I've been lurking around for about a year and like reading about people's situations here and other people's advice to them. Thought I'd throw my situation out there...

I'm 18 years old and work part time in retail(about 25 hrs/wk). It's my first job. I started working in late September. I don't go to college and don't plan to, and I'd appreciate it if the thread didn't turn into a discussion about why I should go. I've heard it all before.

Last month I made a little under $800 after taxes.

I'm $3,400 in debt – to my father, so thankfully I don't have to worry about interest. Right now, $500 of that is for car insurance and $2,900 is car payments. He paid off both my car and my car insurance in full. That was in August – for the car I owed him 3k and $1,259 for car insurance. I have until March to pay off the remaining $500 for car insurance, then I'm not sure what I'll have to pay in car insurance next year. Around $200 a month I suppose. I hope to pay off the car insurance by January though so I can get started paying off the car.

Really, my only other expense is gas...at this point, it's about $25 a month. I'm covered under my parents health care until I'm 19, in May. I doubt I'm going to be given enough full time hours to qualify for health benefits in this job, so I'm going to have to figure something out by then.

I have a $1,000 emergency fund.

I have one checking account, and one savings account. I'm planning on opening a couple other savings accounts with ING Direct for different goals(apartment fund, fun money)

I have no credit card.
I have no retirement account.
I have no investments.

Ideally I'll have the insurance paid off sometime before January, and the other car debt paid in August next year. I'll have to throw almost everything at the debt, but I'd also like to put away $200-300 a month so that I can move out eventually.

I'm thinking that I'll add more to my emergency fund after the debt is paid off. Then sometime I'll start saving for retirement among other things.

So...what do you think of my situation? Advice?

What credit card do you all think I should apply for?
Should I avoid opening multiple savings accounts? How many should I open at the most?
At what point should I start saving for “retirementâ€

Hi.
I don't think the questions in the end of your post apply to you unil you get your head above water. Making 800 dollars a month doesn't give you many options. So, if I were you, I would hang on to that 1000 dollars and focus on paying your dad back. THEN, you can use that money to save up for an apartment.

Do you plan on getting another or a different job, or you're just chillin' with the job you have for now? For one, you need to start working 40 hours (full time). Oh..are you still in high school?

Do you have some kind of strike it rich idea in your brain or are you seriously planning on working retail forever? You need goals, and obviously going to college isn't one of them. I'm fine with that, but you can't live with your parents forever, so you have to start making a plan on how you're going to be self-sufficient. That should be your primary thought right now, not multiple savings accounts or retirement.

well as you said and I'm sure know, you need to get a second job or a full-time, if you arent going to school there is no excuse not to. You will never get ahead on 800 a month, it just simply isnt enough to work with. I don't know what sort of work you're looking at, but I would look for some you can grow with. A retail job is a good start, but there arent many options above that unless you really want to be a store manager or somehow get hooked up with corporate for the retailer.

Some may disagree with me, but until you find more work, no credit cards for you. You already have debt to work on I don't think you have any need for anymore right now. With the savings accounts I wouldn't spread yourself out with too many goals, mostly because you wont see enough progress to mentally reward yourself.

Again, some may disagree, but if I were you, I would feel the weight of a debt to my generous parent almost more than a debt with a high interest rate, I would want to pay off those loans from my father quickly, and I would put it before retirement savings especially if I am only 18. It would prove to my dad that he can trust me and maybe help me out with other big purchases in the future. This is more dependent on your family dynamic which may be completely different then anyone else's.

This is a lengthy response, but I look forward to maybe offering more actual suggestions when you have a little more cash flow. Good for you for getting off to a good start, you will certainly receive some helpful advice on these forums.

You should open a Roth IRA as soon as you start getting a paycheck. Put that in an index mutual fund at the least. If you don't know what that means then you got homework to do.

A $3,400 debt at 18 is pretty steep I caution you to reverse this trend now...if it is $3400 now then I shudder what it can be when you are 28 and on...

You have correctly identified that you have an income problem. And you can forget about retirement, your own apartment, "fun money," and everything else if you don't fix it.

The truth is that you write very well - better than nearly all 18 year-olds, and better than most graduates that I know from "elite" universities. So I can tell that you are very intelligent. The problem is, how do you prove it to a skeptical employer, especially when people half as smart as you are holding 4-year degrees (or more) from reputable institutions?

Right now you are severely underproducing (and being underpaid for your abilities) by working retail. I think there was a time when you could start out in that job and work your way up to being a store manager, and eventually get picked out to work for "corporate." But now I know for a fact that 40-something year-old store managers (who have worked there for 20+ years) are answering to 20-something year-old corporate employees who were hired straight out of business school.

That said, I applaud your courage for saying "no" to going directly to college if you know that you don't want it right now. If you ever change your mind and go for a degree you'll take it much more seriously and have a much better plan in place than most of the people with whom I went to school.

But for now you have to take a hard look at your options. You could learn a trade and do quite well for yourself, especially if you decide to go off and start your own business. Some of this work requires a small amount of schooling to get licensed, but some doesn't. My father learned about sign-making and bought a business and has run it successfully for many years, earning a very comfortable middle-class lifestyle. I took my elite college education in computer science to an internship with a guy who runs an IT consulting firm with nothing more than a high school diploma, and he taught me quite a bit. But whether or not you pay for a formal education, you still have to get some kind of education and develop a skill.

Another option is the military. I'm guessing you could do very well on the ASVAB and pick whatever you want for a job. The pay and benefits are nothing to laugh at. After 4 years most enlisted soldiers with only a high school diploma earn about $50,000 plus full medical benefits for their entire family. At that point in their career they'd also be getting some management experience on top of their regular job training. The same soldier, after 20 years, would have significant management experience and could be earning $80,000. They would also be entitled to a $30,000 inflation-adjusted pension (plus the medical benefits) for the rest of their life. There are also opportunities to get a free college education and become an officer, significantly increasing your responsibilities and income along the way. It's not for everybody, but it's worth your consideration.

Bottom line: Spending time reorganizing your finances right now is an example of missing the forest through the trees. It will all be for naught if you don't come up with a plan to tap your true earning potential.

Tim

I agree that you will get much more out of a college degree if you actually want to be in college and it's part of a larger game plan or a step on the road to a specific goal. Just don't rule it out forever. And keep reading.

I agree that you should pay off your debt first before anything else. Learn to stand on your own two feet financially, and when you combine that with good writing skills and your tendency to think for yourself, you'll be way ahead of the game.

And since retail is pretty much a dead end, you might think about auto repair, plumbing, or carpentry. I remember reading somewhere that carpenters, in particular, continue to be in demand, but fewer people are choosing carpentry as a profession, so there's a real need for new carpenters. Besides, having such skills will make it possible for you to repair your own car and/or house (when you get one, eventually), enabling you to save even more of your own hard-earned cash in the long run.

Good luck!

I feel like a few of you are implying that I'm not serious about paying my debt. I'm not sure where that's coming from, but I appreciate the advice regardless.



They're giving me more hours but I don't know how long that will last. I worked 36 hours last week and know I need to work full time.
I graduated high school a few months ago.

Neither. Retail was just a convenient first step. I needed to make money somehow. I do have some ideas for alternate streams of income but they've ended up on the backburner. That will change soon.



Well, does anyone disagree with this? I do, but that goes without saying. I would trust myself not to get into credit card debt but I don't blame others for questioning that.



Here's some conflicting advice. Others here are saying not to contribute yet since I'm in debt and I'm "only 18".

Is everyone in agreement about throwing most of what I earn at the debt? About $700 a month?



Thanks for the vote of confidence. I should probably add that I went to a vocational high school where I "majored" in graphic communications. It was half design and half printing. I wasn't too proficient but it's a trade I continue to think about.

I've ruled out the military for personal reasons.



I've heard that as well. I didn't get to "explore" the carpentry shop when I was a freshmen. I did "explore" auto tech and auto body each for a week and I can say that it's not something I'm interested in.

Go to college, vocational school of some kind, military, win the lottery, or just continue to be "not interested" in any field that actually produces a real income and content with living on the edge of poverty with your parents. Good luck.

I would be fascinated to hear what somebody with a 25-hour/week job and no children or other responsibilities does with the rest of their time. I'm not trying to be sarcastic, I really would be fascinated to hear more about your lifestyle.

Become a concrete contractor.

My husband and I just paid our guy ~ $6K for a week of work (breaking up the driveway, hauling it off, compacting the soil, building forms, pouring the new driveway). And we were not his only job last week - he had at least one other he was overseeing.

This is one of our better contractor stories: he quoted it in writing, he started when he said he would, he finished when he said he would, and the quality was terrific. And he charged us what he said he would.

So, assuming he makes $30K gross per month ('cause he might not always have 2 jobs/week), that's $360K gross per year.

Four men crews @ $15/hour = $120 per day, x 4 = $10K per month x 12 = $120K.

Net gross: $240K.

Dump fees: Estimate $500 per week, $2K per month, leaving gross at $216K.

Concrete materials: $5K per month, gross income ~ $150K.

Minus taxes at 30% - estimated income at $100K per year.

So, worth a thought!

Sandi

I echo Sandi_K's sentiment.
Blue-collar labor is where the money is at... NOT design and printing. Please, let me encourage you to steer CLEAR of graphic design, printing or anything in the arts. Those jobs are the first to go during a recession, and the design field is over-saturated with way too many designers and not enough jobs.
After 15 years of being in the design business and seeing wages slide down ($8.00/hr for a designer?!!) and jobs disappear, and seeing almost all my designer friends out of work, I've thrown in the towel and am switching careers.

So yeah, concrete pourer, electrician, plumber, auto mechanic, etc...any of those will get you further than design/printing.

You didn't want to turn this into a "go to college " thread so I won't...

But what DO you plan to do with your life? Financial planning is about planning to meet goals. If you have no goals then how can you plan?

Where do you see yourself in 10, 20, or 50 years? What will you need to do to get there? How will the choices you make tomorrow impact your plan and whether you achieve your goals.

You left out two major costs - employee taxes and benefits (unemployment, social security, ok maybe he uses day laborers but then he is probably breaking the law by not paying this.) and liability insurance. Oops, that $100k is almost gone. I know a lot of contractors that work more than that and don't make $100k a year reliably. Nothing wrong with being a contractor but teh average one does not make so much.

DH,

You're probably right that the average contractor doesn't make this much. I don't think our young friend is expecting to make 100K any time soon though. Let's say our he merely wants to double his income. Well, at $800 monthly after taxes, he's making roughly $13,000 to $14,000 annually gross. If he was just a labourer in the above example by sandi, worked 5 days a week and only worked 46 weeks of the year, he'd be clearing over $27,000. Who cares about the contractor for now, this kid needs to learn the trade to be contracted before he starts to organize a crew.

OK, so 15% taxes for the workers (OASDI/Medicare/SS) = $18K

Liability insurance is ~ $5k per year, based on DH's premiums (and he does electrical) - So our mythical contractor is still making $100k-$23K = $77K.

Still better than most white collar people I know.

Sandi