Immigrant Finances #11: Sergio A

Immigrant Finances #11: Sergio A

Being an immigrant has its own challenges and I was curious to know from other immigrants how they were dealing with their finances. I wanted to find out the unique challenges they were facing and how they dealt with them.

I am excited to present the 11th guest of the series, another anonymous reader Sergio A. I’m a computer engineer working for the automotive industry. I enjoy learning and have recently been interested in personal finance which I spent the last year learning about. My other hobbies include playing soccer and smash ultimate competitively. My short term goal is to have 200,000 invested before 30.

I hope you enjoy this interview as much as I did.

1. Can you tell us about yourself? Please include any details you feel comfortable sharing about how long you’ve been in the US, what you do for a living and your income range.

I am 27 years old and graduated from Computer and Electrical Engineering in December 2015. Currently, I work in the automotive Industry working with ECUs on the software side. My income range is between 70,000 to 85,000. I was the first in my family born in the U.S; My 2 older brothers, mom, and dad were all born in Mexico.

2. What was your relationship with money during the early days of your life? How did it influence your finances?

As a child, I was always taught to work for my money. So, on Sundays, we would go to our local public park where soccer events happened all day and I picked up cans and bottles since the deposit was already paid for upon purchase. I also got a weekly allowance of $10 dollars but it didn’t feel like it was enough so I was eventually able to convince my dad to raise it up to $20 and was pretty satisfied with this amount. I stopped getting an allowance when I started working for my uncle’s restaurant at 15 years old. As an informed adult, I have learned that instead of working for money you should have money working for you. This transition takes time but in the long run, it’s the secret to financial independence.

3. Do you discuss money with your friends, family or colleagues? How do they react when you bring up the topic of money? Is this a taboo subject?

Yes, I talk a lot about money with my girlfriend, family, and friends. I know it might be surprising to some of you but I know how much my friends earn annually and they know what I earn (no ranges). Around last year when I started getting into investing, it was a little weird discussing money openly but now everyone is used to talking about it with me.

4. What are some of the money mistakes you have committed? What lessons did you learn from it?

I bought a rental property that doesn’t give a return greater than what holding an index fund long term would give. I also over rehabbed it expecting to get a lot more for rent than what the market is for that area but now I know that it’s a bad idea.

5. What is your view on debt? Do you carry any form of debt? Has it ever been a source of stress in your life?

There are 3 types of people: Those who think all debt is good, those who think some debt is good, and those who think no debt is good. I am a believer of there being good debt depending on what the purpose of the debt is for. A good example of this is having rental properties on a note that despite having a monthly PITI (principal, interest, taxes, insurance), and having operating expenses throughout the years (vacancies, property management, maintenance/repairs, capital expenses), they still cash flow. This means that despite being in debt, the monthly debt is cleared by rent and I still come out positive. I’d consider that good debt. Note that not all investments cash flow and you can purchase a $300,000 home while earning 80,000/year. While you certainly might be able to qualify for it, it would definitely be considered bad debt because no rental property would have good cash on cash returns for that price and also living in a home that expensive would eat up about 1/3 of the income. So, the easiest way to know is whether the debt is good or bad is if it is used for an asset or a liability. Negative cash flowing rental property, despite being an investment, would still be bad debt.

Related:  Immigrant Finances #5: Financial Freedom Countdown

6. How is your money invested? Does being an immigrant have any influence on your investment decisions?

Currently I invest in my company’s traditional 401k for 6% of my salary. I also have a rental property that needs to be paid off to family members since they let me borrow money on 0% interest. This has slowed down my property acquisition since I need to pay off the property in full before I purchase another one and I will be done paying it off next year. I also plan to invest at least $10,000 in my traditional 401k for future years.

7. Do you have any specific money situation as an immigrant (e.g. supporting an aging parent or family overseas) that influences your finances?

The only effect my parents have on my finances is their traditional mindset of paying everything off before investing more as mentioned previously. Since I have to pay them back, it’s slowing me down in acquiring properties. One positive note is that despite being 27 years old, I still live with them and I only need to provide 300/month for food, utility bills, internet, and my stay here. We don’t like to look at this money as rent but more so help my parents out but I’m benefiting more from it than they are.

8. Are you aware of the FI or FIRE movement? If yes, where did you hear about it? Are you pursuing (or have you reached) financial independence?

Yes. I first heard about it from Paula Pant’s podcast in an interview with Suzy Orman. For the first year of learning about investing, I focused on real estate and they don’t really talk about the term FIRE, but they do certainly say what it means, which is having financial independence or retiring early.

9. What are some of the apps or tools you use to manage your finances?

I will be using mint soon.

10. Are there any specific books, blogs or podcasts on personal finance that you’d recommend to others?

There are plenty but I’ll restrict myself to the one of each that have had the most influence on me and my investing actions.

For real estate property investing, I recommend:

  1. Book on rental property investing – Brandon Turner
  2. Book on managing rental properties – Brandon Turner & Heather Turner
  3. Book on estimating rehab costs – J Scott

These 3 books are fundamental before diving in to invest in rental property real estate. These 3 books are all published by BiggerPockets, which I also recommend. BiggerPockets is a forum where people connect and ask questions for all real estate related topics. They also host weekly interviews to professional investors, so check out their podcast.

Related:  Immigrant Finances #10: Joe Chuck

For the stock market, I have read JL Collins’s book called “The Simple Path to Wealth” as recommended by every FIRE passionate. The advice is very straight forward and I like how I can simply invest very passively and don’t have to worry about it till I plan on retiring.

Lastly, I listen to Paula Pant, who gives advice on both real estate and the stock market. Her advice is one of the best and aligns well with what I’ve learned from my other favorite investing guru’s like JL Collins and Brandon Turner.

On YouTube, I listen to Dave Ramsey. I personally find his advice for investing sub-par and linear, so I definitely don’t follow it. However, I do like the advice he gives for getting out of debt. Though I’m not in debt myself, he does seem to guide people in the right direction for getting out of that mess. I still don’t think paying off the credit card with the smallest balance is the way to go though, despite motivating to pay off the rest because mathematically, it doesn’t make sense but different advice works for different people and it’s definitely a step in the right direction.

I also listen to Meet Kevin and Graham Stephan.

11. What money advice do you have for new immigrants who arrive in the US?

Before you invest in anything, always make sure you understand what you’re putting your hard earned money into. Money is easier lost than earned so it’s very important you gain knowledge in investments. The advice your parents may give you may not be what’s best. In my case, they don’t think getting a mortgage on a rental property is a good idea but many investors will prove otherwise. So if you want to invest in real estate, be sure to read at least 3 books on the niche you want to invest in. This is also true if you’d want to invest in the stock market. Also, if your company matches any of your contributions, I recommend at least contributing what the match percentage is and to max out HSA. Advice for how to invest your money is heavily income based so as much as I’d like to provide good advice, it’s too much to say because it’s personal based and there are too many conditions. But in general, make sure you spend less than what you earn, pay your debt as fast as possible, and contribute to 401k to at least matching contributions.

12. How can people connect with you on social media?

You can find me on twitter with my handle: John Sullivan (@john31392)

Immigrant Finances - Interview Series
Immigrant Finances – Interview Series

Are you a first-generation immigrant in the US? If yes, would you like to be part of this interview series? This series will focus on personal finance for first-generation immigrants and the unique challenges they face.

You can check out my page Immigrant Finances – Interview Series for more details on how to participate in this series.

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