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I'm 23. I have $3000. How can I best use it to make more money?

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I'm 23. I have $3000. How can I best use it to make more money?

#1

Post by nimbleNima »

Hello fellow HN readers,

The title gives the gist. I'm in college. I'm $6000 in credit card debt, and at 12% APY I'm paying $60/month in interest. If I pay off half of it, then my interest drops to $30/month. In other words, it's an investment that makes me $30/month. I've read into CDs and IRAs, and I find them meaningless, since their returns are insignificant, and any accrued money will be offset by inflation.

I want to know, from any multimillionaires here, what is the best course of action? Speak authoritatively. How would YOU use this money--if it was all you had--to snowball it into more? I'm open-minded.

Thanks

Re: I'm 23. I have $3000. How can I best use it to make more money?

#2

Post by moocow01 »

12% after taxes is an incredibly difficult return to achieve (you're talking around an 18% return y-o-y). If someone promises you this rate of return make sure the fund manager's last name isn't Madoff.

You are much better off paying down your credit card debt. Sorry I wish I didn't have to sound like Suze Orman.

Re: I'm 23. I have $3000. How can I best use it to make more money?

#4

Post by joshkaufman »

Since you're on HN, I assume you already have a good computer. Invest the money in books that will teach you how to start a profitable and sustainable business, and purchase any additional tools you need to start producing and shipping. (Here are the books I recommend: http://personalmba.com/best-business-books/)

I've easily spend $10k in books (and $20k+ in training) over the past ten years, and can't think of any other investment that has an ROI that's remotely close. Example: after reading Value-Based Fees by Alan Weiss, I tripled my profitability pretty much overnight. The book cost $40.

Buying every book on my recommended list would set you back about $1,500. (Less if you hit the library, and buy only the books you want to keep for easy reference.) The rest can be spent buying tools, specialized training, and inexpensive test marketing.

As long as your first idea isn't very capital intensive, $3,000 can take you far if you use it to invest in your own knowledge and skills.

Re: I'm 23. I have $3000. How can I best use it to make more money?

#5

Post by orangecat »

moocow01 wrote: post #2

12% after taxes is an incredibly difficult return to achieve (you're talking around an 18% return y-o-y). If someone promises you this rate of return make sure the fund manager's last name isn't Madoff. You are much better off paying down your credit card debt. Sorry I wish I didn't have to sound like Suze Orman.

This is absolutely correct.

Re: I'm 23. I have $3000. How can I best use it to make more money?

#6

Post by whichdan »

If I had $3k in the bank and $6k in debt, I'd be very wary of moving any of it around. What happens if your car breaks down and you need $1k in repairs? Your CC limit only goes so far. And if you don't have a car, I'm sure you can think of another example..

Re: I'm 23. I have $3000. How can I best use it to make more money?

#7

Post by thoughtsimple »

If you feel that you have stable employment or means of supporting yourself, pay off the credit card as soon as possible. If your financial situation is not that solid, put the money in a savings account for a rainy day.

I don't subscribe to the theory that says you should always use your available cash to pay off debt. Having no ready cash can leave you in a world of hurt if the unexpected happens. While $60/month is no fun, it is manageable and not a financial risk.

Oh yeah, one more thing, stop using your credit card.

Re: I'm 23. I have $3000. How can I best use it to make more money?

#8

Post by the-come-ons »

I am not a multimillionaire yet, sorry.

If $3000 was all that I had, the one thing I would do would be to a) get a job or b) get a second job (work hard while you can). I would then immediately pay down my credit card with the $3000. Then, with the money from my paychecks, I would save $1000 into a regular savings account (for emergencies). More work more money. Then I completely pay off my debt. I sure as hell hate debt! After my card is paid off, I start adding that old credit card payment to my savings plus anything extra that I possibly can.

It is more advantageous for you to stay out of debt now (and forever). I think you will feel better.

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