Coming of Age

Plastic Money!  Get your plastic money! Step right up.  Easy approval.  Buy now. Why wait for tomorrow.

This sounds like a sleazy used car salesman from the 70’s.  This is a message for you 20 something's out there and you 30 something’s who are still struggling.  It is time to start thinking about tomorrow.  I just hit 40 this year and I have a wealth of financial mistakes on my resume.  I’ve often told my Sailors in the military that it is easier to learn from someone else's mistakes than from your own.  Learning from someone else means you do not have consequences to pay.  Learning from your own mistakes, well get ready to pay.  Learn from mine and those I’ve learned from others.

• You will get old.  It will happen.  My aging moment happened at at 37 while training for a triathlon.  I am now only able to run about 2 miles.
• You will need to retire.  I know what you are thinking. ”I will never get old.”  I have a niece who says that.  She still cannot tell me how she plans on stopping from aging.  Start saving money early.  Many retirements plans allow you to contribute just $50 a month.  That first $50 in your 401K or IRA will be the money that does the most for you for the next 40 years.
• Pay now, not latter.  Credits cards should only be used for building good credit and emergencies.  I use mine, then on the same day I go to my online banking an pay it off.  If you cannot afford to pay for it in cash on the same day, wait until you can.
• Build a nest egg.  Nothing ruins a financial plan faster then an unexpected $1000 repair bill.  This nest egg is not for vacations, Justin Bieber tickets or a new pair of shoes.  Your goal is to never touch this money.  That way if something should happen, it will be there.  It is easier to rebuild the nest egg than to pay off debt.
• Save you a down payment.  Get out of your apartment and get a house.  Home ownership cost just a little bit more than rent.  Here is the difference…equity.  Equity is how much of your home you own.  With rent, you never own anything.  An apartment is like  a bad motel.  You pay to sleep there. There is no room service and you have to clean it.  Start saving with $10 a week.  Increase that by $1 a week until you get to at least $100 per week.  This will teach you to stay focused and to make good financial decisions.  At 5 years, you will have 20% down on a $100,000 home.
• Your education is your best insurance against financial hardship.  Educated people tend to make better decisions and enjoy a higher standard of living.  Many uneducated people want to live like they have a high standard of living, but drive themselves further in debt.  Focus on getting a new skill or certification to help you in your career.
• Once you hit retirement, if you do not have enough money to live on, you can go back to work.  Do not expect to be able to get a loan without placing a significant amount of your assets (like your home) as collateral.  The number of working years you have left will help lenders determine if you are a risky loan or a safe one.  It is best not to need a loan the closer to retirement you are.

Those are just a few lessons.  If you are struggling financially, take responsibility and get out.  The sooner you start, the sooner you will be free.