I get addicted to mastering new (or returning) hobbies fairly easily. When something strikes my fancy, I’ll research and practice it like crazy until I’m an expert, then move on. As they say: knowledge is power.
This explains a recent obsession with personal finance, credit, and investing. I think I’ve checked out nearly every single popular finance app on the iOS App Store, researched almost every available rewards credit card, and have looked into investment options like stocks (ETFs, mostly), IRAs, 401k plans, and more. I’ve also read way too many articles from Reuters, personal finance blogs, and investment forecast sites.
What I’ve come away with is …
… Why the hell haven’t I taught myself about my personal finance options sooner?
Did you know you can REDUCE YOUR TAXES just by changing the way you save?
Some of my friends have had credit cards since they were fifteen years old. FIFTEEN! I didn’t have a credit card until I was 23. As for knowing anything about IRAs and 401ks? Fuhgeddaboutit. The only reason I now know that I can reduce my taxable income by investing in an IRA or 401k is because my roomie, a financial consultant, mentioned it was possible.
“You’re telling me I get to drop an entire tax bracket just by investing in an IRA or 401k, and I get to keep the money I put away without being taxed on it?!” Me.
“Yes. And with a Traditional IRA, you won’t get taxed on it until you withdraw after you retire. But by that point, you won’t be working anymore, so your taxes will be even lower.” Him. “You should consider investing in stocks and bonds to diversify your portfolio — let your money work for you. By keeping it all liquid, it’s only gaining minimal interest. You’d make way more just by investing.”
Say what?! I get to retain MORE of my normally taxed-to-hell money (fuck you, federal taxes) by investing? Not only that, but my current savings account hasn’t actually been making money for me, and I can make MORE just by investing in stock options?!
BRB. Fantasizing about dropping all the extra money I’ve saved into a swimming pool and floating around in it like Beyonce.
Sign me up.
Since diving into personal finance, I’ve opened two new rewards credit cards (thanks to having excellent credit due to being a cheap bastard in the first place) that actually give me money back on my regular monthly purchases. For example, not only do I get 5% back whenever I buy groceries (my largest expense next to my monthly rent), I also get rewarded for riding public transportation, traveling, and buying lunch near my office (I am so addicted to falafel, you guys). In fact, I can take a $500 flight for free just for using my rewards cards monthly instead of usual my debit card.
Again, why the hell didn’t I do any of this sooner?!
That’s not even the best part. The best part is that through the combination of apps I currently use to track and budget my spending as well as my investments (apps that make investing and budgeting more accessible and easy to understand for millennials like myself), I’ve already netted $1.40 in stock since this morning. Do you know how long it takes to net $1.40 in interest from your regular Joe-Shmoe FDIC-insured savings account?! Definitely not 3 hours. And if my stock keeps rising at the forecasted 52-week rate, I’m on track to net nearly 4x what I paid per share. That means a $1 share would be worth $4. And a $20 share would be worth $80. $80!!! Which means if you own 2 of those shares, that’s $160 worth in shares that you only paid $40 for, which means you’re walking away with over $120 in profit!
Holy shit, right?
I repeat: why didn’t I do this sooner?
I’m not the only one who wasn’t taught jack about personal finance.
“Where did you learn all this?” I asked my roomie after he divulged information about IRAs and 401k plans.
“Personal research,” he replied.
“You didn’t learn this in college?”
“No. You’d be surprised how little they teach you about personal finance in college.”
Actually, I’m not surprised because the educational system is broken as shit, but still. Hearing this from my roomie is really scary. If I’m 28 years old, with zero college debt, super low overhead, and only just now getting into personal finance, what the fuck are all of my college-educated friends with zero personal finance experience (and who actually have student loans to pay off) going to do?
Our poor economy.
Our poor, shitty-ass economy.
Wouldn’t it be cool if our expensive educations
required us to manage our personal finances?
We are so screwed.
Gone are the days when we could rely on 10-year pensions to carry us through old age. Today’s worker hops around like crazy from job to job while seeing volatile shifts in their income. Can you imagine what might happen for the person who needs to liquidate their 401k early (assuming they knew to invest in one in the first place), drains their entire retirement savings, never took advantage of their other investment options, and ends up with nothing? How will that person survive through old age? Taking out more loans? More credit? Borrowing more and more money until they’re so far in debt that they’ll never get out of it?
… Yeah, fuck that.
I wrote this blog post because:
- I’m an idiot who’s never taken advantage of my savings and investment options before, and if I’m an idiot, I assume there are plenty more idiots out there who could benefit from this knowledge.
- The US economy is totally fucked, and a big part of that is due to lack of education on the subject.
- A shitton of millennials follow me who are probably just as financially-ignorant as I am, and I’d prefer we all get on the personal finance train now while we can still afford to.
Assuming I ever get around to it, in follow-up blog posts, I’ll reveal which credit cards I’ve looked into, which combination of apps I use to budget and track my own expenses, and explain it all in easy-to-understand terms, because a lot of the mumbo-jumbo out there is full of tons of financial jargon that the average millennial will look at and go, “… Huh?”
In the meanwhile? Start saving, and start doing your own research. Blowing all your money on alcohol, shopping, eating out, etc is really fun for a while (trust me, I’ve definitely been through my “buy fucking everything” phase), but you could be doing so much more with your money.
The next time someone encourages you to spend way above your means, don’t be afraid to tell them:
“Umm, s’cuse you. I’m on a budget.“
Step by step, baby birds. We’ll get there.
~ Sherilynn “HeyCheri” Macale