It wasn't until I reached 30 that I started to turn my own financial life around. Unfortunately, by then, the damage was done. In retrospect, I often knew the decisions I was making were not so smart, but I made them anyway because I could always "pay it off later" or "just save more money when I'm older."
One of the cruel facts of life is that it gets more difficult the older you become.
Hopefully, my sharing a few of these bad money moves will prevent others from doing the same. And don't worry: If you are over 30 and still doing these things, it is never too late to start living frugally.
* Take out three times as much in student loans as your first year's salary. I'm all for following your passions, but if your passion pays $35,000 a year, please reconsider borrowing $100k to get the required degree.
* Trash your college enemies on Facebook and Twitter. It might be funny now, but your future boss probably won't see the humor in it. Remember, the Web is an open book, and down the line things you say online can and will be used against you.
* Trash yourself on Facebook and Twitter. The picture of you half-naked and partying on the beach at spring break will probably get you a few more followers, but remember that future boss?
* Go to school out of state because you like the football team. I included this one because I did it. Well, sort of. I thought I could walk on for my favorite school's football team, forgoing scholarship opportunities in-state.
* Just get a degree . . . in anything. Don't "just get a degree" for the sake of getting a degree. Learn something, and prepare to apply it in the real world.
* Accept a job you hate right out of school because it pays a lot. Many graduates are so saddled with debt that they think they have little choice but to go after the biggest salary, even if it isn't the best opportunity.
* Form a partnership with three fraternity brothers from college. It's been said the only type of ship that won't float is a partnership. Let the one with the most capital start the business and hire the two others. It's much cleaner, and if the business fails, you can all walk away and still be friends.
* Borrow thousands to start a new business. Entrepreneurship is the spirit that built this country, and I'm all for it. But you should consider saving and starting up with cash.
* Accept your first job offer without negotiating. A little wiggle room often exists in salary ranges, schedule flexibility, paid days off, etc., but you have to ask.
* Spend $2,000 on your new corporate wardrobe before getting your first check. This is one of the classic mistakes by new earners. Buy a couple nice outfits for interviews and your first day on the job, but beyond that, make do with what you've got.
The borrower is a slave to the lender
* Co-sign a car loan for your best friend. I no longer borrow money to buy cars. And I especially wouldn't borrow money to buy someone else a car. As a co-signer, you are on the hook if your friend defaults. And if he needs a co-signer, there's a good chance he will.
* Give up credit virginity for a free T-shirt. When I was in college, I signed up for a Discover card because the company was giving away free T-shirts. Dumb. My running joke is the T-shirt probably cost me $500 in interest over the next few years.
* Borrow money from your parents. Not only does it change the relationship between parents and kids, it also makes it tough to declare financial independence when you constantly have to turn to the Bank of Mom and Dad.
* Pay off a credit card with a credit card, without retiring one of them. A balance transfer from a high-interest credit card to a low-interest one makes sense in the short run -- unless you keep using both cards.
A car won't make you sexier
* Buy a car because you can "afford the payments." Ever wonder why car dealers advertise the cost of a car in monthly payments? Writing $32,000 in window paint isn't quite as catchy as $379 a month (for 60 months with a balloon payment at the end).
* Drive like an idiot. It's hard to save money on car insurance when you are collecting traffic tickets right and left. Not to mention the hit you'll take on gas mileage.
* Refuse to buy a used car because you don't want someone else's problem. This tired saying keeps coming up in discussions on used cars. A car transforms from new to used the second it leaves the car lot. A well-maintained, previously owned car can save you thousands of dollars over a new model.
* Buy a new car because it gets better gas mileage. In most cases, you'd have to drive thousands and thousands of miles to break even. Buy a car for better gas mileage only if you already planned to buy another car.
* Don't shop for car insurance. No, seriously, take the first offer you get. That will save you tons of money.
Insurance? That's for old folks
* Go without health insurance -- even catastrophic insurance. When you are in your 20s, the last thing you are thinking about is getting sick. After all, you were just a teenager a few short years ago and the feeling of invincibility hasn't quite worn off yet. At a minimum, look into a high-deductible plan that will cover you in the event of a major illness.
o Bing: Find cheaper health insurance
* Turn down cheap life insurance because you don't have dependents. If you die without dependents, it will still cost money to settle your final expenses. Don't transfer that burden to your parents, or a close friend, because you were too cheap to pay a small premium for affordable life insurance.
* Refuse to have disability insurance. After all, you are only 26, right? Who becomes disabled at 26? A lot of people. Protect your new salary by getting disability insurance.
* Don't go to the doctor. Again, it's that invincibility thing. At a minimum, follow your physician's guidelines on annual or semiannual checkups.
Going to the chapel
* Marry the wrong person for the wrong reasons. They say opposites attract, but I'm not sure they stay together forever. Find someone who shares your dreams on subjects that matter most to you.
* Spend six months' salary on an engagement ring. If you have to spend half a year's salary on an engagement ring to impress someone, you might want to think twice about your choice of partner. I've always thought one month's salary was a good rule of thumb, and, of course, pay cash.
* Blow thousands you don't have on a wedding. Stick to a reasonable wedding and avoid putting your newlywed selves -- or your parents -- deep in debt.
* Refuse to accept your partner's debt. When you marry, you become one, so your spouse's debts are now your debts. Remove "mine" and "yours" from your vocabulary when discussing debt and marriage.
* Buy a house without an emergency fund. It does seem like the minute you stretch to buy a home without proper savings, something will break, causing you to immediately reach for the credit cards.
* Share a mortgage with your boyfriend/girlfriend. I'm not being a prude here. If you decide to share living quarters with someone before marriage, please avoid sharing a mortgage (or lease) with them. If you split up, and chances are you probably will, the financial impact is a lot messier with joint ownership.
Home, bittersweet home
* Sign a long-term lease based on the salary you think you will earn out of college. Wait until the ink has dried on that first job offer letter before signing a lease (or a mortgage) for your first place. Better yet, wait six months to make sure you really can afford the payment, or else you risk being house-poor right out of the gate.
* Don't put any money down on that new mortgage. As many have discovered the hard way, homes can lose value. If you finance 100% of your new home, you have zero breathing room should your home lose value and you're forced to sell.
* Stretch to get into a new home because it is a good investment. Repeat after me: My home is not an investment. Yes, they can increase in value, but like all investments, they can lose value, too.
Kids are expensive (and worth every penny)
* Don't get out of debt before having a baby. Any parent will tell you, things that were difficult before kids are even more difficult after kids. Getting out of debt is no exception, so if possible, try to become debt-free before having kids.
* Wait until kids are 16 to start saving for college. Tuition increases and inflation become factors from the moment your kids are born. You have to save diligently to stay ahead of them both.
* Give your 6-year-old a cell phone. My oldest is almost 11. After four years of her begging, I'm starting to come around to the idea of her having a cell phone to take to sleepovers, sporting events, etc. Her phone will be a real boring one with the only features being strong parental controls.
Investing in your future
* Open an online brokerage account to trade single stocks before funding a 401k because you want to get rich quick. This point really doesn't need further explanation.
* Pass on a Roth IRA. Opening a Roth IRA at an early age may just be the single best retirement strategy for young people. And don't forget, in the event of a real crisis, you can withdraw Roth IRA contributions at any time, tax- and penalty-free.
* Dump all extra savings into company stock. One of my first jobs was for Lowe's. I worked with a guy in his 50s who dumped 100% of his earnings into company stock and obsessed over the stock price because mild swings cost him thousands of dollars. I just couldn't live like that.
o Video: Newbie? Watch this before investing
Shopping, food and rock 'n' roll
*
Get your investing advice from late-night infomercials. Who hasn't been tempted to flip houses or stuff envelopes for hundreds of dollars a month? The problem is, for every legitimate opportunity, there are 1,000 scams.
*
Shop for clothes with labels that impress your "friends." It's time to be a grownup. Impressing people with clothes is something we did in high school.
*
Eat out every single meal. Eating out has its benefits: no preparation, no cleanup, more social interaction. However, it will clean out your wallet a lot faster than cooking at home.
*
Buy a television that consumes 80% of the square footage of your apartment's living room. Some plasma televisions cost more than the car I drive.
*
Don't set up a monthly budget. One of my high school teachers had a sign hanging in her room that read, "If you fail to plan, you plan to fail." Get over your fear of creating a personal budget and spend a little time telling your money where to go.
So there you have it: 43 ways to ruin your financial future. Hopefully, you'll avoid most of these along the way, but even if you don't, winning with money over the long term is about finding discipline and financial maturity. And that maturity can come at any age -- 22 or 42. The advantage of finding that maturity at 22 is that by 42 you could easily reach financial independence -- and have limitless opportunities ahead of you.
