What's the next step in building wealth?

[randomguy1]

Depends how much money you make. I would say acquire a second income. Passive income would be a great step. 

[loyalsudz]

I am open for collaborative discussion.  It sounds like you are dealing with the questions that most people ask themselves when they obtain a cash reserve.  It is nice to have cushion/safety net.  Congrats! That's great having the 30K and a retirement plan in the works through your current employer.  The next steps are very dependent on your priorities.  

• Is it to be debt-free?  
• Is it to be a real estate investor?  
• Is it to be a real estate flipper?  
• Is it to just have a side-hustle?  
• And finally, do you want to learn investments in taxable dividend income using a percentage of your current income or is it time for a hard stop until the storm mode aka coronavirus and other subside?  
• Is this about the feeling restlessness that you are not making steps to prepare for the future?

 A lot of questions for you to answer.  Some of them have bases in a spending and income plan because it is more about the math.  If you can do the annualized math times 25 years that gives you many answers already.  And when you are ready, you are ready no matter the age.

Working with existing income

To determine next steps, plan some scenarios or hypothetical changes based on some assumptions, constraints and risks.  

What portion of your cash is an emergency fund of 3 to 6 months worth of expenses?  That means everything for one year of what you spend and how much you have left over every month and what that equates too on a yearly bases.  To cut out expenses, means you can retire earlier because you do not necessarily need x amount.  The greatest wealth building comes from your existing paycheck or take home pay.  That net determines options and wriggle room.  If it is not enough, then you take on side hustles.  When a side hustle produces revenues or profits above your current income and not just projected but in the bank then you have a business model that is working but it has to make more money because being self-employed means that medical insurance, and all the extras in your benefit package are all on your shoulders to maintain.  

• Does the side-hustle allow you to spend quality time on your human capital ie family, friends, and net-working endeavors as well as volunteering?  
• Start with a spending plan 
• Work on projections with the side-hustles
• Include a timeline for studying to understand what is involved ie youtube.com and free online college courses from a community college or other consortium of schools that offer free courses.
• Ask yourself how that aligns with current plans meaning is it too different from what you do at work?  Would it be better to invest in courses aligned with your current career path that would provide income and recognition if you invest in yourself and how long will that take?  

If you just want a house head over to the mortgage section since there is some really good information over there which can help determine if you are ready for that.  

[800who]

@loyalsudz  thank you! What you said is very helpful in giving me the abililty to brainstorm further.

[TGG_1976]

I would say, just continue saving and grow that liquid asset. As you want to buy a house next year, investing it into stock is too short of a time frame/ gamble to get tangible growth results. Any somewhat liquid asset that you need in the next 3-4 years should really be in a high-yield savings account. The stock market is too volatile at the moment and you could loose money. Hang tight, keep saving and pay down any dept and you re-consider your next move in a few months.

[Anonymous]

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@800who wrote:

I've been trying to buy my first house since January, and I recently gave up for the time being and signed a one year lease for an apartment with my girlfriend(the market is terrible in my area and I'm motivated to get out of my current situation). I have $30k in liquid assets, the only debt I have is $1800 left on an auto lease, I was going to use the cash for down payment, closing costs, furnishing the place.. etc.. now what? I have a federal job where I contribute adequately to the TSP, is this the time to begin personally investing? I'm very interested in pursuing real estate and have been for a couple years(buy/build houses & rent them). The place I am moving into is a stand alone one bedroom apartment that the landlord built himself on his own land out behind his house that he also built himself, I hope over the next year to pick his brain and learn things about building because I know nothing... what should I do now?

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Okay let me give you a piece of advice here.  If your going to get into real estate investing and do the remodeling yourself prepare to spend significant amount time doing so.  This is not passive at all it's very active and time consuming.  Are your prepared to spend 20+ hours a week fixing up a house to rent it out?  Do you even have that much time available?  I remodeled my own home and that was a light remodeling where it was mostly cosmetic i.e. painting the whole house, ripping up the old carpeting and putting new flooring down, replace ceiling tile, etc.  That takes a while to do for one person.  So if your job requires you to put in 60 hours a week or more like mine does be prepared for this to take months and that's a cosmetic remodel and not gutting the house down to the frame, installing new electrical and plumbing. 

Just on cosmetic light remodel expect to spend around 10k on it.  Not saying not to pursue real estate because there is money to be made there just letting you know what you are in for.  Also understand most landlords are looking to get just $100.00 per door for there rentals after mortgage, taxes and maintance is accounted for.  I know a lot of people like residential real estate investing but if you want something that's less time consuming commercial real estate with triple net leases is where it's at.  So in that part I agree with SouthJamaica on.  

However, if you plan on buying multi family unit and living in one of the units than residential real estate investing can make a lot more sense.  This is what I did myself with me living in a 3 bedroom apartment above the garages in the back of my property and planning to rent out the house at the front of my property.  However, with my father passing this year my mother is going to be moving into the house instead and I'm never going to charge her rent.  I'm telling you this because if renting out the units in multi family property doesn't work it's still useful to have if you need to take care of relatives one day.  

Anyway that's just my $.02 of the topic for whatever it's worth.