To all of you Young Dreamers

[cube_rat]

I had a conversation yesterday with two of our young DBA's (early 30's) about personal finances. Not only do they carry a huge debt load (a mixture of student loans and cc debt), and live paycheck to paycheck they viewed their 401K as emergency money! They have no savings account at all. Never heard of ING, Emigrant or the concept of snowballing debt.

So to Laurence, Maddie, Andre and Justin (I know I'm missing a few here). You guys are light years ahead of most people in your age group. You young guys and gals rock!

 

[KB]

Cheers.

Cube-rat....hope after your conversation with the youngens they started thinking about their finances.
We can only hope..

 

[ats5g]

Hey cube,

After talking with a couple of our friends and siblings, the thought of not working past 50 or 55 was extremely appealing to those of us in our early 30's working our a**es off, a lot of them were shocked into starting to save, etc.

You could ask them if they want to work until they're 70, or stop working before 60.

- Alec

 

[azanon]

The main problem I think is just lack of education about it. My story was i came into an inheritance in my mid 20s, bought several investment books so i could learn how to handle it, and in that process was enlighted about the virtues of saving.

Unless they get it from their parents, kids today just aren't taught the virtues of saving and investing. In contrast really, we're taught to pursue the american dream and live for the moment.

Azanon

 

[Jay_Gatsby]

The problem I've found with many of my fellow 30-somethings is not a lack of desire to FIRE, but rather a willingness to alter ingrained behavior towards spending and having "fun" (which, of course, can only be had through spending money).  Many didn't start seriously saving money until they got married and had kids -- especially when they had kids.  Once you bring a life into the world for which you are 100% responsible . . . you don't have much of an incentive to be responsible.

 

[Honkie]

Cube - whilst I was never wasteful and always pretty sensible financially,  it was conversations/friendship with a couple of older colleagues that really got me financially focused when I was in my mid-20's. Now I am in my mid-30's I find the tables turned and others are coming to me for advice and guidance (I have a strict policy of not disclosing our financial position at work, but through general discussions and conversations colleagues have got the impression that I know a little bit more than they do on the financial front- not difficult in some cases). The startling thing is that I am the youngest and those seking advice are in the late 40's and 50's.

What I have learned is that far too many people, in their youth, didn't heed the advice of the office old timer telling them to save. How is it possible that in a room with 2 guys in their 50's, 2 guys in their late 40's and me in my mid 30's, we have a greater net worth than the other 4 combined? (it's not school/college cost as those with kids all got it basically free)

I wish I was still in touch with those old guys, I really would like to thank them again.

Honkie

 

[wompo]

The problem I've found with many of my fellow 30-somethings is not a lack of desire to FIRE, but rather a willingness to alter ingrained behavior towards spending and having "fun" (which, of course, can only be had through spending money).

I do feel lucky that the things I find "fun" do not cost me much. I love to go hiking or most anything outdoors that does not cost a lot of money. It certianly helped me in saving for retirement. I find no real pleasure in buying a fancy car or taking a vacation to some resort at the beach.

 

[piranha]

It's difficult for people to change their spending/savings habits at any age. I have my parents to thank (more than anything) for the great financial situation I'm in today.

I've read lots of things on this board and have participated very little, but felt it was time to share this story with everyone (since I have the time to write it) and maybe it'll impact someone.

When I was 9 years old, my parents insisted that I take over a paper route from a boy that lived next door who was moving out of the neighborhood. The route wasn't what you'd call typical. It involved me going from room to room at a local hospital . It took around 2 hours to do (there were probably around 500 rooms in all... the hospital was 12 stories high and had 4 wings), but it had advantages like the papers being delivered directly to the emergency room, collecting money on the spot rather than after the fact, and a bunch of sick/old people tipping a young smiling boy more than they probably would a regular carrier. I typically sold around 60-70 newspapers daily and around 100 on Sunday. For the first few weeks, my mom accompanied me on the route. I ended up averaging around $70 tax-free profit for the week. My parents forced me to give them the $ I earned every day, and they allocated me $10 per week of it for my own use. There were times I tried to skim money off the top by hiding it (in my sock, in my shoe, in my... well... you get the idea). Sometimes I got away with it, sometimes I didn't. I asked about my money constantly, and they told me that one day they'd give it to me and I'd thank them for it.

Anyway... to make a long story short. I had that paper route for around 8 years. The only time I didn't do the route was when I was involved with after school activities (like basketball). During those times, my sister did the route. So... for the purposes of calculation at the bottom of this post, I'm going to use 7 years. I quit doing the route when I was 16, and ended up getting various odd jobs through the rest of my high school and college career to pay for various expenses like car insurance and room/board. My parents were not involved at all with me managing this money, and like a typical teenager... I spent most of it on food, drink, clothing, and all around good times. I was fortunate enough to receive an academic scholarship that paid for most of my college tuition, so I didn't have any debt after I graduated.

At 22 years old, I began my teaching career. My parents finally decided it was time to allow me to manage the money I had earned from my paper route. They are very conservative people, and didn't invest at all in the stock market. They had put my money in CD's of varying lengths (4 months, 6 months, 1 year, and 2 years). They just all happened to come due shortly after my 22nd birthday. I honestly don't remember what the interest rate I was getting on the CD's was (this was back in around 1996), so I'm not even going to include that in my calculations....

$70 a week from the paper route
times
52 weeks in a year
times
7 years
equals
$25,480 in cash (not including interest) by the time I was 16 years old. Allow that to grow for another 6 years (with interest) and when my parents turned over the accounts to me... I had around $34,000 in money I had earned on my own in savings.

At age 22, I used $30,000 of that money as downpayment on a $110,000 house.

I bought my first house with paper route money I earned before I turned 16 years old.

I didn't use one dime of my first year teaching salary to buy that house. My parents didn't give me any of their money either (hell... they couldn't afford to). I had bought it with my own money.

My parents are simple people. My mom was a homemaker her entire life and my dad was a garbage man. I made more money my first year of teaching (around $31,000 a year in 1996) than my dad did the last year he worked at his job.... yet through coupon cutting, dollar store hunting, and other assorted penny pinching activities... I'm certain my parents (who are now in their 60's) have around $500,000 of assets in the bank (they never did invest in the stock market).

I'm 32 years old with a wife (also a teacher), 2 kids (5 and 3 years old), a $200,000 mortgage on a $350,000 house, over $300,000 in retirement accounts(403-b and Roth IRA), and $30,000 saved towards college in the kids names.

There is absoultely no way I'd be where I am today if it wasn't for a paper route I started when I was 9 yeras old under the guidance of my parents.

 

[SteveR]

Great story!
It is always uplifting to see a parent teach a child the value of saving instead of spending. Congratulations on your achievements to date. You are well on your way to FI and ER.

Thanks for sharing.

 

[CyclingInvestor]

When I was 9 years old, my parents insisted that I take over a paper route from a boy that lived next door who was moving out of the neighborhood.

At age 22, I used $30,000 of that money as downpayment on a $110,000 house.

There is absoultely no way I'd be where I am today if it wasn't for a paper route I started when I was 9 yeras old under the guidance of my parents.

That sounds pretty close to my early years. I had a paper route from age 9 until HS graduation,
when I had about $11K. My parents had always stressed the need to be independent, and I had
saved almost every penny I made (investing in CDs). That grew to $15K by the time I finished
my BS, which turned out to be the down payment on my first house in LA. This was back in 1980,
when LA housing was affordable - $83K for a 2 bedroom in a questionable neighborhood.

Checking my old records and adjusting for inflation, you are now slightly ahead of where I was
at 32, and now at 47 I am FI and can retire when I feel like it. Starting early really does make a
diffference, both with the actual numbers and with the attitude it sets up.

 

[yelnad]

Wow - maybe I should get a paper route.

 

[deserat]

Different story here - started serious saving towards retirement when the old geezer 'engineer' asked me if I was putting money in the 403B - I was 29, just finished my masters and thought that I would just have the company give me a pension. I knew nothing about 401ks/403bs. He told me my cash flow would be more because of the tax deferral - he still lost me. He then basically took me by the ear and marched me down to the human resources office and watched me fill out the form for a 403B and told me to max out the amount eligible for that year. Without his guidance and assistance I would not be where I am today - in financial knowledge, in personal goals knowledge, in the idea of an early retirement. I have yet to thoroughly thank him and that reminds me that I need to do that.

Fast forward three years from that point - I was only 20% vested and received $1500 to roll over into my own IRA when I left the company. The 403B - it had ten times that amount in 3 years - at the next company, the first thing I did was sign up for the 403b.

Amazing what old-timers can teach you - I kick myself for not starting even earlier.

Bridget aka Deserat

 

[JPatrick]

Something about those paper route guys.
It was a real bitch having a route in the frozen north.  Nothing like getting up at 4AM walking to the print plant,  delivering papers in the snow (before the sidewalks were shoveled) and in sub zero weather and getting to school by 7:30.  I only did that a couple of times as a sub, but I had several friends who did this for 4 years. 
I'm in touch with 2 of these folks, and as you might guess they have had the right stuff their entire careers.

 

[Danny]

Something about those paper route guys.

Add me to the list of paperboys.
From when I was 10-16 years old delivered the Chicago Tribune, Sun-Times and the Wall Street Journal 6 days a week.
Up at 5:30. Read the papers while I rolled them. 1 cent a paper later raised to 1 1/2.
Saved my pennies. Some of it ended up in the downpayment for the first house.
I also bought a bunch of Hartland baseball models for $2 each in the early 60s. They are worth more than a couple hundred times that now. Dick Groat is worth $2000+. My best investment returns. Will pass them on to oldest son - a former paperboy.

JP - used to pull my sled piled with boxes of papers down the snow filled streets - beautiful quiet time before the world got started.

 

[Sisyphus]

Cube_rat...

Thanks for the words of encouragement to all of us youngsters.

I think regardless of the generation, those who actually save money are the exception to the rule. You are totally correct in what you say but I find just as many people in their 40s who are basically "broke".

Most of my friends in their 20s and 30s have no savings to speak of and ALREADY predict that they will have to work until they die. That's simply not something I'm willing to accept... I'm sure the other young people on this board are the same way.

I learned about compound interest and played with some calculators around the time I was a teenager. I was hooked. The fact that "financial education" isn't more of a priority in schools is a shame. I wish more kids at that age learned what I did. Maybe as a second career after I ER I can help in that effort. Just show a compound interest calculation to an 18-year-old... they instantly get excited once they understand what it means.

 

[Lazarus]

I am another former paperboy. My parents did not get involved with what I did with my paperoute money. I did buy two cars while in High School with paperoute money. And pay the insurance, gas, and repairs.

 

[Arif]

I wasn't a paperboy but I did have a run in with a guy who owned his own house painting company. I started working for him during the summers when I was 13. One year we made a deal. He bought me a lawnmower and I cut his grass for free. I had about 4 or 5 lawns a week at $10 a piece. From the time I was 13 until I gratuated, I bought my own clothes and paid cash for my first car at 16. Besides the money, I also learned a lot from that man. He taught me about hard work and saving towards my goals. He had paid cash for his house and was no older than 35 if I remember correctly. From then on I always had a side gig making money. In college it was a shuttle service for kids going to the airport and selling used cars. After graduation I took the advice of our recruiter in ROTC and bought a duplex at my first duty station. The rest you can say is history.

BTW- The guy who owned the house painting business moved and we lost touch. One of the things on my "to do" list is to find him to say thanks.

 

[Eagle43]

I was a paperboy about 1955/56.  Also, a bagboy.  Both in New Orleans. Didn't make enough to do anything, but it did teach me to work and to earn my own money.  I never count that time in my "working career length" of 43 years, but if I did, we're looking at 47 or so.  Slept late this morning; didn't feel guilty. 

 

[SteveR]

I had a paper route when I was about 11. I kept it for a few months and then would quit once I had enough for my new bike. I did it again later when I wanted some other large ticket item. I hated getting up at 5 am to hand deliver papers in a very hilly area in all weather conditions.

No house or cars from my short work experience. I did cut grass, shovel coal, clean out furnaces, painted houses, installed electronic gagets in cars (CB radios, 8-track tape units etc.) for some spending money. Never made enough to do much with it and my parents had no idea what a CD was and did not trust the stock market; they barely trusted banks so they tended to have everything in cash. Not exactly a great lesson in investing but they did live below their means and that rubbed of on me.

 

[Mr._johngalt]

I had a paper route when I was about 11.  I kept it for a few months and then would quit once I had enough for my new bike.  I did it again later when I wanted some other large ticket item.  I hated getting up at 5 am to hand deliver papers in a very hilly area in all weather conditions. 

No house or cars from my short work experience.  I did cut grass, shovel coal, clean out furnaces, painted houses, installed electronic gagets in cars (CB radios, 8-track tape units etc.) for some spending money.  Never made enough to do much with it and my parents had no idea what a CD was and did not trust the stock market; they barely trusted banks so they tended to have everything in cash.  Not exactly a great lesson in investing but they did live below their means and that rubbed of on me.

This is interesting. Although I had a "job" from about age 10 on,
I never had a "paper route". I cut grass, baled hay, cut thistles
and weeds,
cleaned a barber shop, set pins (bowling - pre automatic pinstters),
caught, cleaned and sold catfish, stacked, packed and carried groceries,
sold popcorn (state park), ran a concession stand in another state park,
shoveled snow, fed hogs, detassled corn, and pimped on the side
(kidding about that) . Once I tasted the fruits of capitalism,
I was hooked.

JG

 

[Mr._johngalt]

I was a paperboy about 1955/56.  Also, a bagboy.  Both in New Orleans. Didn't make enough to do anything, but it did teach me to work and to earn my own money.  I never count that time in my "working career length" of 43 years, but if I did, we're looking at 47 or so.  Slept late this morning; didn't feel guilty. 

I got up today
at 5 am to see
DW off to work. Back to bed at 6. Up with the dogs around 7am, then back to bed until around 8 or so. Had lunch with my folks and then a short nap at their house. I don't feel guilty either.

JG

 

[Danny]

I got up today
at 5 am to see
DW off to work. Back to bed at 6. Up with the dogs around 7am, then back to bed until around 8 or so. Had lunch with my folks and then a short nap at their house. I don't feel guilty either.

JG

Are there any other ER guys that send their women off on the streets to earn money while they lounge about in silk pajamas and smoking jackets - puffing on a cuban, sipping an espresso, twirling their diamond pinkie ring and posting on ER Forum

 

[Andre1969]

I never did the paper route thing, but when I was 13 I started working for this lady who was the president of the local SPCA.  She had a big old house with a big yard, and I'd do housework and yardwork for her.  It was 1983 when I started working for her, and I made $3.50 per hour.  Since she was associated with the SPCA, she was always bringing home strays, or animals that would otherwise have been put to sleep.  At her peak she had like 30 cats and 5 dogs!    It was a big house, but still!

Let's just say I had plenty to keep me busy!  She actually bumped me to $4.00 per hour around 1985, which wasn't bad considering minimum wage was $3.35 at the time, and that $4.00 per hour was either cash or check, so I wasn't paying taxes or SS on it.

She passed away in 1986 from breast cancer, and after that I worked at a nursery school that summer, doing lawn/maintenance work, and then that fall worked at a veterinary clinic through the summer of '88.  Then I got a job as a dishwasher at Denny's when I entered college, and soon became a host and then a waiter.  By the time I finally got fed up (too heavy of a workload at college, plus my Granddad took ill with lung cancer and passed away) and quit in April 1990, I had a bank account total of around $22,000.

Unfortunately though I blew through it pretty quickly.  Part of the problem is that I have one achilles heel...antique cars.  I bought a '57 DeSoto in the fall of 1990, when I wasn't even working.  I finally picked up a part time job at a department store (Hecht's, for those of you in the Maryland/DC/Va and vicinity) in the fall of 1991, and I think by that time I had spent down to around $18,000, which wasn't bad all things considered.  From then on I really didn't track it like I should have, but I got a part time job with McDonnell Douglas in the fall of '92 making $10 an hour, and thought I had it made.  By the December of 1994 when I bought my condo, I think I was down to around $5,000 or so.  And once I got married in July 1995, my wife took care of what little was left in short order!    Damn it's amazing how fast it can go! Although looking back, I'm really shocked at how quickly I went from $18K in fall '91 to $5K a little over 3 years later. I did total a car (not the DeSoto) in early 1992, but got paid about what I paid for it, and went out and bought another one like it (a Dodge Dart). It wasn't as reliable as the other one had been though, and I had to put a lot more into repairs. And then in April 1994 I bought a '67 Catalina convertible, but I was also working full time by then, plus still had the part time job at Hechts. I really wish I'd tracked my expenses better back then!

 

[cute fuzzy bunny]

Are there any other ER guys that send their women off on the streets to earn money while they lounge about in silk pajamas and smoking jackets - puffing on a cuban, sipping an espresso, twirling their diamond pinkie ring and posting on ER Forum

Yeah me, except for the silk pajamas, smoking jacket, cuban, espresso, and the pinkie ring.

I usually make my wife breakfast at 5am and then pack her off with a cup of homemade starbucks to go right about the time the baby wakes up and wants his breakfast.

Thats right, i'm Mr. Mom. I'm currently rewiring the house for 220, 221, whatever it takes...hold on while I go get my reciprocating saw...

 

[Danny]

Yeah me, except for the silk pajamas, smoking jacket, cuban, espresso, and the pinkie ring.

I usually make my wife breakfast at 5am and then pack her off with a cup of homemade starbucks to go right about the time the baby wakes up and wants his breakfast.

Thats right, i'm Mr. Mom. I'm currently rewiring the house for 220, 221, whatever it takes...hold on while I go get my reciprocating saw...

Good for you!

Have 2 kids away at college most of the time and one on his own.
So, I'm a sleep when my wife takes off...when she's gone I get off my silk sheets
and have Uma the live in housekeeper get me the espresso and light my cuban and well you know...