Start Life On A Solid Foundation
Posted on July 13, 2007
It’s that time of year when young people graduate high school or college and prepare to start their adult lives. Most have visions of grandeur that are quickly dispelled by a great big dose of reality, but there’s no reason for them to become discouraged. Whether entering the workforce as a high school graduate or college graduate, the way they handle their financial affairs in the beginning has everything to do with how comfortable they will be later in life.
Many young people start their careers in a financial hole. Today, between school loans and credit cards, the average college student graduates with nearly $20,000 in debt. That’s a huge hole for a young person to dig out of, especially when they’re probably disillusioned by the fact that their entry level job doesn’t pay anywhere near what they were told they would earn when they were still in school. Even with a good education, few new graduates start with high paying jobs. What education does is enable them to advance more rapidly in their chosen careers as they gain experience.
The good news is that a handful of these new graduates will tighten their belts, live frugally and get their debt paid off before trying to increase their standard of living. The bad news is that most of them will keep going deeper in debt and some will even end up filing bankruptcy. The problem is that the majority of new graduates aren’t willing to make the sacrifices necessary to get out of debt first; they want to start life with the comfortable lifestyle their parents provided when they were still living at home. Its part of the “I want it now” mentality that permeates today’s youth.
Today I live in a beautiful home with a swimming pool, tennis courts and more, but life didn’t start that way for me. My first home away from home was a small $40 per month apartment in the attic of an old house in downtown Asheville that has since been demolished. It certainly had no resemblance to the tidy three bedroom home in a working class neighborhood where I grew up, but even at $40 per month, it was still a stretch. In the early 1960s, that was all I could afford, so I made do with it. Sure, I wanted something nicer, but I wasn’t willing to go in debt to have it.
Eventually, I moved to a very small two bedroom house in a mill village and from there to another small house in the country. (There’s a picture of that house and the one where I live today in the Press Room on my website.) Each move followed a pay raise or a new higher paying job, which gradually enabled me to move from that $40 per month apartment to the $60 per month house. I realize today that had I tried to start with a house similar to the one in which I grew up, it would have caused me to go in debt and I wouldn’t have been able to save the money that later helped me start my own business. I had to sacrifice in order to succeed. That’s a lesson today’s youth are not being taught.
Here’s a tip! A broad guideline to follow if you want to have a middle class standard of living or better is this, if you start with only a high school diploma, be prepared to live on 80-90% of your income for 10-15 years and invest the other 10-20%. If you are fortunate enough to start with a college degree and not a lot of debt, be prepared to do it for at 5-10 years. It will take you that long to save enough for the down payment on your first middle class home. I know, many of you reading this article will say, “I did it faster than that,” or “You can’t do it that quickly.” That’s why I say this is a broad guideline. It’s almost impossible to start out with a middle class lifestyle without help from parents or others.
When I moved into that attic apartment, I wasn’t proud of where I lived, but I knew I wouldn’t be there the rest of my life. Each time I was able to move to a little nicer home, it gave me a feeling of accomplishment and encouraged me to reach for more. Had I started with house or apartment I couldn’t afford in order to impress other people, it would have caused me to go in debt and denied me the positive feelings that came with each move up. The longer I would have kept at it the greater my agony would have become as debt mounted and I would have eventually faced the humiliation that comes with having to back up to catch up.
Young people, this message is for you. If you will be entering the workforce this year, take some advice from an older generation. Be patient! My dad used to say, “Don’t hurry up to fast too slow.” Although I never quite understood what he meant, it was probably good advice. Your parents didn’t start out on top, so why should you. Give yourself the opportunity to experience the thrill of victory as you move up in social status, not the agony of defeat that comes from wallowing in debt or the disgrace of having to file bankruptcy. Your whole life is ahead of you. Don’t ruin it with overindulgences and reckless spending. Successful lives, like sturdy buildings, are built on solid foundations.
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