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Frequent Contributor
Posts: 483
Registered: ‎03-05-2013

What would you do with 20k?

Hi everyone longtime lurker first time poster. First, I want to thank you guys for all the information you have given me over the past 10 months it has been really helpful.  Now I have new situation and maybe you guys can help. I'm a veteran (6yrs Army) who now attends a top3 law school. I just turned 30 recently got married and go to school on the GI bill. I own my car and the only debt I have is 8k in school loans. I have about 3k in the bank. Anyway I'll be taking a job this summer where they'll pay me 3600usd/week by the end of the summer I figure I'll still have about 20k of that money. I'm not sure what to do with it. Should I pay off my loans even though I don't have to for another year (I have one more year of school left) or invest the money. I've already maxed out me and my wife's IRA for the year. I really want to build up my credit as I was a little reckless in my younger days my credit score is hovering around 690. Should I buy some real estate? I know some guys who invest in foreclosed real estate but I'm not sure if that is a great market? Invest in stocks?  Maybe an index fund? Any help would be appreciated.

Last App March 23, 2015. Gardening until November 25, 2015
Current Score: 766 EX 734 EQ 780 TU 6/30/2015Starting Score/Goal Score: 580s/780s across the board
Frequent Contributor
Posts: 371
Registered: ‎12-30-2012

Re: What would you do with 20k?

real estate... Do it right though


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Blogger
Posts: 3,367
Registered: ‎10-19-2012

Re: What would you do with 20k?

I would invest the money. Where to invest depends on your time horizon. When do you see yourself needing the cash? The most profitable investment right now would be a stock investment, and for that you can either invest in an index fund or pick stocks on your own. How knowledgeable about the stock market are you?

Frequent Contributor
Posts: 483
Registered: ‎03-05-2013

Re: What would you do with 20k?

[ Edited ]

Thanks for the reply guys.  I don't think I would need the money ever (meaning until retirement). Me and my wife live comfortably now off her teachers salary and my GI Bill payments. Next year after I pass the bar I'll start working full time and will be getting paid in the low 200's so I have no doubt I'll be able to invest more then or pay my school debt down. I only plan on working for a big firm for a couple of years and then hopefully get a job with a govvernment agency (which will mean a huge pay cut). So it's important that by that time I have both my credit and investments in order. The reason I was leaning toward real estate is that it will positively affect my credit. Also as an aside my wife is new US resident who doesn't have a credit score yet. We opened her both a secured (visa) and an unsecured (AMEX) credit card through usaa both with a thousand dollar limit last month. How long before she gets a credit score?

Last App March 23, 2015. Gardening until November 25, 2015
Current Score: 766 EX 734 EQ 780 TU 6/30/2015Starting Score/Goal Score: 580s/780s across the board
Regular Contributor
Posts: 146
Registered: ‎01-05-2013

Re: What would you do with 20k?

Personally, I would pay off the student loan first and then use the remaining 12K to either invest in stocks or put into CDs (saw someone posting about putting money in CDs every 2 weeks and letting it mature).


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Frequent Contributor
Posts: 483
Registered: ‎03-05-2013

Re: What would you do with 20k?

Thanks I figured I should pay off the loans, it was a little shocking everyone said I should invest all of it first.

Last App March 23, 2015. Gardening until November 25, 2015
Current Score: 766 EX 734 EQ 780 TU 6/30/2015Starting Score/Goal Score: 580s/780s across the board
Blogger
Posts: 3,367
Registered: ‎10-19-2012

Re: What would you do with 20k?

The reason is that a stock investment is likely to earn you a much higher rate of return than the interest rate on the student loan. If you have a certain degree of tolerance for risk, investment will make sense in the long run. On the other hand, some people can't sleep well knowing that they have debt to repay and would much rather relieve themselves of any financial liabilities. If you indeed do not foresee any necessity for that amount of money and don't have to pay off the loans immediately, then do what someone without debt would: invest the money.
Community Leader
Valued Contributor
Posts: 2,441
Registered: ‎11-29-2012

Re: What would you do with 20k?

[ Edited ]

It takes six months to generate a credit score. I personally would pay off the loans and invest the rest because I'd rather earn interest than pay interest.


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Frequent Contributor
Posts: 483
Registered: ‎03-05-2013

Re: What would you do with 20k?

The loans don't have any interest. well at least until i graduate and I pass my grace period.  I actually think it would be smart to invest. I mean if I wait a year technically i'll owe less (because of inflation) plus even if I just put the money in a CD it'll still be worth more than if I just paid off the loan.

Last App March 23, 2015. Gardening until November 25, 2015
Current Score: 766 EX 734 EQ 780 TU 6/30/2015Starting Score/Goal Score: 580s/780s across the board
Blogger
Posts: 3,367
Registered: ‎10-19-2012

Re: What would you do with 20k?


unc0mm0n1 wrote:

The loans don't have any interest. well at least until i graduate and I pass my grace period.  I actually think it would be smart to invest. I mean if I wait a year technically i'll owe less (because of inflation) plus even if I just put the money in a CD it'll still be worth more than if I just paid off the loan.


Exactly.

Keep in mind that most CD's won't beat inflation for you though. Robot Sad

 

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