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I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advice?

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mrstringbean
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I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advice?

Hi everyone,

 

I am 18 years old, live in the US, and I work in IT for a pharmaceutical company making about $54-66k per year (Pre-Tax). I live with my parents. In the fall, I will be attending a university as a full-time student. I will be commuting and all of my classes begin after 5:30 PM allowing me to still work full-time throughout school. In the next four years, I should be able to receive both a Bachelor's in Information Technology and a Master's of Computer Science. Tuition will cost $12-16k a year and I plan to put aside $1k per month for student loans. Aside from that, I currently have no outstanding debt.

 

I want to utilize my current situation as best as I can. Any advice would be greatly appreciated. Thank you!

 

Additional Information

My “bare minimum” expenses per month are $1,700 per month which leaves me with $2,666 in savings per month after taxes.

The reason I left my income as a range is because my base salary is $54,080, but putting in overtime + bonuses can reasonably increase my income to around $66,000. I work from 8 A.M to 5 P.M with a paid hour break. This schedule gives me an hour of overtime every day which (if I can do consistently) can provide an additional ~$10k a year.

 

I prefer to keep university private, but it is one of the top 50 in the US. The reason my tuition is low is… complicated. In high school, I dual enrolled at a local college and took a lot of AP classes which gave me college credit without properly having attended a university. This allowed me to qualify for a Bachelor’s completion program typically intended for adults working full time/people going back to college to finish out their degree. I am not provided housing in this program which cuts out room/board and I only pay per class I am enrolled in (~$1500 per class) which drops the cost from 60k+ to 12-16k per year. All classes are held after 5:30 PM, but are still being taught by the same professor and nearly all classes offer the option to be in-person or online. However, the number of degrees is relatively limited and mine does not offer a Bachelor’s of Computer Science, but they do have a plus one program for the Bachelor’s of Information Technology which allows me to get a Master’s of Computer Science after only one additional year. The way I am completing both in four years is by taking an additional semester's worth of classes in the summer on top of utilizing the credit I received through dual enrollment / APs and getting whatever credit I qualify for from work experience.

 

I still want to take out student loan for two reasons. The first is as a backup in case something happens (I lose my job, medical expenses, etc.). The second is to build credit. My tuition is 12-16k and I plan to put at least $1000 away per month so that I can pay off the loan I take out every year.

 

Although I am not necessarily opposed to it, I would prefer to stay around my family and not move too far if possible. However, I do live just outside a major city and should be able to get plenty of opportunities around where I am.

 

My employer offers to match my 401k contributions up to a certain percentage of my income which I plan to max out every year. This is my only retirement savings plan as of right now.

 

9 REPLIES 9
disdreamin
Valued Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

If the loans are subsidized and you won't be paying interest on them while in school, it might make sense to take them out and bank them. This doesn't seem likely, though, given your income level. Frankly, student loans wouldn't be my first choice for building credit, I'd just make sure to have a couple credit cards that were shown regular use.

 

I'll be curious to see what others opinions are on this situation.

Message 2 of 10
JM427
Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

@mrstringbean Welcome to the forum.  It is quite refreshing to see you seeking this advice.

 

I think your plan is sound, at your age, I would focus rigorously on paying as much of your loans off as quickly after taking them as possible.  The only alteration I would make to your plan is to go ahead and bank that 1st year of savings as an emergency fund, put it in a CD at a local credit union, or a money market account etc.  In year 2, pay year ones loans, in year 3, pay year twos loans, etc.  When you graduate you will have a years worht of loans left to pay, and will be in great shape to do whatever you wish to do with your life.  

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Message 3 of 10
SouthJamaica
Mega Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi


@mrstringbean wrote:

Hi everyone,

 

I am 18 years old, live in the US, and I work in IT for a pharmaceutical company making about $54-66k per year (Pre-Tax). I live with my parents. In the fall, I will be attending a university as a full-time student. I will be commuting and all of my classes begin after 5:30 PM allowing me to still work full-time throughout school. In the next four years, I should be able to receive both a Bachelor's in Information Technology and a Master's of Computer Science. Tuition will cost $12-16k a year and I plan to put aside $1k per month for student loans. Aside from that, I currently have no outstanding debt.

 

I want to utilize my current situation as best as I can. Any advice would be greatly appreciated. Thank you!

 

Additional Information

My “bare minimum” expenses per month are $1,700 per month which leaves me with $2,666 in savings per month after taxes.

The reason I left my income as a range is because my base salary is $54,080, but putting in overtime + bonuses can reasonably increase my income to around $66,000. I work from 8 A.M to 5 P.M with a paid hour break. This schedule gives me an hour of overtime every day which (if I can do consistently) can provide an additional ~$10k a year.

 

I prefer to keep university private, but it is one of the top 50 in the US. The reason my tuition is low is… complicated. In high school, I dual enrolled at a local college and took a lot of AP classes which gave me college credit without properly having attended a university. This allowed me to qualify for a Bachelor’s completion program typically intended for adults working full time/people going back to college to finish out their degree. I am not provided housing in this program which cuts out room/board and I only pay per class I am enrolled in (~$1500 per class) which drops the cost from 60k+ to 12-16k per year. All classes are held after 5:30 PM, but are still being taught by the same professor and nearly all classes offer the option to be in-person or online. However, the number of degrees is relatively limited and mine does not offer a Bachelor’s of Computer Science, but they do have a plus one program for the Bachelor’s of Information Technology which allows me to get a Master’s of Computer Science after only one additional year. The way I am completing both in four years is by taking an additional semester's worth of classes in the summer on top of utilizing the credit I received through dual enrollment / APs and getting whatever credit I qualify for from work experience.

 

I still want to take out student loan for two reasons. The first is as a backup in case something happens (I lose my job, medical expenses, etc.). The second is to build credit. My tuition is 12-16k and I plan to put at least $1000 away per month so that I can pay off the loan I take out every year.

 

Although I am not necessarily opposed to it, I would prefer to stay around my family and not move too far if possible. However, I do live just outside a major city and should be able to get plenty of opportunities around where I am.

 

My employer offers to match my 401k contributions up to a certain percentage of my income which I plan to max out every year. This is my only retirement savings plan as of right now.

 


Sounds like an ambitious plan.  Good luck with it.  No I have no advice; doesn't sound like you need any.


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Message 4 of 10
Anonymous
Not applicable

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

@mrstringbean  I'm not quite sure what you're asking. So please excuse me if I'm not answering this correctly. You are in good shape to start building credit. I recommend a mixture of different credit types. Student loans are a good way to build credit. I would take them out while in school. The interest is low, and you can begin repaying them six months after graduation. I suggest getting a couple credit cards. Capital One and American Express both offer a prequalification tool, so you can check for offers without it hurting your credit. If you've never had credit before, I believe your chances of approval are good, because no prior credit is better than bad credit. I also suggest taking a small share secured loan at the credit union. Andrews FCU does not pull credit for share secured loans, so you won't receive a harmful credit inquiry for the loan. So in conclusion, if you went with my recommendations you will have the following reporting on your credit reports for many years while you're in school:

Two major credit cards

An installment loan

And federal student loans

By the time you graduate, your credit should be in great shape. On another note, you mentioned that you live in the US. Saying this in your post leads me to think you might not be a citizen. If that's the case, I'm sorry but I don't know if you would have trouble getting loans and credit cards in the US. The reason I'm saying this is every time I apply for credit I'm asked on the application if I'm a US citizen.

Message 5 of 10
Anonymalous
Valued Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

Sounds like a good plan. A couple minor comments:

 

I don't think building credit is a good reason to take out a student loan. But you have other reasons, which I won't comment on because I avoided student loans myself.

 

Agree with the posters who said you should get a credit card. As a student, you have some excellent options. Discover, Chase, and Capital One all have some really nice student cards, and you can also check your own bank or credit union. But you're juggling a lot right now, and credit cards are where a lot of people get into trouble, so I recommend taking it slow. Take the time to learn how they work, and establish some good habits. Just use the card, and pay it off in full every month. Don't spend money you don't currently have in your bank account. I wouldn't even consider a second card for at least a full year. Make sure it has no annual fee, and that it will graduate into a regular card, because as your oldest card you'll want to keep it forever. Rewards are much less important.

 

Agree that an emergency fund is a good idea. A lot of people get into financial trouble because they have no buffer. Without that buffer, all it takes is one relatively minor setback or downturn, and things can start to spiral out of control. Three to six months of income is standard.

 

Since you're 18, you have the greatest advantage in the world when it comes to investment: A long time horizon for your investments to compound. Maxing out your matching contributions in your 401(k) is a great start. When you pick how it's invested, low cost is almost always better. Even if you can't put away much, it might be useful to open a Roth, or even a traditional IRA. It'll help you learn how it works, and get in the habit of putting away even a little money on a regular basis. Unlike a 401(k), you can choose to how to invest it. Low cost index funds and minimal or no management fees is the best approach. The Boglehead Three-Fund portfolio is a great place to start, though at your age you could make it even simpler and put 100% in a total US stock market index fund or ETF. Be a buy and hold investor. Don't be a day trader (that's just gambling), and don't worry if there's a recession and the value of your investments plummets. You have time. It'll bounce back, and grow even bigger.

 

Consider finding a good credit union, and become a member. Credit unions typically have the lowest rates for things like car loans or mortgages, so having one in your pocket in a few years when you look for a car or a house is a good idea. And they're relationship-oriented, so length of membership matters. There are some excellent national credit unions if you don't know where you're going to end up, or look at the local options.

 

Message 6 of 10
Citylights18
Valued Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

You may want to get out a few credit cards to build a thicker credit card profile. 

 

Focus on no annual fee cards that will give you some benefit.

 

Hold off on the baller cards until your income grows.

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Message 7 of 10
webhopper
Moderator Emeritus

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

I agree with other posters... try to keep expenses low and loan amounts as low as possible if you need the student loans to fund your classes. Textbooks can be rented pretty cheap through Amazon which is way cheaper than the campus bookstores. 

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Message 8 of 10
iced
Valued Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

This is one of those topics that's basically asking if 50-year-old-us could go back and tell 20-year-old us what to do different, what would that be?

 

- For starters, do not let up on that 401k max-out. Unless it means you can't make the mortgage, don't pull back on it or borrow against it, especially now when you're lucky enough to be buying into a bear market. The one exception to this is to do a little less to cap out HSA, see below.

 

- If I could go back, I'd tell myself to do the Roth401k all the way while my income was lower. When I was making ~$50-100k, I loved having that much less AGI because it meant more money in my pocket, but now that I'm much further up the scale, I realize that I missed a HUGE opportunity to pile up tax-free investments at a favorable tax bracket.

 

- On a similar vein, max out your annual Roth IRA while it's still not complicated to do so (ie, you're not above the max income allowed to contribute that forces you to backdoor it every year instead).

 

- The student loan is fine as long as it doesn't get too big to comfortably repay. You don't want it so big that it impacts your ability to contribute to retirement though as that opportunity cost is far greater than the interest will ever be.

 

- If you can, do a high-deductible plan while you're young and healthy and max out your HSA (hopefully you also get a match there). Even if your parents have you on their insurance, get the cheapest plan that qualifies you to put in to a HSA and do it. It's even better than Roth. This and 401k won't leave much left for savings, but the more you put in at 18, the much, much more it will be when you're 65 (again, especially if you invest your HSA in this bear market).

 

Slight aside: Hopefully this has changed since I was in college, but as a CS graduate myself I found that the MS/CS programs were rather lightweight and not good at preparing for the real world nearly as well as BS/CS was. It sounds like that may not be an option for you, but those peers of mine who did something else for their Bachelors often found themselves either underprepared for the Master's level material or found that they didn't really pick up the critical skills they later found themselves needing in the workplace. In particular, the abstract mathematics courses like algorithm analysis, logic, and discrete math were the types of courses that I found myself leaning on in my career, and those courses were overwhelmingly undergraduate. Programming language classes were also helpful, but those are syntax and easy to pick up elsewhere. If you're looking to go into software development, it may be worth seeking out those courses even if just as an audit. If you plan on going the operations/product management path in tech, then not so much.

Message 9 of 10
KLEXH25
Valued Contributor

Re: I am 18, live in the US, make $54-66k in IT, have no debt, and am attending university. Any advi

Wow, you are off to a good start! The biggest thing I would suggest is to max out a Roth IRA every year. You are in a prime position to do so, and starting this early on with such a big income to start, means you may have the opportunity to retire early. Pick a target date index fund (2070 for you),  park your money there, and you're good to go!



Message 10 of 10
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