I was one of the lucky few who graduated with small amounts of student loan debt. I graduated with only 3k in student loans. But I made a mistake of getting a credit card.
I maxed out my credit card within a few months and took out another credit card because I needed the second one to survive.
In the span of 5 months before I had a salary, I racked out 5k worth of CC debt…
It was funny because I had only 3k of debt from school in 4 years vs. 5k worth of debt in 5 months.
Let’s break it down per month.
3k / 48 months = 62.5 dollars per month
5k / 5 months = 1000 dollars per month (looking back, I blew it mostly on beers). Definitely was not a smart financial decision.
I started my current real estate business with less than 5k in cash… I wish I had started it when I graduated in 2012. That would have saved me a lot of financial headaches down the road.
When you’re first starting out, it’s important to stay out of credit card debt and build up some savings.
Once you have a few thousand dollars, you can start thinking about investment. Here are the most common ways to invest a few thousand dollars:
Stock market - I wouldn’t recommend it. It requires a lot of reading. Warren Buffet reads 12 hours a day.
Mutual Funds - think long-term investments. Good place to park your money, but what if you needed it in the short-term like a year or two?
Real estate- It’d be hard to buy properties with only a few thousand dollars. You would really need to know what you’re doing…
CDs - meh. It just doesn’t sound sexy. Slow gains.
Businesses - this is where I would put your few thousand dollars to good use.
Here is why.
As I’ve mentioned before, I started my first real estate company with less than 5k. In that year, I’ve earned 10x of what I’ve invested into the business…
That’s pretty substantial. It’d beat out any stocks, mutual funds, real estate, and CDs. Hands down the best decision I’ve made in my late 20s.
The business idea is called Airbnb Arbitrage.
Here’s how it works.
In this case, you are renting a property out at a lower price and subleasing it out via Airbnb at a higher price. For example, you lease a 1-bedroom apartment at $1,000 dollars a month and rent out the same 1-bedroom for $2,000 dollars a month on Airbnb. Your net profit is $1k
Best part about this business model is that you lease homes and not own them. Once the business is up and running, I spend only a couple of hours each week managing the business.
Hope this helps!