I remember being in b-school; taking out exorbitant loans and thinking to myself, I am learning how to understand the global economy, but I am not learning anything to teach me how to manage my personal economy. I went back to school at the beginning of the housing bubble/mortgage crisis of 2008 that led us into the deepest recession we have probably been in since the Great Depression of the 1930s. I saw many people lose their jobs, their homes and their families during this economic crisis and I was wondering if the future would look bleak for me too, coming out of school in 2010.
I knew that I had skated by, barely making ends-meet in my early 20s, and had a pretty sizable amount of personal credit card debt, a car loan, and other bills piling up; I was drowning. I didn’t know what I was going to do about it, but I knew I had to do something about it. I could no longer bury my head in the sand like an ostrich and ignore it. It was giving me high anxiety and horrific panic attacks. It kept me up late at night. It made me not get things done during the day. I was an utter mess and I wasn’t alone.
“Nearly two-thirds (of young adults) carry some debt, and those with debt have taken on more in the past five years, according to an analysis of the credit records of 3 million 'twentysomethings' that Experian, the credit-reporting agency, did for USA TODAY”- Mindy Fetterman and Barbara Hansen excerpt from Young people struggle to deal with kiss of debt (USA TODAY).
Then one day, as I lay in bed, flipping through the channels of late night TV, I stumbled upon a woman, in a leopard jacket, with short, spunky blonde hair, berating someone over the airwaves about not being able to afford something, because they wanted to buy a boat on credit, and they had old school loan debt and no savings. Her name was Suze Orman. This started me on a journey of personal financial literacy, and led me to read, watch and listen to, many of today’s financial experts and I thought that I would talk about of few of their best teachings today.
Suze Orman www.suzeorman.com
She has written many books, is a correspondent for “O” magazine, and is a TV personality on CNBC’s “The Suze Orman Show” and her Emmy award-winning, PBS specials. I watched her show for many years, seeing her time after time give people the “Suze Smackdown.” The show can be a bit over the top, but Suze is very charismatic and has a fun “girlfriend, tell it like it is” personality. Her show introduced me to her books and specials, many of which I have read or listened to and I think they are full of great information. Here are a few things that she has taught me.
1.) People First, Then Money, THEN Things:
People includes YOU and me. We spend so much of life sometimes trying to buy things to impress people we don’t even know or like. I have known many people who wanted things, and have a house full of tchotchkes and a mountain of credit card debt. Is it worth it? I don’t think so.
Once you have taken care of the people in your life, the next thing is making money; saving, and investing in retirement. Then if you have money left over focus on things, like vacations or entertainment. You must have your priorities in check if you want to win with money.
2.) DENIED; You CANNOT afford it:
It was heartbreaking and tough to hear sometimes but people don’t always understand when they have 30k in school loans, 10k in credit card debt and no savings, that they cannot buy a 50k boat, even if they make 100k/yr. Again, we are back to things and priorities, but to reiterate, get your house in order first, before focusing on unnecessary things (unless boats are your house, or for your business I don’t think it’s a necessity).
Dave is a no holds bar, let them have it, realist. He comes from a Christian Values perspective, and though he can be tough, he is very sweet. His show is full of “debt free screams” and rants on the government having too much control, but he says a lot of good, common sense, country wisdom, that I think is very beneficial. He has many books, a syndicated radio program, and writes for various news outlets around the country. Dave has taught me:
1.) Everyone NEEDS a will:
I never thought that I would need a will. I have no kids, and no real assets to leave to anyone (at least at the time when I started listening to Dave). Who will get your stuff? What if you get incapacitated; who will make decisions for you? These are things most 20somethings do not think about. I always thought drafting a will would be expensive, but many sites have boiler plate documents you can download inexpensively, fill out and have them notarized. I did, and I am glad I did it. It is one less mess for someone else to have to clean up for me in the event that something catastrophic happens. I highly recommend you getting one done ASAP, if you haven’t already.
2.) You CAN be debt free:
I had heard this term before but it was like the word “Nirvana”, or “Shangri-La” or “Utopia” to me. I thought it was unobtainable. I thought that when you bought something you always needed a loan; for a house, a car, to go to school etc. This is not the case. You can save up and pay for things and just use cash. Cash used to be KING. In fact, less than 100 years ago, that is how you did everything. If you didn’t have the cash, then you didn’t get the product. I know this could be very difficult for some, but knowing that it can be done, is very empowering and inspiring. Dave lives it every day.
Final Thoughts:
I still have a mountain of school loans that I am rolling up my sleeves to work through, but that’s it. I paid off all my old bad debt, and my car loan. I now use cash for everything. I have a will, and health care directive should anything happen to me, and I still continue to learn more about personal finance daily. I have volunteered with Financial Peace University and Operation Hope to help teach financial literacy because I truly feel that it is a disservice that many of us go through the education system in America and are not exposed to this information. I didn’t learn it in B-School. I wish I had known ten years ago. I cannot go back and change the past but I can influence the future. The future is always better when equipped with more knowledge and you have a game plan. Be a lifelong learner of personal finance.
Want to share a story of your journey with money or links to personal finance info that might be beneficial to all? Feel free to comment or send us an email.