What did you take in College?

I wasn't sure what I really wanted to do after college so I aimed myself at Business.  That area of emphasis has enough latitude to allow you to go about any direction.  With that said, what did I take that was really worthwhile?   Having a basic idea about accounting and economics has helped.  I do wish that the colleges had a few classes that were aimed at preparing us to understand money and what to do with it at the personal level.   I think a class like Dave Ramsey 101 would be very appropriate.

As an instructor for a call center, After the weekly review on Friday nights, I would generally have 30 minutes to an hour of time to fill and I gave them my Dennis Petty classes on life and finance in general.  Here are some of the Main points:  Like Proof read and use spell checker)

1.  One of the least understood and costliest expenses is housing.  People generally are told that this is the amount you qualify for as a loan and that's what they spend.  No one really prepares you for the vagaries of interest in that deal.  If you are able to save at least 10% for the down payment, you can lower the interest by at least 1 %.  Go 20% down and it may be 2%.  Apply that over the length of the loan and you can see what really amounts to a major saving.   Sometime look at the total cost of the loan and look at the difference between 15 years and 30 years.  For a hundred dollars more over 15 years you can save major bucks.   If you can't swing it at first, get the 30 year loan and make sure there is no prepayment penalty.  Pay this month's payment and the next month's principle and it will go away on 15 years.  Our first home was an 8X38 foot trailer and guess what, It didn't have granite counters.

2.  Insurance.  One of the least understood things in life are the Insurances you will pay and why you do have insurance.  Most insurances will not make you rich but will keep you from ever being wiped out in an accident or incident.  I recommend a life insurance policy if you have a family, that will cover your salary for a few years.  Once you have your savings built up, life insurance can be skipped.  You are required to have auto insurance and most state minimums are not enough.  The basic level is 100,000 and 300,000.   That is the old limits for claims in some states.   When you could buy a new car for $ 6,000, liability of  300,000 was a lot.  Today, cause a pile up of four or five cars and you just might cover it.  Throw in a truck and you will have some major expense.    For your home, make sure that you have replacement value coverage as the insurance company will make you do a list and then they will depreciate the items to pay you as little as they can.  With modern photography available on everything including your phone, simple walk through your house and take pictures. 

3.  One of the biggest questions people have is how do I live on what I am paid?  First you need to understand what you are spending your money on.  For a month, save every receipt for everything you spend and write it all down in a journal.  I for the life of me do not understand why kids think that a cell phone should cost over a $100 a month.  I had an I-phone and it was over $100 a month and when it died ugly, I replaced it with a TRAC Phone that I put a $29 card on it about every 90 days.   I don't text, I don't search and I don't do voice messages with it.  I have it for basic communication and use my computer for everything else.   My wife uses the public library now and is able to reserve a copy of every new book she wants.  It isn't instant gratification but she always has two or three books checked out at little or no cost.  Eating out is one of the biggest expenses.  For two people you almost can't eat a meal for less than $10@.   Do you live to eat or eat to live?  a couple of sandwiches and some chips in a bag for a couple of dollars beats that 10 dollar tag every day.  Save eating out for special occasions. I left out drinking in bars because I don't drink.  You can seriously damage your income with a night our two out a month. Net Flicks for $8.00 a month just beats the hell out of to or three movies a month. Or a cable TV bill of over $100.00.  Final word here -Income must be equal to or greater than outgo.  You can exceed that if you have some savings but only for a month or two and special occasions.

4. Transportation.   I told my students that somewhere out there in life almost everyone succumbs to  the idea of having a new car.  I did and it was one of the most stupid things I ever did.   No, trading that bright shiny 69 Chevelle in for a New Vega was worse.    The worse part of a new car is that the depreciation the first year is at least $1,000 just to drive it off the car lot.  (Perhaps today 2-3,000 is a closer amount)  Barbara looks in the paper and finds that low mileage older car and that's where we spend our money today.  A new Crown Victoria would have been $30,000 new.  We found one that was about 8 years old and had 14,000 miles on it for 10 grand.   We will drive that car until the wheels fall off.  Today, cars are usually safe for about 200,000 miles.  That Vega I mentioned earlier lost a motor at 12,000 miles,  50,000 miles and was a dead duck at 100,000.  Why People sped so much on transportation eludes me.   

5.  The one area that I have trouble with is what do I do for Savings?  There just isn't the great place to stash cash today like there was in the past.  Very few places will give you enough interest to even cover inflation.  I say so what, get out there and save.  you must have at least 30 days of your outgo in cash to cover immediate expenses.  Your checking account is the only place I know for that.   You should build up a 90 day supply in a savings account.  a Six month savings in a fairly liquid place for long term security.

6.  The only place I have ever invested with good results is on real Estate.  With that said, don't become a Land Lord unless you are handy with tools and don't mind doing some work now and then. I have figured that I have made a reasonable return on my money through my rentals but it hasn't been without cost or the ability to call someone for help now and then.  I January, I had a water pipe break and a patch was about $1000 by the time they had to did it up.  The complete line replacement will probably be  $3-4,000 this spring and both houses need a new roof.  I am saving as much into that account as I can at the present.  If you ever hear me giving you advice on Stocks in the Stock Market, don't listen...

The final word in all of this is that I don't think I took any class in college that wasn't a requirement or that didn't give me back something.  I did take an art appreciation class but it had an associated film workshop that had me watch classic movies that I would have not seen otherwise. I laugh that I can with the help of that class recognize the difference between Manet and money. 

 Whatever you do, get as much education as you can.  Never stop learning and keep it up as long as you can.  Then don't forget to get a bike, take a hike, smell the flowers and hold you spouses hand now and then.  The quantity of you life is not under your control but the quality is.


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