Hey everyone! Today I have a great guest post for you by Mrs. Mad Money Monster over at MadMoneyMonster.com. There is some GREAT wisdom and lessons to learn in this post. Enjoy! ~M$M
Picture This: You just graduated college with a degree that has all the promise of landing you a high-paying job that will eventually lead you to the corner office and your own parking space.
Wow. Congratulations! You have your whole life ahead of you and a blank slate to paint any financial picture you wish for your future self. Imagine the house. Imagine the cars. Imagine the vacations. Imagine the memories you’ll make with friends. Imagine meeting the perfect person.
The person you believe complements your entire being. You propose, or you accept a proposal, and you’re off. Life is going to rock.
Welcome To Your Life
You open your eyes and before you know what happened, you’re 40-years old, married with a 5-year old and one on the way. You’re living in the suburbs, with 2 car payments, massive student loan debt from that small, private college you attended 20 years ago, and a 45-minute commute to your job where you sit in a cubicle (not the corner office) for 9 hours a day pouring through countless emails and trying to hit arbitrary deadlines that will affect your annual bonus.
And you know that if you don’t hit those deadlines, your bonus suffers and there goes the trip to Disney your family was counting on. Of course, you could always charge the trip and pay it off later. Somehow.
It wasn’t supposed to be like this. You were supposed to be living debt-free, paying cash for cars and vacations, socking away the maximum amount in retirement accounts, and having plenty leftover to fully fund your children’s college accounts.
Instead, you’re in debt up to your eyeballs, living paycheck to paycheck, and have no idea how you’ll ever find extra money to save for your own retirement, let alone two college educations.
Whoa. Back up. You just graduated college with an awesome degree. Yes, you have some pretty significant student loans to pay back, but you’re going to earn a high salary out of the gate and live with your parents or roommates until it’s all paid off. Then you’ll start living your life.
You remind yourself that you have your whole life ahead of you and you’re going to do everything right. Until, you don’t.
Until you wake up and you’re 40-years old – and it happened to you.
Getting College Right
There is no rule that says you must attend your dream school at any cost. The probability of your dream school opening up unbelievable opportunities that wouldn’t be available to you if you choose a more reasonable school, is highly unlikely. We hear it all the time – it doesn’t matter where you go to school. It really doesn’t.
I have been on many interviewing committees for global corporations and I can tell you, after the interviewee leaves, I have never heard anyone say we should hire one person over another based on the school they listed under the education header of their resume. What counts most is your experience, how well you present, how much you know about the job you’re applying for, and how well the committee thinks you’ll fit in with their current team.
That’s about it.
I’ve even heard one colleague say after an applicant left the building, “Would you want to be on a business trip with that person? How do you think that flight would go?” Needless to say, that person wasn’t offered the position.
So, you might want to think long and hard before dropping a ton of cash on a brand name school. I have the exact same job as people who have done that very thing. The difference is that my loans were small and are paid off. Their loans were large and still tax them each month.
-Where you go to school doesn’t matter to an employer
-A more expensive school does not equal a better education or a higher salary
-Unless you’re going Ivy League, your post-college opportunities will be the same as anyone else’s opportunities
But What If You Got College Wrong?
That’s all fine and good, but what if you’re sitting there with a degree from a great school and the debt to prove it. No problem. Make a plan to eliminate the debt. Now, depending on how far out of college you are, paying back the debt will be more or less painful.
If you’re sitting on top of a pile of student loan debt, you might consider moving in with your parents. I know that might sound awful, or fantastic, depending on your parents, but it could be a viable option that would help you eliminate the debt. Fast.
If you’re living alone, you could consider getting a roommate, or two. Imagine how much money you could throw at your loans every month if you could cut your living expenses in half! And it could actually be fun, just like college again! Holla!
Let’s not forget, you could get a second job, a third job, and so on. It might not be ideal, and I’m sure you’d rather spend your evenings watching the latest Netflix series instead of driving for Uber, but you do what you have to do. And when you’re single, you can side hustle your way to debt freedom in no time. No excuses.
-Make a plan
-Change your living situation (parents and roommates are wonderful resources)
-Get a 2nd job
-Get a 3rd job
But I Have A Car Payment, Credit Card Debt, And A Spouse
Hmm. This can happen faster than you think – see post opening above. The more decisions we make in our lives, the more chances we have to get it right or to get it terribly wrong. If you’re sitting in a situation that resembles this one, don’t fret. You’re not alone. The only thing you need at this point is the WILL to change your financial future and the only direction to go is UP.
First, sit down with your significant other and make a plan. Make a budget to see where your money is going and where it needs to be going. Determine if you need to make drastic changes like selling cars or picking up extra jobs. If you’re in a hole, the old adage goes something like this…Stop Digging.
-Make a plan
-Stick to the plan
-Dump the cars, if possible
-Pick up extra jobs, if possible
-Cut up the credit cards – and stop using them
-Cancel cable and gym memberships and anything else that’s an unecessary expense
-Any extra cash goes toward debt repayment
Underestimating The Decisions Of Our 20s and 30s
I made a few good decisions throughout my life that lessened the financial blow of the really bad ones I also made. When I was in my 20s and early 30s, I felt like I would be that age FOREVER. Sadly, that was not the case, and is never the case. Time passes. We get older. The decisions we make when we’re younger matter.
Thankfully, I graduated with very little student loan debt and attained a great job with a high salary. I immediately started contributing a high percentage of my salary to retirement accounts. I always drove reasonable cars and didn’t buy designer labels to adorn my 20-something-year-old-butt.
My mistakes came in the form of allowing relationships to derail me. I chose poorly, more than one time. Those decisions caused a financial domino effect of gigantic proportions.
Ultimately, had I stuck to my original plan and chose a partner who was on the same page, I would already be early retired. Alas, I allowed life to get in my way. I allowed other people to influence my behavior and halt my progress. I underestimated the power of the decisions I was making during those early years. The majority of my first two adult decades were comprised of financial decisions that launched me two steps forward and one step backwards.
Things are different these days. I’m in a great marriage and we’re both in the same book AND on the same page. It’s refreshing. Although it makes for a great story, I still wish I had figured this out a long time ago.
Never underestimate the power of your decisions. The decision to take on significant student loan debt should not be taken lightly. The person you choose to enter into a relationship with should be done only after careful consideration.
You think being on opposite pages in terms of money management doesn’t matter? Think again. It could destroy your finances and your relationship. Opposites might attract, but that attraction doesn’t always last.
Every choice you make has the power to enhance or diminish the quality of your life for decades to come. Ask yourself, is your future self going to thank you for making the decisions you’re making today? If not, it’s probably time to make some changes. Because trust me, one day you will blink, and when you open your eyes you’ll be 40-years old with a life you didn’t fully anticipate, and you’ll marvel at how fast the time passed.
Question: Have you made mistakes in your 20s or 30s that have unexpectedly affected your life? If so, did they enhance or diminish the state of your current finances?