How many times have you thought, “If I could only go back in time”? What were some of the things you would have done differently? (Well, besides dating the guy/gal your parents warned you about) I think about it and I think if I had to write myself a letter about my financial future, it would go something like this:
I am writing you today to make sure you don’t make the same financial mistakes I made. First, In 2000, when standing on the concourse, do not sign up for a credit card just to get a free t-shirt.
Second, learn to balance a check book and cut up the first debit card you get. It’s a gateway card to credit cards, which can be just as detrimental to your life. Online banking is great, but don’t count on the balance telling you how much money you have, that’s what your check book balance is for!
When you close your first checking account to go to another bank, remember to actually close your first checking account. They charge you $5 a month. When you leave that bank, you have $200 in that account. When it shows up as a charge-off on your credit report, you have negative $70. Remember to cash checks when you get them so they don’t expire in 90 days and you lose out on unclaimed money!
When you get your first “big-girl” job and you are holding your pay checks for a month before you cash them, don’t. Cash those suckers and start saving some interest on that unused money while the interest rate at the bank is still above 5%, it won’t be that way two years from then. In 2002, when you see that shiny new Dodge Ram sitting in the parking lot, don’t buy it. Your salary that year is going to be $19,800. The truck costs you $19,000. When you get those $379 a month payments, you’ll only have $32 a month after bills to live off of, including your gas and food. Drive the paid-for explorer your parents bought you until the wheels fall off, then go buy a used car with cash!
When you get back that HUGE tax refund check, save it. Don’t go out to eat three meals a day and blow it. You’re throwing away really great money!
Remember the store credit card you got about that time with the $250 limit that you charged up and then paid $50 a month on for the next six and a half months before you did it again? Don’t do that! The APR was almost 30%, you could have saved the $50 cash for 5 months, made some interest off of it, then went and bought yourself new clothes, instead you paid someone else an extra $75.
Let me save some time, don’t use a credit card, not a single credit card. I don’t care if you need tires or diapers, don’t charge a single penny to a credit card. Don’t charge a single penny to start a business on a credit card either! PS, while they are good for some people, you can’t do a part time business and a full time job, it just doesn’t work, just don’t even do it. If a bank thinks the business is worthy, they will loan you the money at a much lower interest rate.
In 2003, you’re going to tell your husband you want to buy some land in the county and he’s not going to want to. Buy the land anyway! In five years, the land is going to be work quadruple what you’ll pay for it.
You’re also fixing to have a baby and you’re going to quit working for a year. Do NOT remove your retirement! You’ll go back to the same job and have to work there another five years to make it up.
In 2004 when you want to go back to school for another degree, don’t. Wait until your son is older, you just can’t juggle a full time job, a baby and school, also, if you decide later to go back to school, choose business, not accounting, you don’t like the morals, or lack there-of of a lot of people you’ll come into contact with. PS, that’s another $3200 your going to throw down the drain, instead, take that $3,200 and pay for a new used car, the explorer you’re still driving (I hope) is probably on its last wheel by now.
This same year your grandmother is going to offer to put a down-payment on a nice brick home on the same street you live on now without her help. Take it! Take her up on the offer, she won’t be here to help you if you wait. When she sends you a large monetary gift a year later, take half of it and save it, use the other half to go see her every chance you get. PS, call her every day and get every piece of investing advice you can from her, the woman is a monetary genius! When she sends you coupons, use them and the $25 for groceries she sends too. Now take that same money you just saved and put it with the other money from her you are saving.
When you want to invest in any money-making schemes and warehouse shoppers clubs, don’t. That will save you thousands over the years. You’re a sucker for anything that might make or save your family some money, simple is best and high risk investments fail. When in doubt, investment wise, don’t.
In 2009, the economy is going to really tank, do not try to start a business during this time, it’s just not going to work. Just stick to simple saving and your full-time jobs. PS, your husband will have a second job that’s just frosting money. Save every penny of it!
Stop eating out so much! Learn to dumb down that sophisticated pallet. It’s killing your pocket book! Use coupons every time you shop. This could save you hundreds of dollars at the store. Stop robbing your savings account to keep your checking account afloat. Just account for every dollar and you won’t ever have to worry about your account going in the negative.
When YNAB comes out, get it! Don’t waste your money on any other finance software, they’re overly expensive and you won’t stick with them because they are complicated and take up too much of your time.
If you will do all the things I have warned you against, you will have saved yourself on the low end, drum roll, $262,050 without interest and that’s on the low end. A house and two cars, paid for, debt free, plus another $125K towards retirement. I also will have saved you countless hours worrying about every dime and more free and happy time with your family and time to do things you enjoy to do.
You 15 years older
What would your letter say?