On the topic of Debt, I’d like to quite this interesting piece from Steven Marshall’s blog (he posts here as lionhearted, he’s a pretty cool guy, eh makes money and doesn’t afraid of nothing):
You’re American, yes? Okay, do you have a credit score? If not, here’s the easiest way to get one. Go to your bank, put a small amount of money in a certificate of deposit, and get a secured loan against it that pays off automatically. Basically, the CD will pay you 2% interest or whatever, and the secured loan will cost 3% interest… so if you put $1,000 into the CD, you lose $10 to do this, but it massively increases your credit score (it’s automatic payment of revolving credit, which is good for a few reasons—I won’t get into the exact details, just trust me and do it). You can do it with as low as $100 I reckon, I did it with a $1000 and it was good. After a few months of this, you’ll have an established credit history. I’d recommend you apply for the Amazon credit card, which gives a big discount on books, so you can get $50 of free books or something. Then you get points which you can use for more free books later. Much later on, when you have higher spending, you’ll probably want an AMEX gold card, but secured loan + Amazon credit card is probably enough for now. Do this ASAP, I lost a lot of money once when I couldn’t get a mortgage on a very good buy because I didn’t have a credit history. Trust me on this. By the time you start thinking of needing credit, it’s too late to build it. Do it now.
Never, ever, ever get into debt. Just don’t do it. If you have debt (student loans, credit cars, etc), pay them off as soon as you have any cash at all. Debt is okay for a mortgage on a house, and that’s about it. I think education debt is a bad idea personally, and that universities exploit young people who don’t understand the value of money yet, but I’m in the minority on that. Maybe take university debt if you need to, but much better to save and pay cash if possible. If you take on debt, absolutely no buying toys or partying with your money until your debt is paid off. Debt cripples a man’s ability to do what he wants with his life. Stay away from it at all costs.
What do you guys think of this, US Citizens and others? My dad used to go even further than this, he always taught me one should at least try to live with only half one’s income (after taxes) and invest the rest in savings. As a result, we’ve lived in pretty shoddy conditions for the last couple of decades, but we have gained a lot in terms of freedom and security, compared to families of similar income who spent most of it in consumer goods.
I agree with Steven Marshall and with your father. (I am a US citizen but living elsewhere.) Living on about half your income, on fairly plausible assumptions about the present and future performance of the economy, gives you good prospects of being able to retire nice and early. At which point, of course, you don’t have to retire—you may enjoy your work too much, or feel obliged to give a lot of money to charities, or have the urge to get rich rather than merely comfortable—but knowing that your employer no longer has the ability to dump you into poverty is a big deal. Even before that point, you have much more ability to (e.g.) choose a job you’ll enjoy, take longer about finding a new job after an old one ends, etc.
I have the impression (based on insufficient evidence, and I’ll listen gladly if others tell me I’m wrong) that this sort of advice is particularly needed in the US, where there is a strong culture of credit-based conspicuous consumption.
knowing that your employer no longer has the ability to dump you into poverty is a big deal.
This is the crux of the matter: being free to do what you want with your life, and feeling safe and secure at the office. This will allow you such luxuries as freely speaking your mind, refusing unethical orders, privileging actual professional accomplishment over the appearance thereof, not feeling threatened by the success of your peers and being able to help and collaborate with them freely, and so on.
Yes. Though, psychologically, many people may in fact have trouble refusing orders, not feeling threatened by more visibly successful peers, etc., even if they’re secure enough financially that they’re in no real danger of poverty.
On the topic of Debt, I’d like to quite this interesting piece from Steven Marshall’s blog (he posts here as lionhearted, he’s a pretty cool guy, eh makes money and doesn’t afraid of nothing):
What do you guys think of this, US Citizens and others? My dad used to go even further than this, he always taught me one should at least try to live with only half one’s income (after taxes) and invest the rest in savings. As a result, we’ve lived in pretty shoddy conditions for the last couple of decades, but we have gained a lot in terms of freedom and security, compared to families of similar income who spent most of it in consumer goods.
I agree with Steven Marshall and with your father. (I am a US citizen but living elsewhere.) Living on about half your income, on fairly plausible assumptions about the present and future performance of the economy, gives you good prospects of being able to retire nice and early. At which point, of course, you don’t have to retire—you may enjoy your work too much, or feel obliged to give a lot of money to charities, or have the urge to get rich rather than merely comfortable—but knowing that your employer no longer has the ability to dump you into poverty is a big deal. Even before that point, you have much more ability to (e.g.) choose a job you’ll enjoy, take longer about finding a new job after an old one ends, etc.
I have the impression (based on insufficient evidence, and I’ll listen gladly if others tell me I’m wrong) that this sort of advice is particularly needed in the US, where there is a strong culture of credit-based conspicuous consumption.
This is the crux of the matter: being free to do what you want with your life, and feeling safe and secure at the office. This will allow you such luxuries as freely speaking your mind, refusing unethical orders, privileging actual professional accomplishment over the appearance thereof, not feeling threatened by the success of your peers and being able to help and collaborate with them freely, and so on.
Yes. Though, psychologically, many people may in fact have trouble refusing orders, not feeling threatened by more visibly successful peers, etc., even if they’re secure enough financially that they’re in no real danger of poverty.