1. Not Saving As a Child
As I mentioned above, whenever I had money, I spent it. From as young as I can remember. I spent it on toys, video games, junk, , and everything else I children blow their money on. The thought or mention of saving just wasn’t there. It sounds insignificant, right? Wrong.**NOTE** I had a very fortunate childhood: I did not pay for any common living expenses such as rent, food, or clothes. Granted, this changed as I aged, obviously. I still never had to pay rent or food, but as I got older and went to more movies and out with more friends, I paid for some more items.** If I would have saved just $100 a year ($8.3 monthly) from the time I was born, citing, for example, my parents put in $100 until I was old enough to earn an allowance, to my current age of 30, at my current interest savings rate of 1% monthly, I would be sitting at $3617.88 of free money right now. That is assuming, I ONLY deposited $100 annually and literally nothing else. That may not seem like much over 30 years, however that is enough of a minimum deposit for Vanguard Index Fund deposit. I will say it again, this would only be if I ONLY CONTRIBUTED $100 ANNUALLY! Makes me sick…
2. Not Saving As a Teenager
In Indiana, especially in a small town, it is common for most teenagers to play sports and work in high school. Most everyone has a vehicle as living in a rural area there is zero public transportation…unless you count someone’s older sibling who already has a license. In high school, with my father being a mechanic, I drove a gas guzzling sports car. My father was a mechanic, so I worked on it his shop quite often. It was nice, not show quality nice, but awesome. However, my father wanted me to be a gear head when I really was not. I would have much rather been working on my computer. However, instead of choosing an economic, used, vehicle, and saving my money, I continually invested in my car. However, I did not treat my car as such. I sold it in my early 20’s, paid my parents their share and blew the rest of the money. I should have treated my car as an investment, not a toy.
During this time, I worked at least part-time for my dad and the time waiting tables when not playing sports. Did I save any of that money? Nope. Not one bit. So, lets throw another equation out there: From September 2003, when I received my driver’s license, to May 2005, when I graduated, minimum wage was $5.15 in Indiana. Let’s say I worked 15 hours a week, or 60 hours a month, for a total of 20 months of license/work time (I did work full-time for the summer of 2003 from May to July during the summer, but I am not including that in here as I feel that can be the deciding average on an errors of wage or time I left out). So, 60 x 5.15 x 20 = $6180, without taxes being taken out, so we can say $5500 for 20 months. Once again, I am being liberal with these numbers. Literally, all I had to do with this money was save it or spend it and I spent it. Now, if I would have been smart, I would have taken at least half, $2750, and added it (monthly payment of $137.50) to my fake non-existent childhood savings account of $3617.88 still at 1% interest, rounding up to 24 months, that would have given me, at the age of 18, $6928.29. Basically, enough to cover my first two semesters, wait, YEARS of college tuition at Ivy Tech….once again, theoretically because I had some savings (I do not remember how much) and the $100 my father gave me when I left for college. Don’t worry, student loans come next…
3. The College Debacle
Now, this is the point in my life where it starts to turn real fun: I went to college, worked at doctor’s office for a few months. It was boring and I thought I did not need to work there and quit. Stupid, I know. It was easy money and I had a great boss, but I pissed it away. I did pick up some part-time jobs, while going to school part-time, and of course partying full-time for a year. My parents purchased me a 1990 Dodge Spirit for $400 from $1000 of gift from my Uncle specifically meant for college. I also had some graduation money I forgot to mention in the previous post, but I blew it so it doesn’t matter. I took out at least $6000 in student loans. The 1990 Dodge Spirit that was literally in perfect shape, received 30+ mpg, and was reliable? I trashed it. I could probably still be driving that car (well, no because I got T-boned at intersection a few years later). But, once again I treated a nice object like shit, not an investment, whereas I could have continued to drive it through college and then sell it after and probably make double the amount I paid into it.
But, that was just one of many poor decisions. The usual of spending too much on eating out, beer, and unnecessary travel. My great-grandfather passed away the spring of my freshman year and my grandmother awarded us all $500 from CDs she had cashed out when he passed. Did I invest mine? Hell no, I went to Miami. No job, no income, but I had $500 and I literally spent it all in one of the most expensive cities in the United States. What a dumb-ass. Also, looking back, I find this completely disrespectful to my great-grandfather and grandmother.
My college situation then got a little non-traditional. I was hired at good job making $35000 annually and living at home. Once again no rent, I did help with food though, but it was not a set amount each month. I had an expensive cell phone plan and of course still ate out all of the time. Travel was limited, but that was because I became lazy. I kept putting off going back to college, just enough to keep my student loan payments from kicking in. With that, instead of paying off college as I went or saving money from paychecks, I continued to just take out student loans..from here comes what I would consider, my downfall financially…
Wait. Before we could get to the next big debacle in my life in section 4, I have to mention I bought a motorcycle. A Harley Davidson. Did I buy a nice used one at a good price and work on it in my spare time? Nope. Did I save up and pay cash for it? Nope. Did I at least pay some money down on it? Nope. What did I do? I bought a $13000 motorcycle that was probably only worth about $10000. Now, at this time I could afford the payments. However, that was money I was blowing and not saving. It is simply amazing as I sit here and write this how much money I have pissed away.
Okay, now onto section 4….
4. The BMW
I had a good job, some college, and lived at home. I had money in my bank account and my bills were paid on time. I was set, right? So, what better than to do with all of that money than buy a sports car! Better yet, a foreign sports car! Better yet, a junk foreign sports car! I did have some friends tell me not buy it and I had some friends and family to tell me to buy it. I had that one family member say the magic words, “You are going to die with debt, you might as well spend it now.” So, I did. I had very little credit, with a very low score (I would guess around 600), and only $2000 to put down. The BMW had over 100,000 miles on it. However, most of the time BMWs are good for many more miles than that, and I saw that the previous owner had just turned it in for transmission issues 2 weeks before, but the salesman assured me everything was perfect.? So, I put down all my $2000, received insurance for $135 monthly from some shady insurance agent that would accept me, and paid a little over $20,000 for this BMW…and it was awesome! For 9 days until the transmission went out and I didn’t drive it for 3 months, and it cost me $1800. Yep, literally after 9 days the transmission went out. But! There is a positive it “only” cost me $375 monthly for my BMW. So, instead of saving the $512 monthly that I was spending on car payment/insurance, I was spending on a car, sitting in a repair shop.
I continued to drive the BMW, took another high paying job in Indianapolis, and of course started making better financial decisions. Kidding, I still drove the BMW, but moved into a nice 2 bedroom apartment that was only $650 a month. So now, my income went up $5000 a year, but my monthly payments, just for rent and car payment/insurance were $1162. That is not factoring in groceries, eating out, fuel (I was dating a girl in Evansville, so that was a 400+ mile drive almost every weekend), and I had satellite and internet and utility bills, too! Needless to say, my bills were going up and not matching my income. I was spending way too much, but I still could have made it work, but I didn’t. I remember laying on my floor one night, on a piece of paper, and writing out all of my bills and what I could cut. I could have sold the BMW and downsized the apartment, but I didn’t. I could not have had cable, but “needed” it. I could not have eaten out at lunch everyday, but all my co-workers did. Basically, I did not want to sacrifice my current lifestyle. One thing you will learn my fellow Midwesteners, is that sacrifice is a necessity. Which, all of this led me to a fairly unhealthy and unhappy lifestyle cycle of worrying about bills and trying to maintain my current lifestyle which eventually caused me to leave that good job in Indy and move back home..oh, and I gained 30 pounds. Oh, and I stopped going to college.
About two years later, I traded the BMW, for the truck, which was rusted and had I believe 112k miles on it. The truck, not the BMW. But, the insurance and monthly payments went down slightly (I cannot remember how much). This was not a good time in my life. I was still living at home, in an unhappy relationship, and still not saving a dime, unless it was for something specific. I also was so burnt out on my job at this point I was wanting to get hurt so I did not have to go to work. Alas, still not the lowest point in my life!
5. The Truck and Charleston
At this point in time, I was so burnt out, drinking heavily, and such an asshole (see a pattern?), I really can’t believe that I still have friends. However, I did have one thing going for me. I did go back to college and was absolutely determined to obtain my Bachelor of Science Degree in Information Systems. However, I once again took out massive school loans to do so. During this time, I have a friend, a great friend, who opened his house to me in the absolutely beautiful city of Charleston, SC. I kept wondering “should I quit my job and go?” I was unhappy in the area I lived (home) and unhappy with my job. I did manage to save a couple thousand dollars and took my friend up on his offer. In May of 2013 I was 27 years old, jobless, and happy once again.
I moved to Charleston, got back in great shape, and began working part-time at a coffee shop making maybe $100-$200 a week. Not a ton of money, but I had little money coming out for bills. My friend did not charge me rent and I helped with groceries and yard work. But, there was something hiding in the dark that I appeared as a blessing and ended a burden: The student loan reimbursement check. $10,000 of “free” cash just for me. Did I immediately pay this $10000 back to my student loans? HELL NO! I lived off of that for the summer. You are probably thinking (hopefully since you are on a sort of personal finance site) “Man, $10000? He could live off of that for at least a year!” Nope, burned through it in 5 months due to eating out (in case you haven’t noticed, I love food and alcohol), trips to Florida, and my truck payment. I spent all the cash I earned from bar tending and the coffee shop (forgot to mention I picked up bar tending/serving job, too) on booze after hours. Needless to say, I was back in Indiana and broke by Christmas of 2013. However, I was a college graduate! But, guess what? Now the student loan payments kicked in.
To Be Continued….