I grew up in a family with little money. My parents did the absolute best they could with what little money they had, but they never had a lot of money to go around. There were times when things were okay, but there were other times when the money was tight and there was never a time when I had all of the cool things that my friends had.
My car in school was a beat-up rusty rattletrap that had so many roof leaks that I literally gave up on it and drilled a hole in the front floorboards so that the rain water that inevitably collected in there during a rainstorm would leak out.
I managed to get into college and I had some scholarship help, but when I got out of school, I still had a pile of debt before me, a pretty healthy pile of subsidized and unsubsidized student loans. The balance on my student loans, according to what records I could find, was higher than my starting salary in my first real job after college.
What did I promptly do? I promptly rang up five figures in credit card debt, almost immediately. I lived in a tiny apartment with rent that was about 30% of my take home pay. I then proceeded to get married and we spent far more than we should on our wedding and honeymoon.
Four years out of college and I was facing almost triple my annual salary in accumulated debt. I lived in a tiny apartment with my wife and my first child, with student loans and car loans and credit card loans all around and a stressful job.
At that point in my life, I basically believed personal finance success was impossible. The deck was utterly stacked against me and against people my age. We were saddled with mountains of student loans and to have any sort of “life” meant credit card debt and a car loan. It felt utterly hopeless.
Narrator: It wasn’t hopeless.
One day, I realized that I was building a pretty awful future for my infant son, so I decided to see what I could do to turn things around. I went to the library – not the bookstore – and grabbed every book on personal finance that seemed relevant and I crammed them. Two of them really stood out to me – The Total Money Makeover by Dave Ramsey spelled out “baby steps” for getting out of debt, and Your Money or Your Life by Joe Dominguez and Vicki Robin espoused a whole life philosophy oriented around a better relationship with money.
Those two books utterly changed my life.
I’ll fast forward through what happened over the next several years. Over the course of eight years – only three of which involved me earning more than the American median income, and the other five I earned below the American median income – I paid off every dime of that debt, bought a house, and paid off that mortgage in full in less than five years, all while having two more children, rotating both of our cars, and experiencing some serious career tumult along the way. Today, Sarah and I are socking away enough of our income that we hope to retire shortly after our youngest child leaves the nest.
Do not – I repeat, do not – tell me that financial success is impossible for people under 40. It’s not.
Do not – I repeat, do not – tell me that you have to have a high income or a lot of help from mom and dad to be able to “make it” or get out of debt. It’s flat out not true.
Financial success is not “impossible” for you. It just requires choices you’re not willing to make and probably not willing to even consider.
Let me go through some of those hard choices we made.
Are you willing to sell off many of your possessions?
Go take a look through your closet and your shelves and your possessions that are stored away here and there. How much of that stuff do you really use? How much of that stuff will you realistically look at going forward? How much of it are you holding onto, if you’re being honest with yourself, for mostly sentimental reasons, or because you’re living under the belief that you might someday maybe use it again?
The truth is that the vast majority of the possessions you have are things that you can live without with extreme ease. You won’t even notice that 95% of the things in your closet are gone – they’ll just go away.
So tear into your closet and dump everything – or almost everything. Sell it on Craigslist. Sell it on Facebook Marketplace. Sell particularly valuable individual items on eBay. Then take all of that cash and throw it directly toward your debts.
Another advantage of doing this is that a tiny apartment suddenly doesn’t seem as tiny when your possessions can fit in a couple of storage bins. The truth is you don’t really need much more than that to have a really good life.
Are you willing to commit to genuinely seeking and enjoying free or ultra low-cost entertainment?
Rather than watching cable television or Netflix, you watch over-the-air digital channels for free – or stop watching television together and read books you check out from the library.
Rather than buying concert tickets, you keep an eye out for free concerts in your area and take the metro to get there.
Rather than going “out on the town,” you invite friends over for a simple dinner party.
Rather than indulging in expensive equipment for your hobby, you make do with what you have and actually practice the hobby.
Rather than going to the theater or buying the latest movies on Bluray, you wait until your library has the Bluray available to borrow for free.
You fill your time doing things like going to Meetups, going on hikes, going on bike rides with the bike you already have, reading lots of books from the library, playing games that you already own, and so on. You intentionally seek out free and, on occasion, super low cost entertainment for yourself, skipping anything that might involve shelling out cash.
Are you willing to utterly stop eating out, period, for quite a long while, and make your own food at home?
Eating out is a giant money vacuum. Going to coffee shops means your money is vanishing. Going to bars? Your cash is just disappearing for no real return.
Cut all of it out. Start eating at home for your meals. Aim to try to spend less than $1 on the food you consume for every meal on average. Learn to appreciate the low cost food staples like rice, beans, oatmeal, eggs, and so on, and use them a lot. Cook those things over and over at home until it is just second nature to you. Eat tons of leftovers – readjust yourself so that throwing away any edible food is a misstep. Make water your sole beverage. Plan your meals in advance using the grocery store flyer and make a shopping list before you go – and make sure you’re shopping at a discount grocer like Fareway.
Not only will this cumulate in a way cheaper diet, it’ll likely be a way healthier diet. It’s not too hard for a single person’s food intake to be $100 a month if you work at it. The catch, of course, is actually making an effort to do it.
Are you willing to live in a dirt cheap tiny apartment with a roommate or two?
It’s quite a perk to live by yourself or perhaps with just your romantic partner. It’s also quite a perk to live in a bigger apartment than you might otherwise afford, particularly when you’ve already filled it with stuff.
Both of those perks are incredibly expensive perks, though, especially when you’re trying to get your financial foundation in place. So skip those perks for now. You’ve got work to do first!
Choose a tiny apartment, the smallest one you can in a safe area. Get a roommate for that tiny apartment. Consider moving back in with mom and dad for a while and paying them a small amount of rent.
The goal is to make having a roof over your head as cheap as possible while you knock out student loans, build up an emergency fund, and start saving for retirement – in other words, building a nice financial foundation for yourself.
The way to do that is to think small, especially when you’re single or in a committed relationship without kids. If you pair this with a thorough cleaning out of the closet where you sell off most of your stuff, a tiny apartment won’t seem so tiny.
Are you willing bust your rear doing side gigs and not using any of that money for entertainment or hobbies?
Guess what? A lot of people don’t get their dream job right after college. Even if they do, it often doesn’t pay very well. Coming out of college, I walked into a pretty bad job market and had only one offer for a decent paying job on the table. It was substantially less than the median American income, but it was better than minimum wage, so I jumped on it.
Some people don’t even get that opportunity, but if you take those months and years after graduating to just sit around and have fun with your friends or play lots of video games, you’re wasting that time. That’s the time to hustle.
Get a job – anywhere – preferably one with some downtime, like an overnight shift at a convenience store. Start a side gig of some kind – maybe start blogging or making videos or mowing lawns or scooping snow. The goal is to keep yourself busy and get some income rolling in. Keep yourself sharp on your career path and keep applying for a main job if you don’t have one.
If you’re not spending at least 50-60 hours a week as a single person trying to earn a healthy income, build a career, build a side gig, or just put some cash in your pocket, you’re wasting time.
Are you willing to drive a dirt-cheap very used car to get to work, or use only mass transit if it’s available?
In 2010, I bought an almost ten year old used car off of Craigslist and drove it for the next eight years until it was literally falling apart, well above the 200,000 mile mark. It was already showing a bit of rust when I bought it, and that only got worse over time until the war on rust became a losing effort. It really wasn’t much to look at at all.
Still, it got our family to where they needed to go, almost without fail. It carted around used stuff and groceries and kids and all kinds of things. It got Sarah to work on slick days. It did everything we asked of it at an absurdly low price for the number of miles we put on it.
A lot of people would take one look at that vehicle and avoid it like the plague. I drove it for almost a decade.
Drive the beater. Embrace the beater. Whatever car you have right now, drive it until the mechanical problems build up. Get a local mechanic to do regular work on it and keep asking him or her how your car is doing and whether there are any problems that might pop up down the road. When they start listing several big things, it’s time to move on, but not until then.
Better yet, if you live close to mass transit stops, try not having a car at all. Use just mass transit and a bicycle with a basket and/or some pannier bags on it.
Are you willing to do your first-run clothes shopping and small appliance shopping at Goodwill and other secondhand stores?
When you need some clothes, your first stop shouldn’t be at a clothing store or at a department store. Your first stop should be at a secondhand store, like Goodwill or a used clothing shop or a consignment shop. Shop at those places first before you even begin to look at buying new.
Yes, you’re probably going to see some worn clothes at the secondhand store, but right in those same racks, you’re going to find a lot of perfectly good clothing hidden, and you’ll sometimes find some really well made nice clothing at a super low price. I’ve found full Brooks Brothers suits, professional clothes for my wife, and apparently still-new dress pants at secondhand stores in just the last few months, all at prices under $10.
The same thing is true for small appliances. If you need a microwave or a rice cooker or a bread maker, the first place to look is at a secondhand store. Scratch that – the first place to look is on social media (just ask your friends and family if they have an extra one lying around somewhere) or on Freecycle, which should be the first places you check.
The routine of “I need clothes” or “I need a toaster” or “I need dinner plates” leading directly to a trip to a department store is a bad routine to fall into. Start with used options and you’ll end up saving a ton and still have perfectly good items.
If you’re turning up your nose at the thought of buying secondhand right now… it might just be that such a reaction is part of the reason you feel that financial success is “impossible.” I’ve bought tons of stuff secondhand and it’s worked out almost all the time for me.
Are you willing to actively suggest free or extremely cheap social activities with your friends when they normally suggest expensive ones?
There’s a good chance that if you’re a typical twenty something or thirty something, your friends regularly suggest expensive activities. They want you go to a bar, or out to a club, or to go golfing, or out to dinner, or to the movies. There’s often a persistent sense that the only way to be “social” and have any sort of a “life” is to go out and do these expensive things.
Nonsense. There are tons and tons of social things you can do without shelling out cash for a meal or a movie or a cover charge or a greens fee.
Go to the park and play soccer or toss a frisbee around or play tennis or play basketball. Go on a hike. Have a dinner party. Play a board game. Have a house party. Have a meal prep party. Volunteer for something together. Have a picnic. Go to a community festival. Go to a free concert. Go geocaching. Have a movie night. Start a fantasy sports league. Go “Goodwill hunting” (our joke name for social shopping at Goodwill or thrift stores or yard sales).
Immediately associating “social” with “spending money” is just silly, and it’s an association that you need to break if you want to have friends and also seek financial success.
Are you willing to use things until they break rather than just replacing them when a cool new version comes along?
You don’t need a new phone every two years. You don’t need the latest gadgets. You don’t need a new game console – wait until the next generation one is coming and the current generation one is dropping in price. You don’t need the latest video games – give it a year or two and pick up the “game of the year” edition with all of the DLC for $10 or $20 (and, while you’re at it, actually play through the games you have). You don’t need the latest book – check it out from the library or read something else you have – or the latest album or the latest anything.
You. Just. Don’t. Need. It.
Use stuff until it’s genuinely worn out or it breaks, then replace it. Don’t go chasing the latest and greatest thing, because, honestly, it’s probably not the greatest thing, just the latest, with a lot of marketing hype and a stiff price tag attached. You don’t need it. It won’t actually add much of anything to your life.
Are you willing to jump off the train of steady indulgence?
You don’t need a $5 cup of coffee every time you pass a coffee shop. You don’t “deserve a treat” every time you wander down the cookie aisle or pass a bakery. You don’t “need” a drink of alcohol or a soda or anything other than water, and you don’t need to buy that in individual bottles at a buck a pop, either – a refillable water bottle filled at a water fountain will do the trick.
You simply don’t need to constantly indulge. The baseline of your life should be as dirt cheap as possible. On the rare occasions when you do have a treat, those treats actually seem special rather than the steady background of your life. A candy bar should feel like a special treat, not an ordinary thing. A drink should feel like a true indulgence (if you drink at all), not a routine or a dependence.
“But I need my morning coffee!” Then make it yourself, at home, with an inexpensive drip coffee maker you picked up at Goodwill and beans or grounds bought at the store – sticking with the inexpensive options, mind you. Eight O’Clock Coffee is quite good and dirt cheap. Put a little shot of milk in it and a bit of sweetener in it and you’re good to go for about $0.30 a cup rather than the $5 you spend at the coffee shop.
If you overindulge so much that a treat becomes the normal routine of your life, that’s a giant money leak you should close off. The baseline of your life should be as inexpensive as you can possibly make it.
Are you willing to use leftover money in your checking account for something financially beneficial?
If you do these things, you’re going to find a lot left over after you pay your bills and cover your needs. What are you going to do with that money?
Are you just going to find new ways to indulge with it? Or are you going to attack your debt with full force, making huge extra payments until it’s gone, and then start saving hard for the future and big goals like your next car and/or retirement and/or a house?
Are you going to do something “fun” with it, or are you going to build a financial fortress for yourself so that you never have to return to a state where things feel hopeless?
Is it time for a splurge? Or is it time to step up to the plate and build your future?
Are you thinking that these are choices you aren’t willing to make?
If you want to find financial success in your life, you have to be on board and willing with all of these things and many others. They can’t be “once in a while” things. Skipping one of your meals at a restaurant once every other week or selling off four things from your closet isn’t enough. You have to commit hard to real change, to not living the lifestyle you might have become accustomed to in your teen years or in your early professional career.
Financial success isn’t impossible. It just means making some choices that you might be really uncomfortable with. It means doing some things that are going to be pretty hard. It means making real changes to your everyday life, and not just talking a good game.
For most people, it’s easier to just throw up your hands and say it’s impossible. It isn’t. I’ve lived through it and it’s something anyone can do if they want it bad enough.
Do you want it bad enough? Or are you content just saying “it’s impossible!” and trying to look for reasons why you can’t do the challenging thing in your own life? Trust me, there are always reasons to not do the hard thing. There are always reasons why the challenging thing, whatever it might be, is “impossible.” It rarely is, though.
It’s your choice. I’ve already made mine.