As a daughter of a Baby-boomer, I was always taught "fiscal safety." What I mean by that is I was encouraged to go into a "stable" job--education, encouraged NOT to take risks, and to save my pennies for a rainy day. I've learned this so-called caution isn't the smartest way to live your life, not and be happy anyway...
Now as a parent and a member of what has become known as "Generation X" (aka the generation that had absolutely no guarantees of success or stability no matter what we chose to do), I have a bit of advice, hard learned, to those millennial out there.
1. Do what you love--I mean this, really. I put 15 years into 4 college degrees only to discover I'm an entrepreneur, through and through. I could have stopped at the first degree had I listened to my heart and not my "practical" parents. Money will come, as long as you DO something. FYI, doing what you love does not mean sleeping all the time (In my best Mom tone).
2. A used car is just fine, really. The closer you can come to paying cash for that next car the better off you will be financially. Truth is, that new car depreciates 25% the second you drive it off the car lot but your notes sure stay around.
3. Being fashion forward is great, but not when it dips into your budget for housing or bills. Buy classic clothes an splurge sparingly on up-to-date fashion items.
4. Get a credit card that awards points, make all your purchases (even pay your utility bills) on it, and pay it off every month. This will build a strong credit profile and make house buying that much easier. Also, you can cash in your points around Christmas for gift cards to buy everyone gifts with!
5. The second you graduate, don't wait for your student loans to kick in, contact them, and CONSOLIDATE. If you try to buy a house, they have to figure each individual loan and estimate your payments. This number is always higher in estimation than it is once your payments kick in, but it makes it look like you have a LOT of debt, and will hurt your ability to buy ANYTHING on credit. If you consolidate, you can pick a graduated payment based on income, and it looks MUCH better on your credit report.
6. DON'T RENT--
buy!, even if it is a smaller house than you want or a note that hurts a bit at first.
When you rent, you are literally throwing money away. There are no tax advantages, you don't build equity, you can't get loans on equity you've built up, and you become trapped in a rent cycle where you can't afford to save up to get a house because you have to pay rent.
I still have my first house. Really, I've owned it for about 20 years. It was a great family home in a transitional FHA build subdivision. Now, it's a great rental. My note gets paid and I make a few hundred bucks a month.
Even if you only plan on living in a spot for 6-12 months--BUY. Worst case, you sell for what you paid for it and you've lived there for free. OR--rent it out for the note plus a bit to the person not savvy enough to do what you've done. OR--sell it and make a profit, put that on the next house, and get more house than you could have without a down payment!
Flash forward 20 years and you have 3 or 4 houses, a decent residual income stream from rentals, and ASSETS--aka WEALTH.
Here's to getting a "leg up" in the competitive environment you guys are graduating into. Smart decisions will help you get ahead in the crowd. Be the mover and shaker, not the follower.
And just so the air is clear here, even though everyone in older generations says you were the generation where everyone got a trophy...let's be honest, each one of you knew whether you deserved it or not. Go out and make your dreams happen, but be armed with savvy financial decision making and wealth and success will be yours.
Welcome to the Grown-ups kiddos! We are glad to have you on board!
