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Are you ready to master your money by 25? First, tell me if this sounds like you.
You just graduated or have been out of school for a few years. You left school with a thousands in student loan debt. And you probably don’t love your job, but, hey, it’s why you went to college. So, you suffer through it.
Any of that ring a bell?
I’m 32 years old as I write this, but I’ve been where you are. I’ve been confused about the student loan bills coming in the mail. Wait, I owe how much?
I’ve hated (and still do) being stuck in a cubicle and not being able to see the sunlight.
I left St. Joseph’s University in 2006 (Go Hawks) with $20,000 in student loans.
The difference between you and I is I’m on the other side of it. I’m you about 8 to 10 years later. And, guess what, I survived.
If you hang in here with me, I’ll show you how you can master your money by 25. (Note: If you’re older than that, should you just forget the advice below? No, read it anyway! Unless, of course, you want to keep living in the dark about your money).
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Yes, it is possible to budget and have fun. Budgeting doesn’t mean you become Ebenezer Scrooge and squirrel away all of your money. It just means you have control over your money.
You run your money instead of letting your money run you. You are proactive instead of reactive.
So, get a mobile app like Mint or use a good old spreadsheet from Excel or Google Docs. List out all of your income sources and your expenses. Figure out what expenses are a necessity and unchanging (like food, shelter, and transportation). Then, figure out what expenses are nonessential and changeable (like cable or the gym membership you don’t use).
Then what? Well, cut out all of the nonessential expenses and decrease (or eliminate) the changeable expenses. Sure, it’s hard.
But, if you budget properly, you won’t be paying hundreds or even thousands more on your credit card for all those happy hours and weekend trips.
Don’t go without an emergency fund.
You will have expenses in life that seem to come out of left field. The car will need new tires. The dog will need surgery. Your home will need a new water heater or roof. These things happen and are just a fact of life.
However, you can be prepared. You can be the guy or girl among your group of friends that has an emergency fund. In events where they would have to put it all on credit, you can be prepared with cash in hand.
Now, isn’t that better then wasting your hard-earned money on another latte, shot, video game, or the latest accessory? (The answer is yes!)
Why pay thousands of dollars extra for a degree you already have? Or heck, you could be on to another degree and still paying for this one. You may also not even be using the degree and asking somebody if they would like fries with that. I kid, but that is the reality for many college graduates these days.
So, why continue to pay for the degree? Instead, you need to pay off your student loans.
It doesn’t matter how much you get paid. When you make debt repayment a priority, you will restructure your life to get it done.
Don’t believe me? OK, that’s fine. I just paid off $20,000 in student loans within a few years of graduating and $40,000 in consumer debt using the debt snowball technique. But, what do I know?
Not everyone should buy a house. I’ll say it again: not everyone should buy a house.
That sounds pretty crazy to say and I’m sure I’ll get haters telling me otherwise. But, it’s just a fact. Not everyone is ready or responsible enough to handle home ownership.
It’s not like renting. Once you sign your life away with a mortgage (I’ve done it twice), you are now responsible.
You own it. You’re responsible for all of it. Not your parents. Not your buddies. And not your boss. Or your previous landlord. YOU.
So, when something breaks, you either learn how to fix it or pay somebody who can. When the roof goes, you will have to fork over thousands of dollars to replace it. The previous owner or builder is not on the hook. You are.
Therefore, consider the full cost of home ownership. It goes beyond the mortgage, taxes, and insurance. It includes maintenance, repairs, replacements, yard work, homeowners’ association (HOA) fees, and a host of other things you won’t even know about until you own the property and live there.
Think about it all and do your research on the areas you want to buy. Save at least 20% of the home price for a down payment if you want to avoid paying extra per month in private mortgage insurance (PMI). Then, consider renting for another year or two before diving in headfirst.
Oh, so you’re amazing, huh? You graduated college and are on your way to a Master’s degree.
Guess what? You know nothing. Nothing at all.
Life is a more difficult teacher than anybody you had in high school or college. And the tests can’t be made up, there is no extra credit, and everybody gets the grade they deserve.
You need to realize that you are responsible for your own life. Nobody is going to hand you everything you need to know about money. You need to go and figure it out.
You need to read and read more. Read books and blogs. Watch YouTube videos. Take courses online and at a local campus. Learn all you can. Become a sponge.
Then, since you will inevitably fail many times like everyone else, learn from those experiences. Consider the experiences of others in your life and those you learn about. Don’t make the same mistakes.
Do that and guess what? You’re well on your way.
Do you want to work until you’re 70? I know I don’t. So, just like debt repayment, your retirement needs to be a top priority.
Find out if your employer offers a matching contribution to a 401(k) or similar retirement vehicle. If they match, find out how much. Then, contact HR and get that setup. Contribute at least up to the highest point that your employer matches.
Please don’t leave money on the table. You’re there for 8 or more hours per day any way. Get what is yours.
Finally, instead of working forever, would you like to have a shot at financial freedom? You may not be aware of it, but there’s a whole movement out there of millennials trying to find financial independence and retire early (often referred to as FIRE).
It’s something I know I want to be a part of. So, instead of going out and playing video games in your free time, work on developing a side hustle. These days everything is so expensive and it’s crucial to have extra income coming in.
Plus, you can learn new skills to boost your resume. So, try selling real estate on the side. Start a website and learn how to handle WordPress. Open up that store you thought would be cool to do on Etsy. Just get started.
You never know how it will work out if you don’t apply yourself. OK, now I sound like my father. But, seriously, you can do this. It’s a matter of forcing yourself to do the hard work and pushing through the times when you just don’t feel like it.
Yes, you can master your money by 25. You can learn the basic principles of personal finance and set yourself up for a successful life. No, it’s not always fun and it’s definitely not easy.
But, the principles are simple. All it takes is you to get on board and implement them. If you do so, you will be thanking yourself for decades to come. Best of luck.
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