Thursday, August 16

The First Job

Creditors Plans for YouThinking back, I remember the rash of financially unwise decisions I made when I got my first career job.

I had been working midnights trying to pay my way through College, but I found it impossible to maintain. So, I dropped out and finished my degree by correspondence. Anyway, at least I had applied for and gotten this job before I formally left classes.

So, I immediately became possessed by the anti-frugal. I was virtually frothing at the mouth in my rush to spend money. I needed new clothes for work. I needed a better place to live. I needed everything I'd had to deny myself since high school. It was time for a walkman. It was time to buy a nice TV. It was time to buy a nice stereo and lot's of CD's.

Of course, when I had joined the student world, the credit companies were more than happy to give me a card knowing that I'd soon be working. Once I was working and paying off my limit, they were more than happy to raise it for me. Yessir, I was exactly what the credit card companies had hoped for, and more.

I was a poor young lad who'd never had much money that had fallen into a well paying professional career. After a life of denial it was so easy to spend, spend and spend. Earning good money, it wasn't really a problem, as I could certainly make payments, but it gave me nothing for the future.

In fact, as the future turned into the present, I started to notice that I was paying for things like a vehicle, home furniture, and a virtual plethora a small purchases that quickly added up. The payments stick around for years while the items you have purchased are often used up or no longer as valuable as they had once seemed.

I should have been doing many things differently. I wish I had done things different as it would greatly improve my situation now. For one, I should have saved my money to make purchases. With a brand new job and no debts it wouldn't have taken much time at all to save up for most purchases. A little bit of financial discipline would have gone a long way. Also, I should have been investing small amounts of money every time I was paid. It really wouldn't have mattered what I had invested in, really, as whatever I had socked away would be in my pocket today.

My advice, for those that are starting or are about to start a new career, is to take control of your finances immediately. If you already have a credit card, do not run up a balance. Pay it off, if you use it at all, every month. There will be a million things you'll decide you must have, but try to delay getting them and save up one or two months of income before you start buying anything.

Make sure you start saving, both for yourself, and for your retirement, right away. When you are forced to use credit, make sure it is for things that have permanent value. It is no fun paying for something that has already been used up. Appropriate uses might be to purchase your first vehicle so you can drive to work or perhaps an inexpensive home within your price range. It might also make sense for tax reasons to consider using credit to top up a retirement savings plan. On the other hand, using credit for any type of entertainment is a big no-no.

Another no-no is to develop a feeling of invulnerability. Perhaps your skill set is in high demand and you expect to make good wages forever. Good for you. However, you can't count on it. Market forces turn. Perhaps your company and another large company full of people in your field will go belly up at the same time. Good luck finding a job in your career path if and when that happens. The lesson here is that you can't simply assume that the future will be as good as or better than the present, though of course we all hope it will be.

Also, be aware, while you are young and single, it is easy to move to another city to chase that high paying job opportunity. When you have settled down, bought a home and have gotten married or had children, it will be much more difficult to pick up and move whenever you feel like it. Things change. Be prepared for common changes and the unexpected emergencies so that their impact can be reduced.

As a parent, if you haven't, make sure you teach your children how to save up for a purchase. Make sure they have figured out how to develop some discipline with respect to spending their money. If they are fairly young, perhaps you can open up a savings account with them and then help them slowly save up enough money for something they really want.

Whatever you do, when they get old enough, have a talk with them about what they can expect to be hit with when they enter the work world. They will have a new found income giving them a lot of purchasing power and a desire to fulfill the perceived needs that they've had to deny themselves up until that point. Consider this "the other talk" and make sure it happens.

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Anonymous said...

Great advice but, it could have been much worse!! You may want to read Mary Hunt's Cheapskate monthly sight. Thanks for all of your help!! Annette I lived in a shack in hell city so, you should be proud of all you have accomplished!! I have been to hell and back.

Anonymous said...

Just so you know we really love your sight. It helps millions. Thanks and just remember I got out of hell city where I lived for several years due to my running up credit cards and poor choices. You live and you learn!!! We just have to do the best we can now!! Have a great weekend!! Annette

Frugal Guy said...

Hi Annette, thanks for the comment!

I'm not generally one to think "it could have been worse" as there is always "a worse" to comtemplate. However, it is certainly true.

Anyway, I know it is advice I could have used when I was younger, so I am guessing that there are a lot of younger people, or people with children, who could use this advice now.

Thanks again.

Anonymous said...

Great!! Have a great week and enjoy life!! Annette Thanks for all of your advice on this great blog!!!

Mrs. Micah said...

That's good advice, in many ways, because it reassures me that I'm making some wise decisions and encourages me to make more. So thanks for sharing that. :-)


Frugal Guy said...

Hi Mrs Mica, keep on making wise decisions, they add up!