Millennial Wealth, LLC
Co-Founder, Chief Compliance Officer
Chad Rixse spent 3 years in the bank-run private wealth management world working primarily with high net worth families and individuals. As much as he enjoyed helping this demographic, he realized that many people, particularly those from his generation, were far too often left behind.
Chad wanted to change that.
Chad's mission in life has always been to help others. As a child, he wanted to become a doctor because he found that helping others was such a rewarding experience for him. Although the medical field did not become his path, he's found another way to fulfill this mission.
The truth is, Chad believes his generation faces a unique set of circumstances. They live in a digital era surrounded by technology and a constant stream of information. Many of them are college educated and burdened with student loans. They lived through, and very well remember, one of the worst financial crises in history. Plus to top it all off, they were taught very little in school about healthy financial habits and preparing for the future.
None of this sat well with Chad. As a Millennial himself, he has experienced many of these struggles first-hand. He knew he had to act. He knew he had to actually do something about it. When he found Levi, it quickly became clear how he was going to make that happen.
BA, Spanish, University of Washington
Assets Under Management:
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It depends on your main priorities. If buying a house in the near future is your main priority, saving $400/mo will get you to the $30k you need in 4.5 years. If you want to buy sooner, you'll need to free up more cash flow by either pulling back on your retirement savings or by finding some sort of side hustle to make some extra cash. If buying a home is not your priority, however, I'd be looking at putting that extra cash towards your student loans, particularly the higher interest ones. You can use the debt avalanche method, where you allocate additional payments towards the highest interest-rate loan first until you have that one paid off then use all the money you were paying towards that one to pay towards the next highest interest loan. Mathematically speaking, this is the quickest and cheapest way to get out of debt. If buying a home or paying off your debt is not a priority, then you could save into either your taxable or your 457(b) plan. The 457(b) is tax-deferred and contributions lower your federal gross taxable income. However, right now your marginal tax rate is only 22% and if you were to max out your 457(b) contributions at $18,500/year, you'd still be paying around 22%. I'm going to say at your age, you should be focusing either on the home purchase or paying off your highest interest student loans, perhaps even at the expense of higher contributions to your retirement savings for a couple years.
I see no harm in doing that as long as you do pay it off during the interest-free introductory period. Plus, you are correct that it would help build your credit score. Make sure you prequalify for the card offer already though as every time you apply, it does a hard credit pull which stays on your credit history for 2 years and can negatively impact your score in the first 12 months, so just be cautious with the application process. The goal is to improve your credit, obviously, not harm it.
When you take on private investors, really anything goes. They are not bound by the same rules and restrictions commercial lenders like banks are. An investor is always going to be looking to make a return on their investment. If they deem it to be high-risk, they may stipulate certain conditions in order to feel like they are fairly compensated for the level of risk they believe they are taking. Just like a lender who decides to lend to a person with poor credit - the worse the credit, the higher the risk, the higher the interest rate as a result. Although 12% interest on loaned funds in the startup investment world is nowhere outside the norm, it does seem rather excessive considering how much equity they have. Usually, in deals like this, they'll lend the money at a high-interest rate but will take only a minority stake as equity. If you are in a position where the business is starting to do well, I'd focus on either getting that $100k paid off as quickly as possible or, I'd see if you can restructure the deal considering the current financial health and trajectory of your startup. If you have the funds, you might also consider buying out that equity partner who loaned the money. Having 12% interest loan for anyone can be very costly and difficult to pay back, especially for a new business looking to become cash flow positive as soon as possible.
Yes, this is a very high rate for a fee-based advisor. The high-end average for fees is 1.5%/yr plus any internal costs of your portfolios (mutual funds have internal expenses). Most hover around 1% nowadays even at the wirehouses like Merril Lynch or UBS. If I were you, I'd be looking to see what your client agreement and account paperwork says as well as analyzing the weighted average expense ratio of the mutual fund portfolio you are in. The main thing to note here is that for every percentage point in fees you pay, that's a percentage point less on returns. Over long periods of time with the power of compounding, this can result in substantially lower returns. I would hope that if you're paying more than 2%/year, your advisor is providing an enormous amount of value. Otherwise, you're just wasting money in my opinion and I'd be looking elsewhere. My firm, for example, uses strictly ETF portfolios and charges 0.80%/yr, so our clients only pay around 1% all-in.
Your credit score is impacted by a variety of different factors. One of these factors is payment history. Typically, paying off a loan early will not hurt your credit score, but you could be missing out on improving your credit by having longer, positive payment history. It all depends on what you are hoping to achieve by paying it off early, however. For example, if your goal is to use that monthly payment money to start contributing to an IRA for retirement, the benefits of early payoff and doing that likely outweigh the chance to continue building credit. If you're in the process of rebuilding previously bad credit, however, you might consider keeping the loan longer. Either way, there should be no negative impact on your credit score, their just might be very little positive impact.