The new says we suck. Articles from vice tell you that ‘adulting’ is bullshit, that you should just travel the world and be a waitress for the rest of your life. Hard work and building for the future is under-valued and ‘having fun’ is all that seems to matter.
Every day I get a glimpse of how grim the outlook is for those who bought into the system. A girl, $60,000 in debt with no degree to show for it. A guy, $80,000 in debt making $20/hr with an $800/month payment! Countless others are in the same boat. The worst part is that these people are hopeless. They spend their free time drowning their sorrows instead of trying to escape this mess. The whole situation is absurd, absolutely absurd!
This is the system that most of us were told to buy into. The problem is that system doesn’t work anymore. That system was broken by globalization and the internet. We came of age during a revolution. Those who realized early, made billions. Those of us that haven’t are grasping at whatever we can get. But now we can build on the platforms that they have created and make millions ourselves. The Internet has allowed us to connect to the far reaches of the earth in a way that has never been possible before. The ability to find like minded groups of people and spread a message is now just a click away.
What does this all have to do with personal finance? Everything.
When you realize the world we are currently operating in, you can act accordingly. If you act like we live the world our parents grew up in, you will surely fail. Things have changed, get over it.
First things first.
College is worthless in the new world.
As a guy who spent damn near ten years in college, I can tell you that almost everything that I learned on my own has benefited me more than anything learned in school or a textbook. It also cost a hell of a lot less. If you are on student loans, you have no business being in college.
College is worthless, but education is priceless.
We can access everything that was ever written from our smartphones. Top Ivy league schools now offer free courses. E-books can be downloaded in mere seconds. You may be stopping your schooling, but your education has just begun.
Step 1: Stop the bleeding!
After I stopped qualifying for financial aid, I began to take out loans. In one semester, I racked up a $5000 bill. I realized very quickly that I didn’t want to spend the rest of my life paying off debt for a degree I barely wanted. I decided to quit college. I didn’t know what I was going to do, but I decided I’d rather be broke than live a life of indentured servitude.
This applies to any broken financial situation. If you are putting out more money than you are making or breaking even, you need to reduce! Anywhere you can cut down on spending is a win. Buy food in bulk, work closer to home, do whatever it is you know you need to do no matter how hard it is.
Step 2: Stack Cash!
More 18-34 year olds are living at home more than ever before. If you’re one of those people, you need to work hard and save every last penny for when your ass hits the real world. No matter how much you save, it will never be enough. I started my adult life with $3000 and my lifestyle took a serious hit. I went from the suburbs to the ghetto. From Steak and Eggs to well, just eggs… and chili, lots and lots of chili.
Step 3: Move out!
I didn’t feel like I had control of my life until I got out of Momma’s house. Because I didn’t. When you are truly on your own and you’ve got to do everything for yourself, you can do anything for yourself. You’ll begin to forge your own life and start making your mark on the world.
Step 4: Make money your main focus
Do whatever you can to make more dollars per hour. This means searching endlessly for work and not settling for average. If you have any skills or hobbies, this is the time to leverage them. This will drag you through tough times, but it will be well worth it when you see your friends in the same shitty position while you move forward at lightning speed.
Many people will tell you that you are too focused on money, while they flip burgers for $7.50 an hour and barely scrape by.
There is no point in working if you are just making end’s meet. The job will suck up all your time and you will have no extra money to pay down debt or even save for a rainy day.
If you don’t know how, learn to cook your own food. This is both healthier and cheaper. Learn to make a dollar stretch while you are poor. All that chili I ate? $20 fed a 190lb man for a week. That’s bang for your buck. Fix your own car and pay your insurance as far in advance as you can before you get out on your own. Furniture from Craigslist will serve you just fine for the time being.
Always save 10% NO MATTER WHAT so that you will never be in a shitty situation. I literally saved $2.30 from a $23 check at one point. It’s no coincidence that I haven’t hit hard times since then, but if I ever do, I’ve got plenty of money to cover myself.
Pay down all high-interest debt. This most likely means credit cards first. I had $4000 in debt that gained $50 of interest every month! My main objective was to eliminate that.
After paying the high-interest debt, you will want to hit the old debt. Anything that is in collections is negatively impacting your credit score. Paying these down will make you more attractive to lenders, but the objective here is not to saddle yourself with more debt. Having good credit gives you options. You will qualify for better apartments, homes, cars and most importantly – capital. Borrowing money at 1-2% beats 23% any day. When and if you need any of this, you will be more than ready.
Step 5: Profit???
As you begin to crawl out of the financial mess you’ve created, you’ll start to find that you have a lot of extra money that used to go towards debt. Stack that cash. Never let your lifestyle grow into your income. That money you’re stacking? This will be invested. Not in mutual funds or 401Ks – those are old world. You’ll be investing in yourself and your business. Take that extra dollar and try and turn it into 2. You will fail, you will lose money, but keep trying and learning from the internet until you succeed. When all goes well, you will be living a life worthy of envy. While your ‘peers’ will be just entering the working world with boatloads of debt.
Stay strong, you’ve got a long journey ahead of you.