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22 Year Old Question
Old 02-04-2006, 09:34 AM   #1
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22 Year Old Question

I'm new to the board, but have been reading many posts. I need some advice. I am 22 years old, about to graduate with a Management Information Systems bachelors degree, and a Process Technology Technical degree. Jobs for these degrees are plentiful where I live (Gulf Coast of Texas aka Refinery Row). I plan to take a job that is close to 60k at Valero upon graduation. Here are my questions

Should I start an MBA program? Or get a dual degree in finance? My favorite subject besides computers.

Valaro matches dollar for dollar in a 401k up to 6%, i was thinking about putting 8% in, should I do more?

I have no student loans, credit card debt, and my truck is paid off. (my parents started saving for myself, sister, and brother when we were first born, even with one person working, and a middle class salary, something that has made me the way I am today)

I'm getting married to the love of my life (4 years) next summer and she graduates at the same time, and will be a Registered Nurse, with pretty much the same 401k, plus no debts.

This is our plans, both of us are very conservative with our money. We should have a combined income of around 85-100k (depending on overtime and other factors), but want to buy a house pretty soon after marriage. I want to save up about 25% for the house. I would like to purchase a house in the 150k range, do any of you think that is too much?

Sorry this is so long, but here is my other problem. My grandparents left me some money (15k)and I would like to save it and invest it, and never touch it since it was free money. Some of it was in a Vanguard Mutual fund, and then some was just cash. I was thinking about putting alot of it in Microsoft and GE since they are pretty low right now I dont want inflation to eat up the cash. Anyways, what do any of you think?
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Re: 22 Year Old Question
Old 02-04-2006, 10:17 AM   #2
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Re: 22 Year Old Question

bode, welcome to the board and congratulations on 1) your pending graduation 2) finding the right woman and 3) apparently having your financial head screwed on straight at such a young age. Good for you.

You will probably get several responses to your questions, but here's my two cents worth:

Quote:
Originally Posted by bode316
Should I start an MBA program? Or get a dual degree in finance? My favorite subject besides computers.
My first inclination is to say do what you enjoy and go for the finance degree. But I wouldn't plan on doing either for a while until you see what your employer and the industry really value.

Quote:
Originally Posted by bode316
Valaro matches dollar for dollar in a 401k up to 6%, i was thinking about putting 8% in, should I do more?
In most cases, the more the better up to the max you are allowed. But are the investment options in the 401k good? How much can you put in and meet your goal of making a 25% down payment for a house?

Quote:
Originally Posted by bode316
We should have a combined income of around 85-100k (depending on overtime and other factors), but want to buy a house pretty soon after marriage. I want to save up about 25% for the house. I would like to purchase a house in the 150k range, do any of you think that is too much?
Having a general idea of housing values in that area, with your combined salaries and 25% down,I don't think you are out of your league at 150k. It will probably require that much to buy something your new bride will be happy with anyhow.

Quote:
Originally Posted by bode316
My grandparents left me some money (15k)and I would like to save it and invest it, and never touch it since it was free money. Some of it was in a Vanguard Mutual fund, and then some was just cash. I was thinking about putting alot of it in Microsoft and GE since they are pretty low right now I dont want inflation to eat up the cash. Anyways, what do any of you think?
There are lots of individual stock people on the board who can speak to those two companies, but I would recommend you go with a Vanguard or Fidelity (low cost) index fund.

Whichever way you go, I'm betting you are going to do well. Heck, you're already ahead of 99.999% of other 22 year olds.

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Re: 22 Year Old Question
Old 02-04-2006, 10:24 AM   #3
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Re: 22 Year Old Question

Hello Bode316,

Welcome to the board. *Sounds like you are in good shape starting out. *Those MIS degrees seem to be pretty markatable. *I remember back in the early 90s when I graduated the folks with that degree had no problem finding opportunities. *But they worked them hard. *I have an MBA that I did right out of undergrad compliments of the AF. *I was a fulltime student on Uncle Sam's nickel at the time. *

My vote would be get the MBA and you could concentrate in finance if you desire. *With your undergrad I would think you would want to take some classes in you MBA that prepares you for managerial.leadership roles a few years down the road. *In my experience it is a given that you will be technically competent after sometime so leadership is what will help you move up. *I don't think I would go fulltime as for the opportunity cost of not having a job, but I might get it at nights and weekends making sure I balance the newlywed time. *

As for the 401K, definately don't leave the matching funds on the table. *You also might want to look at the ROTH IRA as well. *If you can do both and still have more you can do something else. *I would do the Roth before I added to my 401K above the matching funds.

Seems like your significant other will have a pretty good employment prospects as a RN. *Plus what a portable skill. *As for the house, I don't think $150K is to much for you to handle with your income projections. *

Tomcat98
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Re: 22 Year Old Question
Old 02-04-2006, 10:46 AM   #4
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Re: 22 Year Old Question

I pretty much agree with the above posts.
Always capture the match--always
Next choice is a Roth IRA
Next choice individual funds or stocks.
If all of the above amounts to at least 15% of your income you are doing OK, at least for now.
Regarding types of funds.* I like index funds in 401K's because of the low fees. Additionally, many 401K's have crappy offerings so the index funds make a good default choice.*
The $15,000 you mentioned should go into 2 or 3 somewhat aggressive funds that have a good track record at the 5, 3, 2, and 1 year point.* You are to young to put all your money in the index funds, but if you must, go 50% Total Stock and 50% Total International.* If you are going to take an active role in your investments I think you should go with Fidelity primarily for the expanded choices of good funds at good rates.
As long as you are putting 20 to 25 % down I think you could afford more than 150,000.* Don't let them sneak any PMI payments in on you, and handling your own escrow is a blessing once you get used to it.* Remember though, if you plan to move sooner than 3 years, most Texas houses haven't appreciated like the rest of the country.* Sounds like you have a bright future ahead of you and it is nice to hear you recognize your parents role in your success.
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Re: 22 Year Old Question
Old 02-04-2006, 11:00 AM   #5
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Re: 22 Year Old Question



You: 22 MIS degree
Me: 26 MIS degree

You: Fiance is going to be a RN
Me: Fiance is going to be a RN

You: Underestimate how much nurses are paid
Me: Banking on it

Hilarious. Anyways, as far as education goes.... here's my 2 cents. If you want to stay in the world of "computers", you need to get a more specialized degree. I don't know about your MIS program, but the one at my school really produced tons of MIS graduates without enough knowledge to do anything- not enough finance to do finance, not enough accounting to do accounting, and not enough tech to do tech work. You may have other credentials that will allow you to succeed despite the MIS degree (as I had when I graduated). If you don't have or obtain some sort of credentials (even a cert), you will probably end up as some sort of analyst.

The MIS -> MBA track is a logical one, but my college adviser had some great advice which i'll share with you- don't get the MBA right out of college. A lot of the value from a MBA program is not just the knowledge and the degree, but the people you will network with. MBA night programs are 100% full of students who are in the MBA program to move up in their organizations... THESE are the people you want to know, not your former MIS classmates. I went to a MBA program "open house" once, and the difference between the BA -> MBA and MBA night students was (no pun) night and day- the night school was full of very impressive folks who had lots of real-world stories to share, and many of whom were already at the managerial level... they just needed the MBA to make the "next step."

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Re: 22 Year Old Question
Old 02-04-2006, 09:56 PM   #6
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Re: 22 Year Old Question

Thanks for the advice. Believe me, I know how much nurses get paid, and in a few years, they will beable to name their salaries. I heard the same thing you are saying about an MBA program, get some work experience then go back and get an MBA, that makes a lot of sense. Right now I work for my school in their IT department, and will continue to do so until I graduate. My program is just like yours it sounds like. I have a broad knowledge of a lot of software, but am no "expert" in any. I am learning a lot though at my job, and my school just bought a half a million dollar software system called Talisma. I am the analytical reporter for it, and build a few web pages, nothing fansy as of yet.

This is my plan, since I am getting a tech degree in Process Technology, I will have a guarenteed job in the refining business. I will get my foot in the door being an operator, do that for a couple years and hopefully move up to a control room operator(all computers) monitoring flow, pressure, temp, level. If not, move into the corporate part. Most operators only have associate degrees, none that I have talked to have BA's.

It's funny, that I go to a 4 year university and a tech school at the same time. Who would have ever thought the tech school would get me my job? Just a good tech degree can get you a 60k pay job in Texas, but nobody thinks about going to a community college.

I am no genius, and have never claimed to be, but growing up, I would look at my friends parents and see them have a new car every year. I always thought they were rich. I would look at my parents, and see them get one every 10-15 years (or until it was cheaper to get rid of then to fix). Its amazing that now these same people complain about retirment and how they will never be able to do it. WHY DO PEOPLE DO THIS?

Ok, I am long winded, I'll get off this.

PS>>>> Any stock tips from anyone? I was looking into some LNG companies, but any input would help
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Re: 22 Year Old Question
Old 02-04-2006, 11:19 PM   #7
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Re: 22 Year Old Question

Quote:
Originally Posted by bode316
...I am no genius, and have never claimed to be, but growing up, I would look at my friends parents and see them have a new car every year. I always thought they were rich. I would look at my parents, and see them get one every 10-15 years (or until it was cheaper to get rid of then to fix). Its amazing that now these same people complain about retirment and how they will never be able to do it. WHY DO PEOPLE DO THIS?
Because they are weak.
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Re: 22 Year Old Question
Old 02-05-2006, 06:18 AM   #8
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Re: 22 Year Old Question

All good advice and you sound like a smart young person way ahead of the curve. One thing I didn't see mentioned was if Valero will pay for or reimburse you for your continuing education, if so it's a no brainer. As for investments, my suggestions are also socking your free money into a low cost TSM or S&P index fund via a Roth IRA.
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Re: 22 Year Old Question
Old 02-05-2006, 08:26 AM   #9
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Re: 22 Year Old Question

I believe they will pay for college, my only concern is, its 4 days on, 4 off, 12 hour shifts, switching between nights and weekends. I am a determined person though, and can figure something out. Right now, I am working 25 hours a week, and taking 21 hours of class. When I graduate this summer, I will have 4 associate degrees and 1 bachelors degree. I didn't even realize I hade the associate degree until I went into the councelors office and they said that, so I said might as well get more diplomas lol.

PS>>>>What is a TSM?
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Re: 22 Year Old Question
Old 02-05-2006, 08:43 AM   #10
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Re: 22 Year Old Question

Total Stock Market. I worked for BP in a chemical plant in Ohio for 32 years and know the rigours of shift work. Once you get on shift, you may be able to trade shifts to accomodate your classes. I have known a number of people who continued their education while working full time shift work. It was tough but it got most of them out of the hourly shift work grind.
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Re: 22 Year Old Question
Old 02-05-2006, 09:34 AM   #11
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Re: 22 Year Old Question

Thats great to hear, did you work in Texas City? Did you eventually get out of shift work? How did you like your job? I have done shift work in the summer before, but am wondering how you liked it with your family? I think its pretty neat that, "When your off, your off", plus I hear that you dont have to take the job home with you. One last thing, I really wanna do the overtime. Any response would help.

PS>> What TSM fund do you reccommend?
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Re: 22 Year Old Question
Old 02-05-2006, 11:01 AM   #12
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Re: 22 Year Old Question

Hey, you are asking really good questions. I think you will do quite well in life.

In regards to the TSM (Total Stock Market) it's an index fund. I believe it basically holds the Wilshire 4500.

Check this board out, it's the Vanguard Diehard Forum.

http://socialize.morningstar.com/New...mId=F100000015

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Re: 22 Year Old Question
Old 02-05-2006, 11:10 AM   #13
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Re: 22 Year Old Question

Actually worked in Ohio during my entire 32 year career but I do know some people in Texas City as well as other BP plants around the country. *I started in 1974 as a plant utility operator, got some education and worked my way up through the ranks to shift supervisor, day supervisor, saftey director, operations superintentdent as well as managing some special projects through the years. *I really enjoyed the job and the challenges associated with running and managing a chemical plant. *After about 28 years and going through a number of painful re-organizations, I guess I kind of got burnt out wasn't having as much fun, and believe me you take the job home with you when you are in management, and even to some extent in the hourly ranks if you really care and enjoy your work. *In the plant I worked at there was always plenty of overtime for the hourly workers. *Overall I had a good run, met some fine people and the pay and benefits were damn good. *

A couple of TSM mutual funds I would consider if I was 22 and had some free money would be a Vanguard fund VSTMX and or a Fidelity fund FSTMX, both no load index funds with low fees. *

Good luck on your career. *
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Re: 22 Year Old Question
Old 02-05-2006, 11:27 AM   #14
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Re: 22 Year Old Question

Quote:
Originally Posted by Helen
In regards to the TSM (Total Stock Market) it's an index fund. I believe it basically holds the Wilshire 4500.
Helen - the wilshire 5000 is the TSM. The wilshire 4500 is the TSM minus the S&P 500, mostly mid cap and small capitalization stocks. Sometimes people hold equal amounts of the S&P500 and the wilshire 4500 to get a more balanced holding of large, mid and small cap as the "TSM" is market weighted, meaning it has more shares of the larger companies.

Vanguard is also using the MSCI indexes for a lot of their funds now. In defiance of their names, the MSCI index holds just under 4000 companies while vanguards TSM only holds 3776. Another source of the "why is xxx's total market index returning differently from yyy's?" question. Many indexes leave out illiquid stocks or inconsequential ones.
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Re: 22 Year Old Question
Old 02-05-2006, 02:02 PM   #15
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Re: 22 Year Old Question

Thanks CFB !!! I think I was confusing it with a fund in my 403b.
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Re: 22 Year Old Question
Old 02-05-2006, 02:16 PM   #16
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Re: 22 Year Old Question

Well, its almost Super Bowl time, Frayne, thank you for all your help. What type of education did you get to move up there ranks? The reason I chose to get into the field was because I read how there are going to be such a shortage of operators in the next 5-10 years, and with a good education, I believe I can move up the chain. How easy was it for you to move up the ladder, and do you believe it was mostly because of hard work and an education?

I am the type of person that is always looking for an edge, and I saw that the average age of an operator was in the 50's. Also, I met a man that is an Operations supervisor, who's wife didnt work, who was buying up rent houses. He told me about operations and how the pay was really good and that nobody my age is going into that work because they dont realize the benefits and pay. Anyways, thanks for your input, and if you could give me any inside advice about education, training, or anything that could possibly help me(besides the PTAC education I am recieving) it would be greatly appreciated.
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Re: 22 Year Old Question
Old 02-05-2006, 02:33 PM   #17
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Re: 22 Year Old Question

Also keep in mind that many MBA programs (especially the top tier full time day programs) will want you to have at least 3 years of full time work experience before they will accept you.

My graduate program (not an MBA) was a combination of folks with and without experience. The ones with experience had so much more to bring to the classroom and could easily cross theory into practice. Those without experience had a tougher time of it.
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Re: 22 Year Old Question
Old 02-05-2006, 02:36 PM   #18
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Re: 22 Year Old Question

Yup, almost time for the super bowel, go Steelers. *As far as education, I mostly took chemical engineering and statistics, SPC, etc. courses. *Also hard work, plus I was very fortunate to have some good mentors and bosses throughout my career as well. *First and foremost is I learned every job that I had very well, knew my sections of the plant inside and out and read every manual I could get my hands on to help me better understand how the processes worked. So many times people get blinders on about only doing their own work and feel compelled by peer pressure not to work harder. *I didn't care what others thought as I wanted to know as much about the plant as I could, actually found it interesting.

My advice is to go in there work hard and be a sponge to soak up as much knowledge as you can. *
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Re: 22 Year Old Question
Old 02-05-2006, 09:03 PM   #19
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Re: 22 Year Old Question

Welcome bode,

Regarding what to do with your earnings, I'd suggest the following:

$90k Estimated total household income
$15k 401 (k) Contribution-yours
$15k 401 (K) Contribution-spouse
$ 4k ROTH Contribution-yours
$ 4k ROTH Contribution-spouse
$52k Taxable Income
$8k Estimated total Federal taxes
$7k SS/Medicare taxes
$37k Spendable Income

While it might not leave you with a whole lot left over, by contributing the max possible in your very first year of working, it will result in a huge difference over 30 years of tax-deferred compounding (in addition to lowering your current taxable income, although you still have to pay SS/Medicare tax on your 401(k) contributions).

Regarding your house: while no one can accurately predict future interest rates, current rates are at all-time lows. If you can go ahead and lock in your mortgage now with a 30-year, you should be able to use the $15k that your grandparents left you as part of it. You might have to either come up with a second loan or pay the additional PMI fee for not having 20% down, but the PMI would go away once you have 20% in equity in the house. In return, you would be guaranteed to be locked in at a damn good low mortgage rate.

Also, many furniture/home furnishings stores have plenty of "pay zero interest until 2007/2008/2009" deals, so you'd still be able to buy some standard furniture to start with and not have it kill your budget.

I'm 29, single (although working on an excellent prospect ), and have made a lot of sacrifices in the past 5 years that are allowing me to reap HUGE dividends starting next year (when I will hppefully be FIREd). While you may not be able to put the full $15k in each of your 401 (k)s, give it a try at least, assuming that you have decent fund options to pick from.

--Peter
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Re: 22 Year Old Question
Old 02-06-2006, 09:14 AM   #20
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Re: 22 Year Old Question

As a slave to shift work the 4-4 twelve hours shift is a good schedule, once you get used to it. I tried to talk my boss into it a few months ago, but he sould'nt go for it.

The way I look at it, I don't care if I'm at work 1 hour or 15 hours either way my day is ruined.
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