When I started Freelance Finances, I focused on being as general as possible with posts and advice, because I realized a good portion of my traffic was coming from google searches, and my specific audience (over 60% of which are 13-24 yr olds) don’t typically search “personal finance tips” on google.
I realize now that was a mistake, and why I quickly lost motivation to keep this updated. According to YouTube 47% of my online audience is 17 years old or younger. And seeing as how high schools don’t teach you how to balance check books, calculate finance charges on credit cards, or teach you about retirement accounts, I’m going to stop being general, and I’m going to start focusing on what’s going to help you.
Fortunately for you, I’ve already been in your shoes. In fact, I’m twenty-six years old, so I’ve already grown out of your shoes. The advice I’m going to offer here isn’t theoretical, it’s practical. And it comes from someone who knows what happens when you make the mistakes you’re likely to make, and what it takes to fix them.
So let’s relaunch this blog with the first mistake, the biggest mistake, and the one mistake that costs the most to correct… fortunately for my word count, all of those mistakes are the same: spending more money than you earn.
Right out of high school I wanted a digital camera. I couldn’t afford one. So I signed up for a Best Buy credit card and “bought” one. Then I wanted a new computer, so I called Dell and financed one. I wanted a car too, so I went to my credit union and took out a loan and got a car. Before the end of the year I graduated high school in, I was in debt by over $10,000 – and I was only working at a grocery store for $8.61/hour!
It took me seven years to pay for that digital camera, computer and car. And after all of the interest, finance charges and late fees, I ended up paying close to $16,000 for that original $10,000 I borrowed.
This is not the way to be successful with money.
It’s hard to think about tomorrow, next week, next year, when the world is in instant gratification mode. And retailers are more than happy to give you the money, at 30% interest, so you can buy the things you can’t afford. But if there is one thing you take away from all the things I ever write on the internet, it is this: do not spend money you don’t have.
If I would have just been patient and saved, I could have paid cash for that camera. I could have paid cash for that computer. And I could have at least put some kind of down payment on that car. And then, those $10,000 worth of items, would not have cost me seven years and $16,000 total to buy.
Money is scary to talk about sometimes. Some people hate even thinking about it. If you have any questions about money, credit cards, savings, checking, investing, retirement accounts, loans, anything, please send me an email at freelancefinances@gmail.com and I will answer your question. Do it anonymously, set up a fake free gmail account if you’re embarrassed to ask. Once you start talking about it and thinking about it, it isn’t so scary anymore. And if you have a money mistake that you’ve made, and want to share in the comments so others don’t make the same mistake, please do.
Stay tuned tomorrow.
{ 7 comments… read them below or add one }
I know all too well what you mean about “wanting” something so you finance it and then you’re screwing yourself. When I was 18, I got my first credit card, and here I am almost 4 years later with almost $10,000 in credit card debt, plus a $12,000 car loan (down from $16,000). My parents never taught me how to save money, because they never did. My mom only ever told me that “you’re going to get yourself in trouble” but never really helped me NOT get in trouble. I am a full-time college student working as much as I can to pay down my debt but it’s going no where because of the outrageous rate increases. If only the new “you have to be 21 to have a credit card without a co-signer” law were in place four years ago, I wouldn’t be in this mess. I wouldn’t have a lot of the things I have now, but I wouldn’t know the difference.
I have learned my lesson. I have ONE credit card that didn’t get cut up and it’s for emergencies only and I don’t even carry it on me all the time, only if I’m traveling alone great distances. I have AAA so if I’m really stuck somewhere or I run out of gas, that’s what they’re there for.
I hope that the young people reading this blog don’t make the same mistake. It’s going to take a LONG time for me to dig myself out of this hole, and get myself out of this debt (PLUS school loans UGH). But NO ONE else is to blame but me.
Alan, thanks for all of your financial advice. I look forward to your blogs here. I have been doing the “snowballing” technique and have paid off two cards in a little over two months. It’s progress!
Sarah, thanks for sharing your story. You’d think somewhere along the line everyone would smarten up and educate their children before they end up in the same place I was and you are, and it sounds like both our parents were. I hope this gets through to a few people. I know at that age it’s so easy to think things will work themselves out and not think about the consequences, or think those consequences are NORMAL and that is the only option.
Hi Alan. Thanks for the information. I am only 12 and don’t really need to bother with finance at the moment but I still feel I need to wise up abut these things. I’ve already decided a credit card isn’t for me. I’d much rather get a debit card. I’ll treat it as if it’s money if I don’t have it I can’t use it. Unless anyone knows a upside to having a credit card. Thanks.
Even though you’re only 12, you can still start saving so that you DON’T have to turn to credit cards in the future. If I would have done that at your age, I would have a boatload of money, but instead of saving my money, I spent it as soon as I had it.
I’m really looking forward to further posts here. I’m graduating high school in a few months and starting to seriously think about my ‘finacnes’. In fact, right now I’m talking to my mom about different accounts and what I need to save for and I’m showing her your site
Hey Alan! Welcome back. I look forward to your posts!
What are the upsides to having a credit card?
My parents mentioned something about a credit history?
I just really don’t understand why money savvy people have them.