Step 1: In which I admit all my privilege

  • Be born white and male in America to an upper-middle-class family, to parents with advanced degrees and an 11-year-older brother who will fall into all the traps America sets for people with bad financial literacy education (IE, anyone who is not upper-class enough to have trusts and accountants upon birth and EVEN THEN).
    • This means you will never have to worry about being hungry or having any opportunities blocked for lack of capitol or systemic racism. Hence: private elementary school, magnet/AP middle and high school, and prestigious private college, offer letters from all of the jobs I Really Wanted, successful and pain-free acquisition of the house, cars, credit lines, and investment accounts with Good Rates that are often not as available to people who are less white and less male and less educated.

Step 2: In which I pass on all the stuff my Older brother taught to me.

  • Make your first car a used car, preferably a hand-me-down. Insurance for a new driver, especially a 16-year-old boy in a hand-me-down car is that much lower than a new car (even if the desired new car was tiny and cheap.)
    • I desperately wanted a Dodge Neon. It would have ruined me.
  • Get that first Credit Card and expect to run it up to the paltry limit. Do not let the credit card company increase that limit. My brother assured me it was not a personal failing to immediately run my newly acquired credit card up to the in-the-hundreds limit at 18, but it would be a personal failing if I allowed them to increase said limit and then chased it.
    • That being said first thing I did when I got my post-college “Time to live life” job was pay off my credit cards.
  • Sign up for the 401k at least up to the employee match. Every Job. That is extra money. That is a benefit. It’s what your job is offering you instead of a pension. If you have extra income, put it into the 401K and the Roth IRA.
    • These are the magical compound interest “Fortune Makers”. These are the things where if you just put 3-5 percent from each paycheck in them over a few years in your twenties, they double and double and double and become a million or two by the time it’s time to retire. It’s usually even better to start early then stop because of a change in life situation than it is to wait.
    • These are also very effective “You shouldn’t touch this” accounts. You can pull from them in emergencies, but they discourage you from pulling money for cars, houses, Pyramid Schemes, Franchises, etc… and the funds involved are usually indexes. They are set up to be locked up until it’s time to retire or something REALLY serious happens.
    • While a bunch of my money is in IRAs, I do have a bit of money for individual stocks.. but I tend to treat them as “buy and hold” and otherwise like I would gambling. The immediate thing most people learn when they get a brokerage account is they are not a day trader and I was no different.
  • If you feel like you want a house, get the house within your means (mortgage rate of no more than 1/3rd of your income) and use a fixed-rate mortgage. I had to fight to get a stable fixed rate on a mortgage for a modest house instead of a variable rate on a McMansion I could barely afford; in 2006 when NOBODY was doing that. (Seriously, the loan processors’ hangdog expressions when I had to put my foot down and say ‘I have no interest in this sketchy Adjustable Rate Mortgage you are selling, please stop trying to talk me into it’ still haunt me. They really did look like a couple of smacked asses when I told them their insistence was about to spook me.)
    • If you can, refinance that mortgage. Do it again. Every time the interest rates drop. Shorten the loan or drop your payment. DON’T use your house as an ATM. Have the mortgage cover the house and only the house.
  • I overpaid on student loans and car loans and the sketchy balloon payment PMI mortgage but not the big-stable mortgage payment because tax benefits.
  • I got YNAB (You need a budget) to plan where my future money was going instead of using a mix of mint, excel sheets, and index cards to figure out where money had been.