Is It Okay To Go Into a “Little Bit of Debt?”

Summary

In this engaging conversation, a young man named Ethan seeks financial advice after turning 18 and graduating high school. He's currently working as a pipe fitter, earning $20 an hour, and has managed to save a significant amount. The hosts advise against debt, except for a 15-year fixed-rate mortgage paid off early, and suggest that renting can be a smart move to build financial stability. They encourage Ethan to continue living at home to save money, plan for the future, and consider getting a roommate when he's ready for independence. They also recommend saving for a car and avoiding the common pitfalls of impulsive spending and lifestyle inflation.

Takeaways

• 🎓 Ethan, an 18-year-old high school graduate, is a pipe fitter earning $20 an hour and has savings of around $5,800.
• 💼 Ethan is currently living at home and has no debt, which is a good financial position for his age.
• 🏠 The discussion revolves around the pros and cons of renting versus owning property, especially for young adults.
• 🚫 The hosts are generally against debt, except for a 15-year fixed-rate mortgage paid off early.
• 📈 Renting is seen as a temporary solution that can provide financial flexibility and patience before making a larger investment like buying a house.
• 🏡 Owning a home comes with responsibilities and expenses, such as maintenance and repairs, which can be avoided when renting.
• 💰 Ethan is advised to continue saving and avoid debt, with a goal to eventually own a home but not to rush into it.
• 📚 Ethan is considering an apprenticeship which could lead to a raise and eventually a higher income as a journeyman.
• 🚗 Ethan is encouraged to pay cash for his next car to avoid financial pitfalls common among young adults.
• 📅 Setting a date to seriously consider moving out and living independently is recommended, along with open communication with parents.
• 📚 George's book 'Breaking Free from Broke' is recommended for Ethan to help him navigate financial myths and maintain a debt-free life.

Q & A

What is Ethan's current occupation?

Ethan is a pipe fitter.

How much does Ethan earn per hour?

Ethan earns $20 an hour.

What is Ethan's monthly income?

Ethan's monthly income is approximately $2,400.

Where is Ethan currently living?

Ethan is living at home.

How much money has Ethan saved up?

Ethan has about $3,000 in a checking account and $2,500 in a money market account.

Does Ethan have any debt?

No, Ethan does not have any debt.

What is Ethan's concern about renting apartments?

Ethan is concerned because he has heard that renting apartments is generally a bad idea and he wants to avoid debt.

What is the advice given to Ethan regarding debt?

The advice given is to avoid debt altogether, except for a 15-year fixed rate mortgage that one intends to pay off early.

What is the perspective on renting versus owning a home?

Renting is seen as a way to buy time and get into a better financial position before owning a home, which comes with its own set of expenses and risks.

What is Ethan's plan for the future regarding his job?

Ethan plans to start an apprenticeship in September, which is offered by his current employer, and hopes to become a journeyman in four or five years.

What is the advice given to Ethan about moving out and living independently?

The advice is not to rush into moving out alone, especially since his current living situation allows him to save money. It's suggested that he could consider getting a roommate in a few years to share expenses.

What is the recommendation for Ethan's next car purchase?

The recommendation is to pay cash for the next car to avoid going into debt.