19 years old - am I headed on the right track?

[chaz]

Hi folks,

Just wanted to say that I think this community is really neat, and I hope to learn a lot from all of you and also hopefully be an early retiree, or even reach the point where money is no longer a factor.

A little about myself..

I'm 19 years old, had 2 /12 years of college but didn't go this semester due to self-employment. I wanted to spend more time on my business and learning new things that my local community college probably couldn't offer. I have tried to make sound financial decisions, and I consider my finances to be extremely important and a high priority. Plus I have always found the concept of making money grow interesting and fun.

I just wanted to ask you fine people if I'm making wise financial decisions. I purchased a few of Bogle's books and have been reading other various finance and investing publications.

Here is my situation:

$9k in stafford student loans, most at 6% interest. Payments start in June, as I did not attend school this semester.

$~6k and a little over 2 years left on my car loan.

$135k left at 5.5% on a $170k home I purchased last summer. I paid 20% down to avoid mortgage insurance and other fees.

This month I opened a SEP-IRA and Roth at Vanguard. Here is what I invested in the SEP:

$10k in VTSMX (Total Stock Market Index)
$5k in VGTSX (Total International Stock Index)
$~3.5k in VGSIX (REIT Index Fund)

And in the Roth I maxed it out with the Vanguard target 2050 fund

I also have a taxable account at Scottrade with individual holdings in CAT, AAPL, AMZN, and others, which the value has increased by about $2.8k (started with 10k last fall).

Finally, I have miscellaneous holdings in things such as precious metals (I collect coins), and a small cash emergency fund.

Am I maximizing my situation? Is there anything that I could do to improve it, and optimize my goal to reach early retirement? Did I make any bad choices regarding my investments at Vanguard?

I apologize for the long post. Thank you very much in advance for your input!

 

[plex]

Investments seem fine. Last summer was a good time to buy a house if you knew you were staying in the area for awhile. You will want a sizable liquid fund to handle your yearly expenses, including your living and business expenses. Keeping a tight rein on your expenses, followed by increasing your income, will have the largest impact on how early you can retire.

 

[jimnjana]

Build your emergency fund, plan and budget for your expenses, enjoy your life, educate yourself on personal financial planning matters, you are definitely moving in the right direction.

 

[brewer12345]

You are on the right track at a very early age, so congrats. But since it is hugely important, let me emplhasize what others have said: beef up that emergency fund! You need a minimum of 6 months expenses including debt service in a savings account.

 

[Dawg52]

What kind of business do you have, if you don't mind me asking? I would think it would be very difficult for a 19 year old to be approved for a mortgage of that size. Pretty impressive. You must be the next Bill Gates.

 

[VaCollector]

To answer the OP's title question ~ YES!

You are HERE at age 19....most if not all of the other members here can
only WISH that we had focused on ER at such an early age!

BTW ~ WELCOME!!

 

[ziggy29]

Even thinking about retirement at 19 puts you ahead of probably 95% of your peers, even without saving a cent. Add some actual retirement savings and you are even more ahead of the game.

Agreed with what the others have said -- you will no doubt have some intermediate financial goals that require savings and investments between now and retirement, and don't forget to keep an emergency stash of liquid cash. Doesn't mean you should stop saving for retirement, but at your age you probably have a few other places to stash excess cash flow, too.

Sounds like you're off to a great start.

 

[JBmadera]

welcome, and congratulations...as other have said you're well on your way.

if you remember to always "pay yourself first" (skim off that % of your earnings before it even hits the bank and direct it into your investments), you'll be in charge of your future.

good luck!

 

[easysurfer]

At 19 and you already have a house. That's pretty impressive.

Hmm...let's see, when I was 19 I was still working on getting rid of all my pimples

Looks like you've done a great job getting started off on the right track.

Welcome and congrats.

 

[chinaco]

Congrats... starting early is key.

It appears you are self employed and deferred a semester of college.

IMO - Finish college and acquire a BS degree as quickly as possible (while keeping your expenses down). In general college educated people make more money.... especially if they w*rk for another company. If you intend to work or another company, get to work and work smart and do not avoid opportunities at work that is the quickest way to advance (and increase your compensation). Often opportunity requires having some courage and taking on opportunities that may seem difficult. But those opportunities often can increase your earning potential. Management jobs have thier challenges, but those jobs often are a more direct route to higher earnings. LBYM! If you are careful.... you might be able to ER at 40 or 45 without cutting your lifestyle (should you choose to do so). But you need a plan.

 

[chaz]

Thank you everyone for the advice and nice words.

I'll work on building up a decent emergency fund in case things go wrong. One other thing I think I need to work on is spending..I do tend to spend more than I'd like on things like dining and sporadic purchases (I have a weakness for electronics). I should instead funnel more money into investments and more "appreciating" assets.

 

[brewer12345]

One other piece of advice: don't forget to smell the flowers. Your experience of things changes as you age so some things are best done young. If I have a regret about the life path I have taken thus far it is that I did not really ever give myself the time and resources to go do something outlandish (extended cross country trip, backpacking through Europe, etc.) when I was yound enough to get away with it.

 

[kimber6]

I am in a very similar situation. I am 19 and skipped last semister of community college. I am also self employed and took some time off of school to concentrate on my business and put some cash in the bank. Good to finally hear about someone else that has a head on their shoulders that is under 30. By the way, what business are you in?

 

[chaz]

I am in a very similar situation. I am 19 and skipped last semister of community college. I am also self employed and took some time off of school to concentrate on my business and put some cash in the bank. Good to finally hear about someone else that has a head on their shoulders that is under 30. By the way, what business are you in?

Awesome to hear someone out there like me, so I'm not TOO much of a freak..

I dabble in a lot of different things, mostly internet e-commerce type stuff, marketing, advertising...and I also play around with stock trading and a little forex (gotta be careful with that one though).

I've been wanting to branch out into other forms of business as well...there is a local laundromat I'm interested in and other miscellaneous ventures.

What about you?

 

[Fantasm]

Make sure you save your money and don't waste it on crap. I'm 23 now and I've wasted around $150K in depreciation of cars that I bought and wish I could go back and change that.

Its exciting to have a new and fancy car, but its more exciting to make money. If you do it right, your money should be invested in your own business where the profits pay for the car on its own. That's what I am shooting for now, have my money make its self money to pay for the things I want without eating into my base principal. It's still hard to stay on track though proven by the fact that I just bought another new car a few days ago and will most likely lose $20K in depreciation when I get rid of it in <6 months.

Save, save, save and spend money only in things that will make you more money.

 

[FreeAt30]

First of all - Well done.

Add another one to the folks suggesting that you add to the emergency fund.

Not knowing where you live or what the alternatives are like, do you really need the car?

When you say "home", are you talking about an apartment that's big enough for you, or is it a house where there's space that you could possibly pick up a roommate / housemates that could help you with the payments.

The e-commerce space is great if you can manage it. I've met quite a few of the big names in the "I'll endorse you if you endorse me" circle of e-commerce ennoblement education and although repetitive, it all makes good sense. Just a couple of months ago, I was vacationing with my DW in Thailand where I met a guy who ran a site that paid for his lifestyle as he traveled around with his wife and kid.

IMHO, you should stick to one thing at a time and get really good at it so that you have something to fall back on in case future ventures don't come through. This is especially true if you're going to forgo post-secondary ed. It gives me great peace of mind that although I don't have any need for a job right now, I know that I can out qualify and outperform a great many people in the areas I used to specialize in.

Forget about FX (unless you have a really big emergency fund and want to make it the one thing that you are going to grind away at. It's a very steep and long path.

Good luck in your journey.