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