Friday, April 22, 2016
Advice for a New College Graduate
This is a rehashing of an email that I sent to my cousin before he graduated from college and started a new job. These are things I strongly believe:
Well, I finally got around to sending you a preachy email, and, my first piece of advice is DON'T PROCRASTINATE! Yeah, I don't follow that one either.
The main reason I wanted to send you this email is that you are right at the point in your life when people start fucking things up. Most people go through life, fucking things up, not realizing they're fucking things up, and wondering why their life sucks or is always a struggle. Not fucking things up is, truly, the key to life.
I'm going to give most of this advice in list form, because it's simple, and easy to edit, but I'll expand on some. First though, I want to make a point about people. People do things because they think they have to, or because that's what everyone else does, or because someone tells them that's the way it should be done. As I pointed out before, most people are fucking life up, so why should you do what they do. Seriously, listen to adults. All they do is bitch about what they have to do, what they can't do, and just about everything else. Don't be like everyone else. And don't follow my advice just because I tell you too. In fact, if you follow everything, in some ways, that's not ideal either. Read my advice, think about it, and do what you think works best for you. Just keep in mind that my life is awesome, and I'm pretty damn smart, so have a good reason for blowing something off - just make sure it's YOUR reason, and not some bloviating blowhard's reason.
I'm going to try to stay away from mystical metaphysical bullshit, but some is going to slip in, because it can help.
I'm also going to try to order things in relative importance, but there's some fudge factor in the list. Just rest assured that if something is near the top, it's probably a big deal.
Some of the money things can be gotten off on the right foot by judicious use of whatever money you get from the trust fund when you graduate, and any signing bonuses you get.
So here it goes:
Don't drink and drive - have a plan before you go out.
Have an emergency fund. Start with $1000, and then build it up every month until it equals 3 to 6 months of must pay expenses. I like to have a permanent line item on my budget for emergency fund, so if I have an emergency, I don't have to redo the budget to refund the emergency fund. Only use for emergencies unless it exceeds your 3 to 6 month fully funded amount.
Have a budget. Every rich person who didn't inherit money has a budget. Set yours up before you get your first paycheck, and then adjust it as necessary. It doesn't have to be too detailed, but every dollar you earn, every month, should have a job - that job may be beer, but that's okay.
Don't borrow money for ANYTHING except a house, and a car that meets your minimum NEEDS. If you want a better car, save for it and pay cash. Make a car payment to yourself, and you will always be able to get more car for less money than you would if you financed the car. Credit cards are fine, just pay them off every month. Don't get in-store financing for anything, even if it's 0% or 12 months same as cash.
Start putting money into your 401k immediately to at least the employer's match. I would start at 15% or more. Youth is your best ally in retirement savings. Start out really big! Every time you get a raise, increase the percentage.
Never, ever, EVER, get any life insurance that is not pure term. Everything else is a rip-off.
Make sure your prospective spouse is on the same page with you on money - if not - you're fucked. Money is the number one cause of divorce (followed closely by kids). Ideally, you and your wife should go over the budget monthly. Kari and I use a big whiteboard and go over all our funds (how things in our account are allocated), verify the amounts are right, and then go over the credit card bills identifying which fund the money is coming from. Then we pay the bill. (Before this Kari allocates our paycheck into the funds based on our agreed upon budget. It helps that we get exactly the same amount every month.) If your income is variable, use the minimum for your budget, and allocate any excess to a long term savings item such as retirement, vacation, kids college, house payoff, etc. I know this sounds complicated, and, when your budget is a mess and you have to squeeze every dollar to make ends meet, it does suck - but is critical. If you make smart decisions early, and stay out of financial trouble, this becomes easy. Kari and I have big "funds" that are basically slush funds so we don't have to pay too much attention. We can do this because we worked hard to make sure that there's a ton of money in our paycheck's that's not needed to pay our bills. Financial flexibility is a huge key to happiness.
Live below your means. Just because you can afford a really nice apartment or house, doesn't mean you should have one. Same with cars and furniture (video game systems may be an exception to this rule). Start off living someplace adequate, then work your way up (if you want to) as your income increases. Controlling your standard of living is critical to life. Ultimately you are going to want to quit working, and you have to maintain whatever standard of living you established. As your income goes up, your standard of living should go up, just not as fast. You normally do this by saving a portion of every raise for a long term objective like kids college, retirement or first home.
Don't marry unless you've known the girl for at least 2 years.
Be aware that you think with your dick too much. This will be true until you are at least thirty. There's not much you can do about it except be aware and try to keep the little fucker under control. Before 30 it is often difficult to tell whether it is you or your dick that's in love with the girl.
Don't have kids. (Or at least wait until you and you're wife are done with school, have been married a year, and have discussed and committed to child rearing techniques)
Know the difference between wants and needs.
Save up 20% down before you buy a house and try to get a 15 year mortgage with a payment less than 25% of your income. People have no idea how much better a deal you get with 20% down. It's more important than your credit rating. Don't buy a house unless you will be there at least 5 years.
Always be looking for your next job.
Try to put $5000 into a Roth IRA every year.
Never buy an extended warranty (except for computers if you are a computer moron - being able to bring it back to Best Buy and go "fix it" might be worth the rip-off warranty.) Every time I'm offered an extended warranty, I put the cost of the warranty into a "warranty fund" and use it when something breaks. There's over $1000 in the account and it never seems to go down.
Stay on top of computers, internet stuff and tech. Once you fall behind the times - you're fucked.
Your kid is not an excuse to start blowing money because "you have to." That's bullshit. If kids are going to make you break all the rules of a happy life - don't have them.
Happiness comes from you and nowhere else. So does stress. Learn to worry about things you can control and not to worry about things you can't.
Scams are everywhere. Never buy anything you aren't completely familiar with, and never give out personal information to anyone who contacts you first until you have researched them and taken 24 hours to think about it (unless it's a Nigerian prince trying to smuggle money into the U.S. They're always totally legit.)
Don't be an asshole just because you're smarter than everyone else (boy this has been hard for me!)
Have a high deductible for car insurance - that's why you have an emergency fund
If you have a wife or kids - get life insurance - term
Don't day trade.
Use Vanguard for your investments
Keep a schedule and task list for your life. Stay organized.
Keep a journal. Doesn't need to be fancy, and doesn't need to be detailed. You're life is going to be cool, and you're going to forget a lot of it. Write it down (or keep electronically.)
Don't lend money to people unless you don't care about getting it back (this does not apply to lending to me).
Most salesman are trying to rip you off - especially your broker and car salesman.
Beware the upsell - add-ons are almost never worth it.
Everyone's in sales. If you don't think you're in sales, you're wrong.
Learn to cook, and not just a few things. Learn the theory and methods.
Multi Level Marketing (Avon, Amway, Party Lights, etc.) are generally a terrible idea.
All politicians suck, and are only interested in their own power or money.
Gas grills are for pussies.
Buy my tax book and make all your friends buy it. Everyday Taxes 2015.1
There's more, but that's enough for now.