Meet Dan, Matt’s financially savvy brother to discuss what he’s doing right, wrong, and what he could do better. Are money smarts genetic?
We learn early on the difference between Matt and Dan. As children, Dan wanted stocks for Christmas while Matt asked for Xbox games. Their Mom told me they still do that. Dan also took personal finance classes while in high school underscoring the importance of teaching kids about money.
Dan started college majoring in finance but changed to management information systems after one semester. He graduated with $45,000 in student debt and bought a house soon after.
He did not take Matt’s advice to “live a little.” Instead, he put 10% down while maintaining a cushion of $10,000. Half of that money is in Betterment, while the other half slowly transfers to Betterment from his savings account.
Dan has a private IRA, a pension through his job, no credit card debt and owes $4,000 on his car.
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A few changes linger for him on the horizon. Dan got a five-year tax abatement while buying his house. When those five years are up, his mortgage payments will increase.
He’s also eligible for a program that will partially forgive his student loans after working for a public institution for ten years. He’s midway through year five.
The question is, how can Dan do better (because he’s doing pretty damn well). His portfolio is diversified, and he’s involved with his financial situation.
He should pay off the car loan in a few months freeing up $300 and put it towards Betterment. He may also start researching 3-4 individual companies as potential investment opportunities. He should also make better snack choices.
Betterment: An on-line investing tool.
Mint: LMM’s favorite budgeting tool.