 AM..
It smooths cashflow. When I was first starting out after college, I made around 50k. I had like $2000 to my name and negative net worth with student loans. By getting acccess to free credit, it allowed me to do things like meet the max 401k match for my company. It allowed me to build up a large cash balance and purchase a home which exploded with equity. I’ve made about 6,000 in rewards, but far more valuable was years and years of zero interest debt to provide liquitidy and options. More liquidity allowed me to buy in bulk to cut costs. It allowed me to prepay things like car insurance and get a discount. I never missed any payment on any debt because of increased liquidity. Liquidity allowed me to afford things like the cost of obtaining my cpa license (study materials, paying for test) that I would not have been able to do by cutting out debt and living on a cash basis. Buying myself time. Free time. Allowed me to pay old expenses off with a pay increasing 10 to 25 percent every year.
I’d rather have 15,000 of cash and 15,000 of interest free revolving credit card debt than no cash and no debt. Having free credit gives you options with your cashflow. The problem people have is going into debt....then spending all of their cash. In that case, their options narrow and debt service costs spiral.
You could have easily done all this with work and savings. With $6k in rewards, it doesn’t sound like you were all that disciplined. Coming out of college with the loans were part of your problem. As pointed out previously, there are was of getting through school without having student loans holding you back.
You could have easily done all this with work and savings. With $6k in rewards, it doesn’t sound like you were all that disciplined. Coming out of college with the loans were part of your problem. As pointed out previously, there are was of getting through school without having student loans holding you back.
My student loans weren’t and are not a problem. I graduated with the average student loan amount at that time despite doing 5 years of school. My degree program has good starting wages and easy wage growth overtime. My school cost is peanuts looking back compared to how hard it would have been to afford to pay as I went.
How would 6,000 in rewards indicate not being disciplined? Over a 5 year period that’s running 300,000 through credit cards at a 2 percent return between my wife and I. It’s actually Much Less than 300,000 if you consider sign up bonuses and returns greater than 2 percent (5% is common with chase freedom). Those were ordinary expenses that would have been made anyways. It’s not like I’m running out to spend a dollar to earn 2 cents.
And again, you keep focusing on the rewards alone. It’s the liquidity that was important. I am “doing it” with work and savings. Why not accelerate it with work, savings, and free leverage and liquidity that I get paid to use?
Last edited by Thatsright19; 02-26-2018 at 11:45 AM..
My student loans weren’t and are not a problem. I graduated with the average student loan amount at that time despite doing 5 years of school. My degree program has good starting wages and easy wage growth overtime. My school cost is peanuts looking back compared to how hard it would have been to afford to pay as I went.
How would 6,000 in rewards indicate not being disciplined? Over a 5 year period that’s running 300,000 through credit cards at a 2 percent return between my wife and I. It’s actually Much Less than 300,000 if you consider sign up bonuses and returns greater than 2 percent (5% is common with chase freedom). Those were ordinary expenses that would have been made anyways. It’s not like I’m running out to spend a dollar to earn 2 cents.
And again, you keep focusing on the rewards alone. It’s the liquidity that was important. I am “doing it” with work and savings. Why not accelerate it with work, savings, and free leverage and liquidity that I get paid to use?
If you would have worked through high school, summers and during college, you could have paid cash. Further, there are plenty of internship programs in the Masters programs for accounting. While you were busy paying off your loans, the cash paying grads were building real wealth. Further, your 6000k in rewards just shows your lack of discipline.
If you would have worked through high school, summers and during college, you could have paid cash. Further, there are plenty of internship programs in the Masters programs for accounting. While you were busy paying off your loans, the cash paying grads were building real wealth. Further, your 6000k in rewards just shows your lack of discipline.
Um, I did work while I was in school to pay living expenses. I worked during summers. Later, I interned with CPA firms during my 4th and 5th year. I can’t afford living expenses and school costs while being paid $8 an hour. Even if I could....why would I? I can meet my payment now with a total compensation package 10 or more times larger than when I was a student. For a investment of tens of thousands, I will improve my career earnings by 1 million+. Also....I am building wealth through 401k investments and owning a home. Two things I know I achieved by leveraging credit card debt and no interest and student loan debt.
How is collecting free money in rewards a lack of discipline? I never paid a cent of interest or penalty.
I may not “need” it but I would be worse off by not leveraging it. Debt is a tool. If I use this debt with debt service costs lower than the benefit I received...it’s worth it.
It’s pretty clear you’re lost.
Last edited by Thatsright19; 02-26-2018 at 01:46 PM..
Um, I did work while I was in school to pay living expenses. I worked during summers. Later, I interned with CPA firms during my 4th and 5th year. I can’t afford living expenses and school costs while being paid $8 an hour. Even if I could....why would I? I can meet my payment now with a total compensation package 10 or more times larger than when I was a student. For a investment of tens of thousands, I will improve my career earnings by 1 million+. Also....I am building wealth through 401k investments and owning a home. Two things I know I achieved by leveraging credit card debt and no interest and student loan debt.
How is collecting free money in rewards a lack of discipline? I never paid a cent of interest or penalty.
I may not “need” it but I would be worse off by not leveraging it. Debt is a tool. If I use this debt with debt service costs lower than the benefit I received...it’s worth it.
It’s pretty clear you’re lost.
First, you should have earned enough during high school to pay for 2 years at a community college. During the 2 years at Community College, you should have earned enough to pay for year 3 and then some. Two more summers of work pays for year 4. The internship pays enough for year 5. Beyond that, you should be able to dig up a couple small scholarships.
If you settled for only $8/hr on an internship, that is your fault. I hire interns all the time and have the market data. For some reason, you settled for a wage more typical of fast food.
Here is data back from 2011 on accounting internships:
First, you should have earned enough during high school to pay for 2 years at a community college. During the 2 years at Community College, you should have earned enough to pay for year 3 and then some. Two more summers of work pays for year 4. The internship pays enough for year 5. Beyond that, you should be able to dig up a couple small scholarships.
If you settled for only $8/hr on an internship, that is your fault. I hire interns all the time and have the market data. For some reason, you settled for a wage more typical of fast food.
Here is data back from 2011 on accounting internships:
Meanwhile, while you were paying off debts, your peers with no debt we’re leaving you in the dust.
I’m glad you know what I should have done.
Also, the higher paying accounting internships aren’t available until later into school. I didn’t accept internships at cpa firms that paid $8 an hour. But there are often 3 to 4 years before you get to the good internships and internships for cpa firms last 3 months. I worked regular jobs.
So 3 to 6 months of good internships paying $20+ an hour isn’t enough to fill in the gaps of 5 years of school costs with living AND school costs.
I’m not sure why you’re so focused on my school costs that are easily serviced after I graduated. But seeing as how you’re now my hindsight “adviser”....
Last edited by Thatsright19; 02-27-2018 at 04:28 AM..
You should pay the loans off because you haven’t factored in short term market risk. Just as the market goes up, it can go down in the short term. If we were talking about 10+ year timeframe, the market would likely be higher. However, why would anyone want to have a student loan hanging around that long?
Because if your student loans are an interest rate of 6 percent (less effectively after the for agi tax deduction) and you can make a higher rate of return in the market....so for example, I could have thrown more money at my student loan or I as I did instead I got 100 guaranteed return by getting the company 7 to 8 percent 401k match (all tax deferred....)then invested that money in the market and earned several more percentage points.
Or..i could fund my 401k AND Buy a house that’s appreciating faster that 6%...my home alone earned me enough equity to be worth more than my student loan amount paid.
Opportunity cost my debt fearing friend It would have been far more costly to my net worth to focus getting out of student loan debt due over 10 years (slowly paid in the future) than it was to build a foundation of a home and 401k working for me TODAY over that same 10 years and beyond. My total debt paid over 10 years on a student loan is around $7,000 (700 per year average). I made many many multiples of that with my 401k match and appreciation and home appreciation. Having this base in place (ahead of my peers...not behind them like you said) should build wealth for my entire life.
The student loan can wait.
Last edited by Thatsright19; 02-27-2018 at 05:34 AM..
I think this is the concept most often overlooked by the cash-only crowd. Second most undervalued concept would probably be the advantages of liquidity.
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