Goal #1: CHECK!
I paid off my credit card on Friday. I feel like I won the World Cup myself. Sorry, Germany, it was actually me. Enjoy second place.
How did I do it, you might ask? I would like to say through perseverance and determination and not spending any money at all. In actuality, the stock market did it.
Lessons in investing from someone who has no idea what she’s doing
Step 1–Make sure your parents have the foresight to set up a brokerage account with investments in foreign things you don’t understand for you when you’re young. It will make doing your taxes a nightmare, but ideally, it will grow in value from a very modest amount to enough to make a difference in your life.
Step 2–Use the cash value and sell some stock for things like helping with a down payment on your house or paying off a furnace before it starts accruing interest.
Step 3–Don’t touch it anymore until it’s grown and you have a substantial need to tap into it.
I kind of feel like I’m “cheating” on how I paid it off. At the same time, I needed to be smart about getting it paid off before it accrued any interest. I have only tapped into this investment that was intended to help me pay for college three times in my life and none of them were for college: the first time was to help with the down payment on our house, the next was to help finance my food on our Boston trip this summer (that was just taking out the cash that had been swept and was sitting in a money market account not making me any money so I didn’t actually sell any stock), and now to pay off my credit card. I decided that I would use this investment to pay it off because it had gained enough in value over the last three months to be ahead of where it was a year ago and still pay off my credit card in full. It was important enough to me to get rid of this debt before I lost money on it through interest that I viewed this rapid growth as a windfall and decided to use it before it went down in value or something.
I truly appreciate my parents making this investment in my future. It has fluctuated in value over the years and was hit pretty hard by the recession, but overall, the stock market tends towards growth. It might go down in value sometimes, but there’s a good chance it’ll keep growing overall. I plan on doing something similar for my future children. It has also taught me to figure out complicated tax situations and I kind of feel like I can handle anything when tax season approaches. I also feel more comfortable putting my retirement in more aggressive portfolios despite the recession because of my experience with this investment.
1. Pay off our new furnace by the end of 2014.
2. Build an emergency fund of 6 months of expenses.
3. Pay off my car loan.
4. Start contributing $250 a month to my Roth IRA, in addition to other savings and other retirement contributions.
5. Pay off our house early.
6. Save a travel fund so I can see the world.
Have you ventured into the world of investing or is your money safely tucked away in your mattress? Do you think I “cheated” on my goal by utilizing this resource?