Sometimes an article just speaks to you. Could be the photo or just the right topic at the right time, usually for me it’s something I can personally relate to.
Today’s WSJ had a feature called “They Can’t Even: A Generation Avoids Facing Its Finances“
A lifelong financial planner at heart of course I was immediately intrigued. Avoidance is the quickest path to Ignorance when it comes to dollars and cents. Ya heard it here first.
The article mentions a college student, faced with pandemic lockdown, ordering DoorDash like mad (fella gotta eat, right?) and somewhere along the way he developed a fondness for Crocs and ended up with 15 pairs.
(At this point I am trying to envision a reason I would wear Crocs. Beach? Pool? Give up my Sperry’s? Don’t see it happening. But I am open minded.)
He goes on to admit, this was part of the college “experience” and his “budgeting was very loose”. “Sometimes I’d forget about the bills”.
Not going to judge here because I didn’t face a global pandemic that would ultimately kill 6M+ people while I was in college. Hey at least he had a wi-fi connection, I had a Bell South Mobility “bag phone” and a 32″ RCA tube TV (more on that in a sec).
Here is the excerpt from the article that really resonated:
He dipped into his savings to cover rent and utilities. Mr. —- eventually received a call from his father, who had checked his credit-card account and saw he had used 90% of his $500 limit. After that he changed his ways.
Dad steps in after he maxes his $500 card. “Son what the hell are you doing?” “Crocs? What is a CROC? I’ll tell you what’s a CROC is the fact you have maxed out your card on rubber shoes with holes!” (My interpretation of how this conversation went but I bet I am close).
Let’s rewind to January 1996.
I was a college student myself, gainfully employed as an engineering intern and filling up my Chevy Blazer at my local BP station. I see an application for a BP “gas card”. That would be nice…I told myself…to be able to fill up when I needed and pay it off later so I grabbed a damp leaflet from beneath the plastic cover, returned to the apartment and filled it out. Let’s see what happens.
Two weeks later, one week ahead of Super Bowl Sunday, a crisp white stiff envelope arrived in the mail with not only a BP gas card, but a BP “Visa” Card! They one upped me! So you mean I can use this for anything, anywhere? Up to $2000?
My roommate and I jumped in the Blazer and headed to our local Circuit City. I was soon the proud new owner of a 32″ RCA TV, biggest thing we had ever seen. We called everyone we knew to watch the super bowl on that beast.
I think it cost me $450? Who cares, I still had $1,550 left to spend, and spend it I did.
Later that same year in March, I passed a table on campus for a company called “Citibank” which offered “Student Visa’s” and of course, I applied! Here comes another white stiff envelope and another $2000 to spend! A third card would follow with my company’s logo, which at the time I was proud to display.
Spend I did.
I became very good at creating Excel Spreadsheets to track my debt. How much I needed to pay. How much I could afford to pay. How many months it would take me to pay it off. Nice multi-color bar graphs.
I am not sure at what point I got mad, but I did. I realized I was jeopardizing my future with instant gratification. The student in the WSJ article called it “spending on things to self-soothe”.
Exactly what I was doing 25 some odd years ago.
Dad never called me. He had no idea what I was doing. Instead, one late night in a dimly lit apartment in shame staring at my growing debt in graphical form I heard a voice in my head. That voice said:
“You, my friend, are a dumbass”.
“You, are making money hand over fist, but not investing a penny, and spending tomorrow’s dollars today.”
The rest is history. Trips to the bookstore were made and retirement accounts were opened. I enrolled in some online finance courses.
Less than five years later I would be eligible to sit for the CFP® exam had I chose to do so.
That self education over time was expensive, but at some point along the way I forced myself to stick my nose in my mistakes until I had fully acknowledged each one and had a plan of escape.
Nobody gets a free pass.
Regardless of your age or what you endured along the way, at some point you have to be willing to acknowledge and accept your mistakes and make amends. The Ostrich Method is easier, avoidance, walking away and trust me I considered it, but there is no answer to be found in the sand.
When I was eligible to sit for that CFP® exam, the title of my first book was going to be “Tomorrow’s Foundation Today”.
It still rings true.
If you are young and racking up debt, stop.
Take a deep breath and simply make a plan to reassess your relationship with money and things. It doesn’t have to happen overnight, it’s a process. Embrace the Process.
Reassess the “need” for it “today“.
I was there so I know. I had pages and pages of colorful graphs outlining my debt.
I just finally realized doing the exact same thing with assets would be much more fun.
The Finance Stance 