Turning the age of 30, I now reflect back at some of the key choices that I made to put me and my wife in the prime financial situation that we’re in. As a college student, I started to walk down the path as many of my peers accumulating student loan and credit card debt at ease.
Luckily, I stumbled into a career as a financial planner and was able to see the error of my ways. When I look back, I can attribute five things that I did that made a huge difference into where I’m at today. These are five smart money decisions that anyone can do as long as they have a willingness and discipline to do so.
1. Avoid Debt Like the Plague
Most college students graduate with a combination of student loan and credit card debt. Most of us are just kind of brain washed into thinking this is just the way it is, that everybody should graduate college with student loan debt.
Luckily, with the aid of the Illinois National Guard and the realization that my student loans were mounting, I was able to graduate college with no student loan debt and very minimal credit card debt. Doing so was a huge relief in starting my career of not having to worry about making those loan payments back.
2. Don’t Buy a House Immediately
I know a lot of people that once they start their first job, they start searching for their first home. I, on the other hand, continued to share rent with some of my buddies in the house that I lived in while I was in college. I did this for a few years in my working career to help ease the monthly payment.
Reflecting back I realize now that that put me in such a financial position to be able to be able to buy the first that we really wanted.
2. New Ride Equals No Savings
I don’t know how many of my former college classmates that I knew that were going to buy a brand new car once they graduated. I remember talking to a girl in one of my accounting classes about how she’d already picked out the car of her dreams.
I remember telling her, “If you wait just a year or two to buy that car, you can invest that $400 a month payment into your Roth IRA. That will make such a huge difference for you down the road”. She did not listen and went out and bought her car and, as far as I know, was unable to contribute to any retirement plans including the Roth IRA.
I, on the other hand, continued to drive my champagne colored 1998 Chevy Lumina that was a hand me down from my grandmother (Pictured above, isn’t it sweet?) . Although it wasn’t the car that I had envisioned driving once I graduated college, it had very low mileage and, most importantly, was reliable.
Also, by not having that $300 to $400 a month car payment, I was able to contribute to not only my 401(k), but also my Roth IRA on a systematic basis. That has allowed me sock away a considerable amount in both my retirement plans.
4. Big Screen Looks Sweet, But It Can Wait
I don’t know how many times I visited Best Buy while I was in college and drooled over the new flat-screen HD TV’s that were out. I wanted one so bad I could taste it. So many times, I pondered doing the 0% interest promotion that they always
advertised. I mean it’s only like $20 bucks a month, right? Thank goodness I didn’t buy into that philosophy. By postponing some of those major purchases such as the big-screen TV, I was able to, once again, put away money in my retirement account and not worrying about following into debt trap that most people find themselves in.
Do I own a flat screen today? Of course I do. The best part by waiting, I was able to receive it as a wedding gift from my mother. Now I have my flat screen TV and no payment.
5. Invest, invest, and invest some more.
All the things I listed above allowed me to invest my retirement accounts. I’ve been able to sock away a good chunk into my 401(k) s while I was with my previous employer, and also been able to max out my Roth IRA for the last five years. That has been a huge blessing to getting me into my path into financial independence. Anybody can follow these same steps. You just have to have a little will power.