Month: April 2015

5 Horrible Purchases Millennials Make

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Let’s face it, people of all ages make some really bad financial decisions. People in their 20’s make some horrible financial decisions. It’s a shame how much money is thrown into these purchases which don’t bring you any closer to financial freedom. I see these habits from friends, colleagues, family, and yes, even myself at times (it’s true). Your 20’s are not only about learning and experiencing, but they are about setting goals as well as a foundation to achieve financial freedom. Here are five purchases that I see on a regular basis from millennials that financially struggle.

1.Buying a brand new or expensive used car. There is no reason for a 24 year old to be driving a European sports car. Not only do you have to pay the expensive price tag, you have to fork up big bucks for insurance and maintenance issues. Cars are DEPRECIATING assets, and whether you make $30,000/yr or $130,000/yr, there is no reason to pick an investment where you can lose between 15-20%/yr. Buying a nice, professional used car, can save you time and extra money that you can spend on paying down high interest debt, or putting your money to work. Don’t be a fool, buy a used Prius like myself.

2. Spending money on things instead of experiences. I only buy things that will either increase my happiness level, or make my life easier while teaching myself something. The new iPhone 6, or the latest Fifa game will not make me smarter, and will probably make my life more complicated. I am more likely to spend two grand on a trip to a new country than spend $650 for the latest phone. I recently had a friend who bought three huge LCD TV’s during Black Friday because they were on sale. No comment. Not only does this type of behavior lead to being broke, it also leads to spending countless hours of doing nothing. Experiences are everything, material items will get you nowhere but into debt.

3. Shots. Late night meals. Shots. Everyone likes to have a good time, but there is absolutely no reason to spend $150 bucks every night of every weekend on booze, food, and Uber. Not only are you hurting your health, but more importantly, it is hurting your pockets, deeply. Just kidding, your health is more important, but still. I have friends who can barely afford their rent but refuse to give up their weekends of alcohol belligerence. If you have to start crowd funding your Uber ride home, there is a problem.

4. Buying all of your groceries at Whole Foods. Before I start, I will say that I love Whole Foods as a company. Have you ever met an unhappy employee? That being said, you can find organic, natural, and “healthy” foods almost anywhere now without having to pay premium prices. Shopping at Whole Foods for simple items such as milk, coffee, bread, and cheese will cost you almost double than your local discount store. Don’t even get me started on the juice prices. They would be better off changing their name to Whole Wallet.

5. Leasing anything besides an apartment. If you can’t afford to buy it, you shouldn’t be borrowing it for a fixed cost. The problem is that there are many sales people in several industries that will avoid telling you how much something costs, instead telling you how little you will have fork up monthly. Consumers end up missing the big picture on how much they are really paying for something or how much they will lose by having to return it after the lease term. Not only will you lose money at the end of your term, you will owe money for the wear and tear of the product. You are better off saving the money while having less distractions in your life.

I’m not saying that you should stop enjoying your life. The key is to set budgets for splurging so you can have money to spend elsewhere. Setting splurge budgets also lets you enjoy things more than usual when done in a lower capacity. Remember, the road to financial freedom isn’t easy, and it takes time to build good habits of spending. Just like anything else, once you start noticing your account balance increase, it becomes easier.

Money for All

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Why am I broke?

How much do I need to save every month?

Should I buy that car?

What’s a good investment?

Is 401k a good company to invest in? Yes, I have been asked this.

These are just a few of the questions I get asked on a daily basis from many soul searching (money searching) millennial friends.

Why me? That’s a good question. I’m not sure. I guess I am one of the few millennials I know that doesn’t just “break even” every month, or one who doesn’t have to look for spare change before their rent/mortgage is due because of last weekend’s festivities, or how I am able to travel, do the things I love, while being able to help people along the way.

Am I an expert? No. Far from it. I have made horrendous financial decisions in the past, which is why I have also made excellent financial decisions. I have read, learned, experienced, helped, worked, and taught about personal finance. I am not a journalist who has learned the subject for a living. I live it, everyday.

I love the concept of money and I want to share my personal stories and views on it, along with everything that goes with it, in order to make you as financially savvy as you can be.

The first thing I want to share is a Financial Check Up template for you to examine your current financial situation, while also being able to see how you can improve. Use your current monthly income and expenses for the first column. I have put multiple spots for income because I am a firm believer in having more than one income. According to James Altucher, the average multimillionaire has seven sources of income! If you only have one source of income, you may want to include a second or third source on the second column with your improvements. The goal is to see where you are, compared to where you can be once you increase your income and decrease as many expenses as you can. The key is to use your excess money for high interest debt, savings, and investments.

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