Don't Launch too Soon

The ages of 18 to 24 are probably the most difficult years financially for a man.

Around this age, student loans have been accrued and a man most likely doesn't have the best paying job.
You won't be an accountant, lawyer, financial planner, engineer, etc at the age of 20.

On top of that, if you go to college and are financing it with debt, you could owe $20,000 to $30,000 over the course of 4 to 5 years in just tuition. And this is in state tuition.

If it is out of state tuition, you could owe $50,000 to $60,000 over 4 to 5 years in just tuition.


When pressed with debts and not very much earning, I would recommend any man in his early 20's to continue living with his parents for as long as they will allow it.

Don't dorm at college, don't rent a house or apartment.

Rent can cost anywhere from a couple of hundred dollars a month to excess of a thousand dollars a month.

Avoiding these costs will really help your finances in the future.


Obviously, there are some downsides to doing this.

You might not have a good relationship with your parents or don't get along with them.
You have less privacy.
You are looked down on for not being independent.

Don't be discouraged. While society tells you to get your independence as soon as possible, society is just telling you to play the game on hard mode.

If you are 18, moved into your own place, and are going to college, life isn't easy. You need a lot of money.
If you want to be financially responsible, you have to make sure you can take care of all your living expenses and tuition. You have to work to pay for all that stuff.

What most people do is borrow the money that is needed to pay for rent, tuition, etc.
While they still work, its not usually enough to pay off everything.

Also, borrowing money isn't free. Student loans do accrue interest over time.

Collecting free money

Collecting free money is great.

Today, banks and credit card companies are getting super competitive. So much so that they offer free money in promotions just for opening accounts.

Since November of last year, I've collected $600 in free money just buy opening up bank accounts and credit cards. After searching around, I've found at least $450 more in promotions I could easily get.

Sometimes, these promotions get sent to you by mail. Other times, you have to look for these online. My favorite place to check online is http://www.hustlermoneyblog.com/best-bank-bonuses-deals/.

The best promotions you want to find are the ones that you get free money just by opening a checking or savings account. The money usually gets credited after having the account open for a certain amount of time.

Please keep in mind that bank accounts usually have a monthly fee. These can be waived usually by having a direct deposit linked to your account or maintaining a minimum monthly average in the account. This minimum amount will probably be anywhere from $500 to $1500. There may also be fees if you close your account to quickly after opening it. Make sure you know all the fees before opening an account.

The other promotions I would recommend are credit cards. These promotions usually work if you open up a new credit card and spend a certain amount within a certain time. The most common promotion I've seen is spend $500 within 3 months and get a free $100. They will either send you a check or credit the amount to your credit card.

Most people spend at least $500 in a month. This promotion rewards you for something you would do anyway, spend money. If you spend only $500 with the credit card to get the $100, you pretty much get $100 worth of stuff for free. It is like getting a 20% discount on whatever you buy (for the first $500). Just make sure that you don't buy anything you would not have bought otherwise.

Please keep in mind that opening up several credit cards and bank accounts will have an adverse effect on your credit score. The adverse effect will fade away after holding those accounts for a longer period of time though. Also, try not to close several accounts at the same time. That can lower scores as well.

But if you never plan on borrowing any money (loans, mortgages, notes, etc) and don't care about you're credit score, go right ahead. Open up as much accounts and collect as much free money as possible.

Hard decisions

These are statements I've learned to be true by experience.

1. You are going to die.
2. Stuff costs money
3. Most likely, you will have to work to earn money.
4. Work sucks

After looking at these four statements, any man would logically come to the conclusion that you want to get through life working as little as possible.

Work takes time and effort. Time that could be spent doing more enjoyable things. Like sleeping.

There are different strategies getting through life working as little as possible.

One of them is to spend as little as possible. Don't buy anything unnecessary.

However, there are things that you might want. Or maybe society wants for you.

1. Buy a house
2. Get married
3. Have children
4. Buy a luxury car
5. Get the newest apple product/videogame system/electronic/tv
6. Get advanced degrees
7. Travel and see multiple countries

Realize that all this stuff above costs money. If you want it, you will have to spend money. Make money. Sacrifice part of your life for it.

Before buying any of this stuff above, make sure it is really worth it.

Now, if you decide to go without most of this stuff above. You will have more of your money and life to play with.

Why you shouldn't buy a Nissan Leaf

In 2009, I thought the Nissan Leaf was a really cool car. 100% pure electric, no need for gas. Sounded pretty amazing.

But, that seems like the biggest appeal. No gas bill.

Today, a new 2014 Nissan Leaf costs $30,000. If the federal tax credit of $7,500 is still available, the actual cost comes down to $22,500.

In a few minutes, I did an analysis to see how long it would take to recoup the savings for gas.

My commute is 40 miles, round trip, 5 days a week.
On average, I spend $150 a month on gas.
That comes out to $1,800 per year on fuel.

$22,500 (price of leaf) / $1,800 (fuel cost per year) = 12.5 years.

So with this calculation, you need to have the Leaf for more than 12.5 years to save money on gas. Keep in mind that this is only an analysis of saving fuel. New cars carry higher insurance costs.

Now the above calculation does not include inflation. Lets set inflation at 3% per year for gas.

Fuel costs
year 1 $1,800
year 2 $1,854
year 3 $1,909.62
year 4 $1,966.91
year 5 $2,025.92
year 6 $2,086.69
year 7 $2,149.29
year 8 $2,213.77
year 9 $2,280.19
year 10 $2,384.59
year 11 $2,419.05

total costs after 11 years = $23,054.03

Even after adjusting for inflation, it takes more than 10 years to recoup the cost of just gas.

How to structure your finances

When you start working and making money, its really important to know how to have everything organized.

This is how I was taught to structure my finances.

Imagine a pyramid made of layers. It looks like the following..

Investment
Savings/Emergency fund
Debt Management
Protection


The bottom layer is the foundation, the thing that should be done first. Protection will included different types of insurance. Health insurance usually comes to find first.

Should something happen to you, injury, sickness, etc, and you go to the hospital. Hospital bills can be very expensive. You want to protect yourself in case you run into medical bills of tens of thousands of dollars.

In this section, you would include other types of insurance if you have any legal exposure like if you own your own home or have your own business. You need to have the right type of insurance to protect yourself from lawsuits.


Above protection is Debt Management. Whatever debts/loans you have, it is your goal to make sure that the balance goes down every month. It is your ultimate goal to have all of these debts paid off.

Debts/loans most always come with an interest rate. Left untouched, the balance will grow. Grow uncontrollably.  Credit card debt can carry interest rates of around 20%.

This is why you focus on debt management way before investment. Typically, the interest rates charged on debt will vastly surpass the interest rate you could earn on any safe investment.

Last I checked, the best interest rate I could get at a CD at my bank is three tenths of one percent.

After getting debt under control (total debt decreasing every month). The next thing you want to have is an emergency fund.


Typically, you want to have 3 to 6 months of your earnings saved in a bank account in case something unexpected something. Though the amount is not exact, you can adjust the amount to how much you feel comfortable with.

Say you lose your job, have unexpected bills, your car breaks down, you need to maintain your house. You have that money to take care of yourself for a little while.


At the very top, you have the last thing to focus on. Investment.

If you have spare money after taking care of protection, debt, and emergency fund. You can try to invest it into different things to earn a better return.

Investment is the last thing you focus on for a few reasons. You might have to hold your investments for several years to see a return. Your investments might not be very liquid. The value of your investments will fluctuate. You might take a loss on your investments.




The mistake that a lot of people make is that they focus on investment first without considering anything else. So if a man loses his job, and he has everything in investment with no emergency fund. He might have to sell off his investments at a loss.

Put down the controller

Ever since I was 9, I spent lots of time playing video games.

While I really like playing games, it can be kind of expensive if you go crazy with it.

The new systems now cost $400. I really wouldn't recommend buying a PS4 or Xbox One right now. And the biggest reason why is that there aren't really any good games that are only coming out for the PS4 or Xbox One that isn't already coming out for the PS3 or Xbox 360.

If you want to get these systems, either wait for a price drop or wait until some good games come out that won't come out for the PS3 or Xbox 360.

There is another reason why I would not buy a new gaming system now.
This is just an opinion and it is based on absolutely nothing. But I kind of get the feeling that Microsoft did not learn from the red ring of death with the 360. November of 2014, you might start hearing reports of defects with the Xbox.

After all, I've heard stories about people that bought multiple 360s. If someone had to buy 4 or 5 of them, that could be a thousand dollars spent because of defects.


One thing that I also would not do is buy games as soon as they come out.
For as long as I can remember, highly anticipated new release games always go for about $50 to $60. I remember buying super smash bros for the N64 for $52 when I was 12.

If you bought two new release games a month for a year, that would cost roughly $1200 a year.
$1200 could buy me gas for 8 months.

If you really need new games, try to keep new release down to only a few times a year. From experience, checking prices in Walmart, if you wait a couple of months after a game is released, the game's price will drop from $55 to $30 to $35.

After a year or two , it may drop down to $20.


Speaking of which, if you really want to save money, don't buy the games that you want right now.

Instead, go and buy the games that you wanted to play a few years ago but never did. You can find games dirt cheap that way.

I went into a GameStop a year ago just looking for some cheap games for my PS2.

When I was there, I saw that they were just trying to get rid of those things. I could pick up games for $2 to $10 dollars each.

Off the top of my head, here are 10 PS2 titles that were just amazing.

1. Metal Gear Solid 2
2. Kingdom Hearts
3. Tony Hawk's Pro Skater 3
4. Final Fantasy X
5. Katamari Damacy
6. Silent Hill 2
7. Grand Theft Auto Vice City
8. Guitar Hero 2
9. Shadow of the Colossus
10. Jak and Daxter


The last way to save money on gaming is to shift some time away for it.
Try some activities like running, swimming, hiking, bicycle riding.

Just try one or some of the above. They are enjoyable, and also cheap. But that is for the next post.

Learning how to use Ms Excel with financial planning

Back in college, I took one class all about learning how to use spreadsheets. On of our projects was to plan out savings and retirement. 

When I got my first job, I kept track of my expenses and put my life down on spreadsheets immediately. 

Below is an example how to make simple spreadsheets in Microsoft Excel.

age	savings
25	1000
26	2000
27	3000
28	4000
29	5000
30	6000
31	7000
32	8000
33	9000
34	10000
35	11000
36	12000
37	13000
38	14000
39	15000
40	16000
41	17000
42	18000
43	19000
44	20000
45	21000

This is a simple spreadsheet to illustrate the point. This took less than a half minute to make.

In cell A1, put age. In cell B1 put savings.

In cell A2, you can put your current age. For this example, you can use 25.

In cell A3, you can type in a formula =A2+1

Press enter and 26 will appear into the box.

Make sure that the cell A3 is selected. There should be a small square in the corner of the cell. 

Click and hold the square and drag the mouse down to cell A22. Release the button and Excel should fill in all the age until 45.

This is the fill function in excel. The same thing can be done with the column for savings.

This is just an illustration. If you know how to make this, you can replace the numbers with those that apply to you.

In the following example. Jack is 30 and saves $10,000 every year.

The spreadsheet shows Jack's total savings at any given year.

age	savings
30	10000
31	20000
32	30000
33	40000
34	50000
35	60000
36	70000
37	80000
38	90000
39	100000
40	110000
41	120000
42	130000
43	140000
44	150000
45	160000
46	170000
47	180000
48	190000
49	200000
50	210000
51	220000
52	230000
53	240000
54	250000
55	260000
56	270000
57	280000
58	290000
59	300000
60	310000
61	320000
62	330000
63	340000
64	350000
65	360000
66	370000
67	380000
68	390000
69	400000
70	410000
71	420000
72	430000
73	440000
74	450000
75	460000
76	470000
77	480000
78	490000
79	500000
80	510000
81	520000
82	530000
83	540000
84	550000
85	560000
86	570000
87	580000
88	590000
89	600000
90	610000