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Young, Fabulous and Broke
Financial guru and Oprah's BFF Suze Orman wrote a book titled The Money Book for the Young, Fabulous and Broke. After I graduated from college, my Mom bought me this book, which is aimed at young people who are new to living independently and paying their own bills. When I got my first job after college, I felt like I had hit the jackpot- all of a sudden I had my own money and Mom and Dad weren't making their usual contribution to my bank account. So what did I do? I promptly bought myself a new (but affordable) car, and decided I had enough money to get my own apartment in Centreville. By this point I was bored with Warrenton and running into people from high school in local bars and restaurants. I was ready for a new scene, full of young professionals like myself who could exchange witty banter and pretend to be worldly.
I am one of the very fortunate people that did not have to work through college and didn't have any students loans for my undergraduate degree. Many of my friends did not have the same luxury, and I am forever grateful to my parents for my college education and experience. With that said, I soon found out how harsh the world of independent living was. When I first moved out, I was actually elated to be paying bills- I couldn't wait to be saddled with rent, utilities, a car payment and all of the other expenses that slowly add up.
Several years later, I'm living in the Fair Oaks area with a higher rent, higher utilities, a higher car payment and a walk in closet that is busting at the seams. My friends and I love to get together and gripe about how we're over-educated and underpaid and struggling in this difficult economy (all while sitting in a luxury apartment, wearing designer clothes and drinking a $30 bottle of wine instead of a $2 beer). But where did we go wrong? We're struggling, but determined to live a glamorous life. We are Suze Orman's stereotype- young, fabulous and broke.
We live in a world that is becoming increasingly dependent upon credit cards. We want things that we can't pay cash for, so we use our "imaginary funds" to pay for it, forgetting that in 30 days we'll have to begin paying for it. Twenty-somethings are especially prone to free spending and the "I need/deserve/want that" attitude. Nicer clothers, designer jewelry, sexy cars, dining out frequently, and don't forget the trips to the bar. I'm not proposing that all twenty-somethings are financially irresponsible, but it's difficult when you're first starting out. Many young people can't live at home rent free, have credit card debt, student loans and meager paychecks in entry level jobs. They can't just stop drinking Starbucks every morning and break even in a few months.
So how do we get out of this predicament? I certainly don't have all the answers, but I do have parents who give great advice and friends who have found some ways to help stay afloat as the economy goes down the drain.
1)Move back in with your parents if you can. It may not be glamorous, but living rent free is a great way to save money or pay down your debt. Being cool now is not as cool as being financially stable later. If your parents aren't charging you rent, give them some money each month anyway and have them deposit it in a savings account for you. It will be there when you're ready to move out.
2)Get a second job to earn some extra cash. All kinds of places are looking for a little extra help, you just have to get off your butt and apply. $300 extra bucks a month beats sitting at home playing video games after you get off work.
3) Stop eating out. NOW. I was amazed at how much money I was saving every month by packing my lunch and cooking my own dinner. Those trips to Chipolte and Subway add up.
4) Track your spending for a month. Where is you money going besides your "absolutes" such as rent, car payment, insurance, etc? Once you've figured this out, see what you can cut out. Do you really need to tan that much? Are acrylic nails really worth it? How much have those bar tabs been? Every little bit counts, and you'd be amazed at how much you spend on things you don't really need.
5) Give your credits cards to your parents to hold onto or take them out of your wallet so they aren't constantly accessible. If you don't have them, you can't use them. Don't cancel them, just don't use them. Then pay them off in order of highest interest rate and try to pay more than the minimum payment. Try calling your credit card companies to ask for a lower interest rate.
These suggestions certainly aren't a guarantee that you'll get out of a financial crunch and stay out of it, but these have helped not only me, but people that I know. And don't be afraid to talk about your financial issues- most people have them, and they are nothing to be ashamed of. Admitting that you have a problem and need to solve it is the first step towards fixing it. Remember- you may want to buy that fancy leather couch because it would look cool in your place, but Grandma's old sofa is free and slipcovers are cheap!
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