# Feel Stuck. Need Advice



## Longer32 (Jun 12, 2013)

I'm a 22 yr old who is pursuing a career in aviation as a commercial pilot. I live with my girlfriend and have been for the past 4 years. We just recently moved to start flying with an airline. (We are both pilots) As it goes, you usually have to put in some time on the ground before you can get an aircraft (Aprox. 1 yr.) It's almost considered an internship. I still need to pay aprox $10k to receive all of the schooling required to start flying in an airline before I can actually start working as a pilot. For those of you who know, I need a multi engine instrument rating (Group 1)

In Jan of 2012 I made a decision to get my finances back on track as I was stupid with credit when I was younger. My strategy for my income, amazingly that I have stuck to religiously, is as follows; 

Necessities 55%
Long Term Savings (Debt repayment/Trips) 10%
Financial Freedom 10%
Long Term Education 10%
Play 10%
Give 5% 

It took me 6 months to completely follow this system and break my old habits but I pulled through and began to save money to invest. 

As it stands now we get paid aprox $25k/yr or aprox $1600/mo each. I have $6,400 in my TFSA invested heavily in dividend stocks that are dripping and has appreciated over 25% since last year and over 25oz of silver bullion. She has $4,000 in her TFSA also dripping and up around 10%. She also owns 15oz silver bullion. We own an 86 gas guzzling beauty chevy truck cause it was cheap... Worth -$250 

Our expenses have reduced since we moved out to Sask from Vancouver BC.

Rent $600
Cell $160
Insurance $25
Internet/hydro/water $70
CC $190 (Interest)
LOC $90 (Interest)
Student Loans $250
Gas/Food $350 (Basically Kraft Dinner, Milk, Butter) 

Ok.. Take a deep breath.

CC Maxed at $9,000 (21%)
LOC Maxed at $9,500 (11%)
Student Loans of $18,900 (6%)
Another CC at $1,200 (21%)

I feel stuck because I want to be able to save the $10,000 needed by next spring. By my calculations, it would take $850/mo to get there. I don't want to take out my TFSA money because that is my retirement fund and is making very good returns. Also, being invested in the market is a huge hobby of mine and I love everything to do with it. The obvious thing would be to invest my 10% education money and attempt to create it by trading, plus using my 10% financial freedom money. On the flip side risking my education money trading in the market could potentially put me another year behind. Any suggestions how I can work smart with my money, not hard for my money?


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## Sampson (Apr 3, 2009)

Consolidate the debt, then try to pay that down first.

Trying to save while you carry so much debt isn't the best idea. It is good to save a little to force the habit, but aggressively tackle the debt before doing anything else.


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## MoneyGal (Apr 24, 2009)

How much do you think you're going to earn over your career as a pilot? If the remaining schooling to qualify is $10K, what rate of return on that investment do your lifetime earnings represent? If you are able to start flying earlier, how much faster do you think you'll be able to rebuild the $10K you withdraw?

(Feel like a grade-school math teacher. If Johnny's education is a train going at 50kph, and Johnny adds $10K of acceleration power to his train, how much faster will he reach his destination?)


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## Four Pillars (Apr 5, 2009)

You're 22 - don't worry about retirement at the expense of paying down high interest debt and furthering your career.

You have enough in your TFSAs to kill the two CC debts - do that first.

Try to work out a plan to play down the LOC.

Borrow more student loans to finish off your education if you can do that. 

Not sure why you own silver - doesn't seem to be worth much. I'd sell and pay down debt.


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## MorningCoffee (May 8, 2013)

First of all, congrats on working on your spending.

I would use savings to get rid of debt, then work on building it back up. Consolidate what's left if you can. Reducing the interest % would be a big help.
You have to be making 21% with your investments just to break even, and that's every single year. Paying off your credit card debt, for example, is a guaranteed 21% return.

If you paid only the interest on your credit cards and loans, it costs you $4,121 per year. That's money you're just giving away. It will be easier to save up and get ahead once they are gone.


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## humble_pie (Jun 7, 2009)

longer there you have it. The 3 best people in the whole of canada have just told you to pay down debt & pay for the rest of your training/education as top priorities.

use your tfsa to get on with your career. If you & gf have any profit in the silver, then sell that as well. Think how proud you'll be when you take off for the first time as a licensed pilot! & your girlfriend too, you'll both be so proud when she flies off into the blue with her license in hand.

the market is always, always, always going to be there. It's dull by comparison with this last, final stage of your career training. I don't believe thoughts of retirement have any place in a 22-year-old's life.

that reminds me, this am i glimpsed a globe & mail video carrying out a supposed portfolio makeover for another young person. The subject was a 24-year-old student.

there were 2 financial advisors. Basically they said 1) stop drinking & paying for so much coffee; 2) diversify; 3) start fretting about your retirement; 4) hire a financial advisor to increase the retirement fretting.

surely these have to be the advisors from hell. What, the FA industry is so desperate for clients that now they're down to gushing over retirement portfolios for 24-year-olds with $19,000? 

http://www.theglobeandmail.com/glob...eds-to-kick-his-coffee-habit/article12284642/


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## Longer32 (Jun 12, 2013)

Four Pillars said:


> You're 22 - don't worry about retirement at the expense of paying down high interest debt and furthering your career.
> 
> You have enough in your TFSAs to kill the two CC debts - do that first.
> 
> ...




I think you might be right about taking out the TFSA. It's crazy how much I actually GIVE AWAY for nothing. The LOC I can manage once I get my CC down to zero. Its just the interest payments on the CC that are killing me financially right now. I owe about $150/mo just to stay above water. That's my first day and a half of work off my paycheck!


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## Charlie (May 20, 2011)

I'll echo the cash in TFSA and pay down CCs crowd. 

Also look into the terms of your ccs. My mastercard has an option to pay $35/yr to reduce the rate from 21% to 13%. Well worth it if you'll be carrying a balance. But you have to opt in....and they won't suggest it to you on their own. Possibly there's a better card out there for you if you'll be a cc debtor for a bit?

If you're tracking expenses at 22 and working on a budget, you'll do great. Congrats. As MG states, the $10K may be a great investment if it lands you that pilot job. Student debt's perfectly fine if it's part of a realistic plan for better earnings. 

I've no idea what the pilot market is like these days. I know it was a dogfight in my day with lots and lots of low paying gigs to work up your hours and then tough competition for the good jobs. But great career for those who stuck it out. Good luck.


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## peterk (May 16, 2010)

As someone who just finished his schooling, and has been playing around with stocks for the past 3 years, I would say: Cut it out, it's not worth it at this point in your life.

I spent countless hours screwing around on this and other forums, the internet, reading books, etc.. While it wasn't worth nothing, my time/ mental energy should have been spent elsewhere. Too much of my life was spent trying to figure out how to turn $8,000 into 10,000. With the small amounts a poor student deals with, I would have been infinitely better off focusing on getting better grades, women, exercising, socialising, etc. Pretty much anything... 

If I wanted to pursue "money hobbies" it should have been focusing 100% on CUTTING COSTS and MAKING MORE MONEY, and 0% on investing. If I spent an hour a day working even a shitty minimum wage job instead of "investing" for 3 years, I'd have earned 10k extra. If I spent that hour focusing on some entrepreneurial endeavour, who knows where I'd be now... could be a millionaire!

I'm sure someone told me something similar here on CMF when I joined 3 years ago. And I'm sure I ignored them! 

My advice is to get off this forum, stop investing. Focus on cutting expenses, paying your debt, getting your pilot's license, and earning as much damn money as possible! When you've settled into a career, and are regularly banking a nice big chunk of your regular paycheque, then come back here and start. 

I don't mean to discourage any of the new guys reading this. Just trying to put things into perspective a bit; especially if you're still in school and hardly making any money yet.


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## the-royal-mail (Dec 11, 2009)

^What a great post, peterk. 100% agreed with that. Too many newbies these days are focused on investing and growth when they should be learning about LOWERING expenses, saving and money management. The OP would be well advised to follow what you say, and we can only hope they are here to listen rather than seek confirmation of what they have already decided to do. Not saying that's the case with this OP, but many before them have followed this pattern. Be different and prosper.


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## Charlie (May 20, 2011)

humble_pie said:


> that reminds me, this am i glimpsed a globe & mail video carrying out a supposed portfolio makeover for another young person. The subject was a 24-year-old student.
> 
> there were 2 financial advisors. Basically they said 1) stop drinking & paying for so much coffee; 2) diversify; 3) start fretting about your retirement; 4) hire a financial advisor to increase the retirement fretting.


Here's the non-video link: http://www.theglobeandmail.com/glob...s-protection-from-volatility/article12229985/

And I couldn't agree with you more. Here we have a 24YO phd student with no debt, income of $3500 > expenses, a $19K portfolio, and aspirations of becoming a university professor.....and the advice is to curtail spending, invest more, diversify and, best of all, come up with a retirement plan...just what kind of assumptions are they going to use to project this guys future earnings, needs, returns and available pensions? 

I would have told him to spend his energy on his studies, and establishing a path to professorship. That will reap much better financial returns then diversification in his portfolio or scrimping an extra few hundred dollars from his relatively modest budget. 

And....great post peterk. I read an article a while back that outlined how returns are not really that important early on....in the early years it's more about stashing away the capital. In the mid to later years, once the capital base has accumulated, the returns matter more.


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## humble_pie (Jun 7, 2009)

Charlie said:


> ...great post peterk. I read an article a while back that outlined how returns are not really that important early on....in the early years it's more about stashing away the capital. In the mid to later years, once the capital base has accumulated, the returns matter more.



isn't this wonderful! the entire forum is in synch each:

the huge hurdle is the job after the degree/diploma is earned, along with the amount of debt it took to get that far in the first place. A 25-year-old can just as well build his tfsa in a 1.25% HISA for quite a few years, as long as he's got the rest of his life - jobs, friends, dates, no debt - up & running well.

it looks nasty if financial advisors these days are down to pushing 20-28-year-olds into fretting over their retirements in order to give themselves (the advisors) a hook to sell product.


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## Four Pillars (Apr 5, 2009)

Great post PeterK!


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## cainvest (May 1, 2013)

I think peterK's post should get a sticky, great advice!


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## Longer32 (Jun 12, 2013)

That advice has been helpful. I'm stuck with a fear however. That fear is racking up the debt after I've worked so hard to pay it off. Should I use the $6,000 to pay down the debt on my cc or pay for my education? The biggest fear I have is taking the $6,000 and putting it on the cc, then finding another way of piling it all back on again just by habit. 

I want to reduce my limit if it does come to paying down the cc. Is that a good strategy? Get it down to $3,000 then reduce the limit to that? 

At least if I spend it on my flying, I'll have it and it has the ability to make me employable. One of my family members doesn't want me to pay down the debt because he went through this experience more than once. (That is paying down debt to have it sneak back up almost subconsciously) This has happened to me once before when they increased my LOC from $6,000 to $9,000. I used the extra credit to pay down the cc, telling myself I would continue to pay it down, but lo-and-behold I justified spending it and before I knew it they were both maxed. The only good part is some of it was used on my education...


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## Yoqui (Mar 5, 2013)

Pay down your credit card as much as you can and cut it.


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## MoreMiles (Apr 20, 2011)

Longer32 said:


> That advice has been helpful. I'm stuck with a fear however. That fear is racking up the debt after I've worked so hard to pay it off.


That is not an investment issue anymore. It's about self-control. If you do not believe you have that control, then cancel all credit card and live on cash. Many people have a credit card limit of of over $10,000, and do not spend anywhere close to that. So you know yourself the best, make a decision whether or not to keep your credit products.


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## My Own Advisor (Sep 24, 2012)

Echo that, great post peterk!

If you're young and in debt, kill that crap first. Then, take time to understand your expenses and learn money management principles.

If I did this in my 20s, I'd be about 5 years away from retirement instead of 15.


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## Four Pillars (Apr 5, 2009)

Longer32 said:


> That fear is racking up the debt after I've worked so hard to pay it off.


So what? So maybe you don't succeed in perfecting your finances around the first time around. You learn from it and try again. Paying off a debt and racking it up again is still better than just not trying at all.


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## Nemo2 (Mar 1, 2012)

Go to Botswana, fly bush planes hauling tourists for safaris, get your hours in, upgrade your qualifications, get paid, have fun.


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## kcowan (Jul 1, 2010)

+1 peterk and Nemo2

You have to stop using your CC for anything but convenience credit. That means paying in 21 days the full amount.


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## blin10 (Jun 27, 2011)

+1... markets are not for people who are in debt or struggling financially living pay check to paycheck... forget markets/trading, cash out anything that you have and kill that debt... 



peterk said:


> As someone who just finished his schooling, and has been playing around with stocks for the past 3 years, I would say: Cut it out, it's not worth it at this point in your life.
> 
> I spent countless hours screwing around on this and other forums, the internet, reading books, etc.. While it wasn't worth nothing, my time/ mental energy should have been spent elsewhere. Too much of my life was spent trying to figure out how to turn $8,000 into 10,000. With the small amounts a poor student deals with, I would have been infinitely better off focusing on getting better grades, women, exercising, socialising, etc. Pretty much anything...
> 
> ...


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## mind_business (Sep 24, 2011)

Peterk's advise is excellent ... and I'm probably one of the guys pushing you to live your life first LOL.

To the OP, have you considered trying to increase the limit on your LOC (assuming it's relatively low interest rate compared to your CC's), then paying off your CC with the LOC? Or simply consolidate your loans into a lower interest loan?

If you have momentum with your training/career, I wouldn't lose focus on it now. I wouldn't hesitate using the TFSA to invest in myself at your age. Focus on getting a good paying job, then worry about TFSA's and investing. 

Either way, good luck!!!


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## rd_aaron (Jun 24, 2011)

Do you think you'll be able to get another student loan to pay for schooling? The 6% rate on that student loan is peanuts compared to how much extra money you'll make once you are working full time as a pilot. Don't use your LoC or credit cards if possible to pay for school. Plus while you're in school, you shouldn't have to make payments, and the interest is tax deductible.

In any case, please pay off your credit cards immediately. Not paying off your credit cards is one of the quickest ways to financial doom. There's no way your TFSA is going to keep up with the 21% interest rate of the credit cards. You said you're paying $190 a month on your CC. If you use the two TFSAs to pay off your credit cards, suddenly you'll have an extra $190/month to do whatever you want with (debt repayment/save for school).

Anyways, take Peter's advice. Investing, even though you consider it a hobby, should not be a priority right now. Pay off your high interest debt, finish your schooling, and get a job that pays better than $25k/year. Growing your career at this age is far more important than trying to grow your investment account.

If you are really struggling for money, you could probably find some other part-time work. Saskatchewan is booming and has plenty of jobs available that pay pretty well. You could do it for a year to save up the extra money you need for school if student loans don't work out.


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## Guban (Jul 5, 2011)

peterk said:


> My advice is to get off this forum, stop investing. Focus on cutting expenses, paying your debt, getting your pilot's license, and earning as much damn money as possible! When you've settled into a career, and are regularly banking a nice big chunk of your regular paycheque, then come back here and start.
> 
> I don't mean to discourage any of the new guys reading this. Just trying to put things into perspective a bit; especially if you're still in school and hardly making any money yet.


Hate to be the first to disagree with peterk, but the CMF is great! Perhaps the OP should just concentrate his reading in the General Personal Finance, Real Estate and Frugality areas. :encouragement:


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## Longer32 (Jun 12, 2013)

Thank you everybody for your advice!

I can't get a student loan because I wouldn't be with an "educational institution" as per the student loans board. If I was to apply for a degree/diploma with aviation involved then it would be considered worthy of loaning out money. 

I think I just needed some validation that my credit card debt needs to go! Not only is it financially stressful, it's also mentally and emotionally stressful. It would feel so amazing to have that statement be $0. I've already cut up the card and threw it away. That felt amazing. 

I did up an expense sheet using excel to find where all of our money was going. After seeing how much a month goes out the window in interest payment made me want to throw up. I think withdrawing the TFSA is in my best interest.


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## the-royal-mail (Dec 11, 2009)

Glad to hear you found the right advice for your situation. Your plan sounds very good to me.


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## YYC (Nov 12, 2012)

Longer32 said:


> That advice has been helpful. I'm stuck with a fear however. That fear is racking up the debt after I've worked so hard to pay it off. Should I use the $6,000 to pay down the debt on my cc or pay for my education? The biggest fear I have is taking the $6,000 and putting it on the cc, then finding another way of piling it all back on again just by habit.
> 
> I want to reduce my limit if it does come to paying down the cc. Is that a good strategy? Get it down to $3,000 then reduce the limit to that?
> 
> At least if I spend it on my flying, I'll have it and it has the ability to make me employable. One of my family members doesn't want me to pay down the debt because he went through this experience more than once. (That is paying down debt to have it sneak back up almost subconsciously) This has happened to me once before when they increased my LOC from $6,000 to $9,000. I used the extra credit to pay down the cc, telling myself I would continue to pay it down, but lo-and-behold I justified spending it and before I knew it they were both maxed. The only good part is some of it was used on my education...


What we did (and I've been bad with credit in my life too, so this is from a credit whore himself) is take the credit cards and freeze them in a bag of water in the freezer. Stop carrying them. Once they are paid off, you can let yourself carry one again, but if you do something stupid with it, back in the freezer it goes. This way you retain the credit card for emergencies, it's just 5-10 minutes to thaw it out, but don't have it in your wallet. And you feel really stupid thawing a credit card out of a block of ice to buy some ridiculous consumer item (I know because I've done that too). Good luck!


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