Question:
Why should I read your site?
Answer:
Because I need readers?
Seriously, I can tell you that I am not Warren Buffet. I have no secret investment tips, nor do I know what will happen in the future. I am however, completely debt free at age 31. I have no mortgage, no credit card debt and no car payments. I have a decent sum of money in the bank.
I received no inheritance. I paid for most of my college with student loans. I made a lot of mistakes along the way. But I think I’ve learned quite a bit.
I won’t try to tell you I did it all myself. My parents gave me a car (an 87 Delta 88) when I left for school. My parents helped me out with living expenses from time to time. However most of my college was paid for with grants, loans and few measly scholarships. My wife is one of the biggest factors in our success so far.
When I finished college I was in debt five figures. I had discovered credit cards my fourth year and thought it was a good idea to take a trip to Las Vegas for spring break. I bought a guitar, a PlayStation, tropical fish and more than my fair share of malted barley drinks at the local pubs. Mind you I had a job, actually several jobs. Making minimum wage gets you no where fast, so my income had no potential to match my expenses.
So after five years I was out in the world with a degree. I wasn’t sure what I wanted to do and ended up with a job doing collections at a bank. They claimed this was where everyone started, and I was dumb enough to believe them. I wanted in a job that involved finance or management of some sort as my degree was in Business Economics.
So, there I am in the collections department calling people who are a month late on their credit card bills. There are some moments in life when you realize you should have studied harder. Later I realized the year I spent in collections is probably one of the most valuable years of my life. I learned more from that job then I did 5 years of college.
I learned that bill collection can be handled two ways. The first approach is to scream at the person hoping they will break down and scrounge up some money just to make it stop. The second approach involves understanding the problem and tying to find a solution. The bank I worked for tried the problem solving approach. We attempted to figure out what the problem was and why the customer wasn’t paying the bill. People just don’t stop paying their bills for no reason. Sure you’ll drop your bill behind the TV one month or you’ll forget to put a stamp on the envelope and get it returned to you but most rational people just don’t stop paying their bills.
Our job was to find out why people stopped paying their bills and if possible work out a solution. Sometimes this was setting up an automated payment plan, other times you spent and hour on the phone with someone whose wife had cancer and owed $60,000 in medical bills. When you find out something like that, you want to get out fast because credit cards aren’t their top priority. You make an offer to allow the customer to pay off their bill for half the face value.
Once you spent a while dealing with these situations you gain an insight into human nature. You try to understand why a Dentist with a $300,000 income isn’t paying his $50 credit card bill. You find that drugs, booze, gambling, cheating, divorce and a hundred other variables come into play. You discover that ninety percent of financial problems are psychological. Excluding medical bills, death and disability, most problems can be summarized in the category of “stupid things people do to themselves and the people they love.”
I moved on to the credit department after my tour of duty in collections. We went through 70 to a hundred applications a day deciding who got a credit card. Most of these decisions would probably be done automatically by a computer now, with only a few edge cases left to the discretion of us humans.
I learned that nurses were always a good credit risk. Doctors are horrible with money. There are a surprising number of “Financial Advisors” who aren’t very good with credit. Teachers can’t figure out after 30 years of working nine months a year that they need to budget their money for the summer.
I also discovered my First Rule of Wealth: those with the most material stuff usually have the least actual wealth. At first most people have trouble believing this. However, when you analyze the facts, it makes perfect sense. How do you get stuff? You buy it. Every time you buy a new pair of shoes you trade your financial assets (cash) for a material good. However, your shoes aren’t worth what you paid for them as soon as you slip them on your feet. They’ve now become “used.” So, the more you buy, the less money you have.
I’m constantly amazed how people fail to see this simple principle. So many people mistakenly believe that a new Mercedes is an indicator of material wealth. Again a car is a depreciating asset, meaning it doesn’t make you any money and its worth less over time. A new foreign luxury automobile may be many things: keeping up with the neighbors; trying to boost a low self esteem or trying to make up for physical deficiencies. All too often it’s a sign of someone who wants to make sure they aren’t getting wealthy.
The same goes for a large house. The more you spend on your house the less you can invest. Also a large house demands to be filled with stuff. Tables, chairs, mirrors, bedroom sets and big screen TV’s. What about a boat to put in that three stall garage? A large house can almost guarantee you won’t get wealthy.
Once I realized this I began seeking out resources to confirm my suspicions. I started reading personal finance books and watching all the cable financial networks. I’ve read almost all the well known financial authors. I can tell you which ones were helpful and which ones were not. There is one book especially which stands head and shoulders above all others, but that deserves its own article (actually a series of articles).
For me these things come together about the same time I got married. My Second Rule of Wealth: The person you marry will be the biggest determinate of your financial success. Beyond every successful man (woman) there is a great woman (man). My wife whipped me into financial shape. I thought I was doing pretty well but she pushed me to do better and to pay off my bills. She led by example. She didn’t pay full price for anything. She didn’t need expensive baubles to enjoy (well she did have me after all).
We bought a modest house and she took a second job. I went to graduate school but this time around I wisely got my employer to pay for it. No more student loans for me. I got an adjunct (part-time) teaching job after I finished my degree. I switched careers, moving to the more lucrative field of Information Technology. Hence the Third Rule of Wealth: pick the right career.
In a few short years we had my debts paid and our house paid off. We aren’t at the finish line by any means. We are enjoying our first child and the financial implications of that.
I’ve brought you full circle through the brief history of my adult life. I’ve shown you that I’ve been in debt, and now I’m debt free. I’ve made decisions with thousands of individual’s personal financial information. I’ve seen the results of bad decisions and bad luck.
I just might have some interesting ideas to share with you. If nothing else, maybe I can entertain you. I can’t educate you. That’s not possible; you can’t teach a person anything. You can give them the tools and the materials for them to learn, but you can’t force anyone to do anything they don’t want to, at least in the United States.
Over the next few months I will be adding some tools to the site that should help you make educated decisions. I hope I can use my financial education, my technical knowledge and my writing skills to provide you with the tools you will need to become wealthy.
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