Last month we achieved an important milestone. We cleared our credit card debt. Living in the U.S. for nearly 8 years (will be 8 in couple of days) most of that time as a student eventually lands you up in credit card debt courtesy either necessary items like laptops, mandatory semester fees, or luxuries like traveling around the U.S. Somehow I landed in the U.S. with only $4200 in my pocket and although I was funded throughout my graduate school, you still have other incidental expenses, right? To be fair, my parents did pitch in at time when the need was dire.
At one point in time, I was nearly 12K in debt but that lead to a timely wakeup call for better financial management. Moving to Texas, one of the cheaper states to live in the United States, a generous assistantship stipend, and cutting back on luxuries helped in a speedy recovery. Ash had her share of debts thanks to the in-state tuition she was paying for grad school and the car she bought after a year in Texas to commute from Houston. But clearing her debts became lot easier when she started working full-time so she achieved her debt-free status much earlier.
Clearing your debts while being a student is no easy task so I’m quite proud of my achievement although I’ll admit that taking advantage of those 0% APR schemes did play a part. I wouldn’t recommend it to those who are flimsy with their financial management because one slip up and you screw up your credit history for a long time. I never missed a payment on my credit cards and always paid more than the minimum. Tackling the cards with the highest APR first or moving the balances to a low APR and paying them off with a vengeance is just one way to go about controlling your finances.
While I was paying off my debt, I still kept adding albeit a little to a savings account. ING Direct provides great rates although WAMU has been looking good recently. The size of my savings from couple of years back was evident when my annual interest was a measly $12 but it is safe to say that I earn much more than that in a month now from my savings. But as any financial guru worth his salt will attest that putting your savings in a savings account is like giving the bank a cheap loan. So that’s where you come in, dear readers – I would like some investment advice.
I am what you would call a conservative investor. I am definitely not the guy who would take chances in risky stocks and am definitely don’t aspire to be Harshad Mehta or whoever the current stock market king is. My dad never invested in the stock market saying, he doesn’t have the luck and instead choose to invest in real estate which did pay off handsomely. But even he will admit that in times of need, real estate is extremely difficult to liquidate. So naturally investment and financial management other than that in real estate wasn’t something I learned from my dad.
I’ve been reading up on some basic investment advice but the amount of stuff that is out there is enough to make your head spin especially for a newbie investor. Also, with the economy tanking in the U.S., I’m not even sure if it is the right time to invest. I lean more toward money market accounts or mutual fund index funds but they may not be the best bets today. I’m slightly aware of Vanguard’s Online Personal Fund Manager and even ING Direct has a Sharebuilder option.
Do you recommend any must-reads? What investment advice would you consider paramount to a newbie conservative investor? What options/funds are the best for investing in today’s market and how will they change if and when the economy improves?