Tag Archives: college degree

Excitement and Saliency: Why Accounting Is Important for Everyone

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…Well technically accounting isn’t crucial for everyone. But accounting and the field of financial as well as tax accounting are very useful, valuable, and foundational fields to study for the vast majority of people.

As a business major I might have a slight bias, but the argument still holds for any other career or academic path – accounting is foundational. Why, you might ask, is accounting so important?

Accounting is important for two types of people: Business people (people involved in business decisions, management, and keeping business records) and regular people who make logical financial decisions.

First I will lay out merits of accounting for business people (who I’m sure already know a lot of them). Secondly I will cover reasons for accounting for individuals in their finances.

Accounting, specifically financial accounting is highly useful from a business perspective. Accounting has been known by many as the “language” of business. Accounting is a world of financial terms and figures that mean precise, crucial things to business owners and managers.

The three things useful to “business people” are: 1) Analyzing where the business is at, 2) keeping the business legal for tax purposes, and 3) presenting the business to others in a clear, conscience way.

 

Moving on to personal finances, there is a different use for accounting which lies primarily in the realm of clarity and accountability. Accounting on a personal level with individual or household finances is a fantastic way to get on track with finances.

There are two primary uses for accounting on a personal level: 1) Tracking where you’re at financially and 2) where you want to go. In addition, just like business, accounting on a personal level can prepare you for tax season and take away a lot of the headache. To be clear, business accounting is presented and formatted in a different manner than personal finances, but nonetheless the principles still apply.

Where can you go from here? Begin taking accounting seriously! You don’t have to become a financial major or geek out about it. But you should definitely learn the basics, and as a result set yourself up for many wise decisions to come.

3 Ways to Limit Your Spending and Pursue Your Financial Goals

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Most people who grew up middle class know the value of cutting spending. In fact, when you’re starting out in either business or with your personal finances, the only way to move up financially is to take control of spending.

Because of this fact, I want to cover three of the simplest ways I have cut spending in my personal life and ways you can implement these techniques in your own life.

Prioritizing expenses

This by far is the most direct way to begin controlling your spending. As soon as you have a clear vision and are able to align your purchases with your values, your financial journey becomes a lot clearer.

It takes about 20 minutes or less. Take a sheet of paper or a document on your computer. Write out the major categories: taxes, necessary expenses(food, shelter, transportation, insurance), optional expenses/fun (toys, sports cars, Netflix subscription, tv, hobbies etc…), and giving. Now you have the list of types of expenses, begin prioritizing areas or particular expenses that you value more than others. For example, would you rather have a Netflix subscription or put that extra money towards a long-term objective like retirement?

Tracking Expenses

After prioritizing expenses and seeing where you want to be with your spending, you can see where you actually are. This is a major step in establishing and contemplating where you currently are.

Making a Shopping List

After deciding your priorities, tracking your past spending, and setting your trajectory, the last and final step is to make specific spending lists, also called shopping lists. “Why would I write stuff down,” you might ask, “when I know exactly what I want?” The reason for this is because making a list can limit your spending to only things on the list.

An example of this is once I was shopping to buy things for college and as soon as I got to the store I began buying things I thought I needed. The truth was there were a few things on the list that I actually didn’t need. It taught me a lesson: going in with a list is a positive step towards controlling spending.

Ultimately spending money and controlling your expenses doesn’t have to be a boring exercise. In fact, in time as your budget and income expand, you should be able to have a little fun with your spending.

3 Often Overlooked Disadvantages of Going to College

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Around this time of year, many of us are heading off to college, anxious to begin the next academic year. However when comparing colleges or even contemplating college altogether, there are a few key disadvantages that many dropouts understand.

Schedule

When you’re in school there are often many activities, events, and even classes themselves that interfere with your ability to do what you’d like with your time. While this can certainly be an advantages because it keeps you busy, it also has drawbacks like committing you to spend your time doing things you don’t necessarily want to do.

Costs

When you enter college you most likely will have a big bill to pay. Unless you are a high athletic or academic achiever, or have worked really hard to get scholarships, you most likely don’t have too much financial relief in the way of expenses. This can make it particularly hard to stock money away for a home, living expenses, or even retirement planning.

Freedom and Mobility

Not only can the college experience place more restrictions on when you can go, it can also place restrictions on where you can go. During college there are usually rules on when you can be back. This, by definition places a time limit on how long you can be gone, and thus how far you can go.

When entering college you will be giving up these freedoms as well as a few others. Please don’t think I’m against college altogether. But it certainly is a good idea to compare these various factors when thinking about going to a specific college or university.

3 Things I learned Getting Ready for College

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While not everyone goes to college, the tendency of young people to choose this path is getting more and more prominent. As the undergraduate degree becomes more common the costs have gone up significantly. I am attending a private College called Cornerstone University in Grand Rapids MI.

Here are some things I learned as I prepared for this journey:

1. College Is Expensive

While I certainly have been given much in life (including amazing parents, a healthy body, and uplifting friends) free college is not one of them. Paying for college is the largest expense most young people face heading into adulthood. Tackling massive or even moderate debt down the road can take tremendous time and energy.

My parents, as many readers may know, are currently involved in missions work in Zambia, Africa. Because of this tight situation financially and their belief that it is my responsibility to pay for school (which I happen to believe with), I have taken it upon myself to pay for school debt free.

The cost to attend college is going to run about $13K per year for me. While this is definitely a lot more than some state schools in which the student receive some sort of financial assistance, there are many schools out there that cost tremendously more. I plan on working both during the summer and during the semester to pay for this expense.

2. The most important things are getting the degree and meeting people

Even more crucial in college than grades or extra credit is the people you meet (connections) and the degree you get (credentials). Coming out of college which will matter more, the fact that you have a bachelor’s degree in business administration, or the fact that you got amazing grades? The degree, in my mind is much more of a stand out feature than the grades themselves.

I truly believe that from a financial perspective, grades are less important than the experience you gain and the credentials and knowledge you acquire. While grades are certainly helpful to have, they shouldn’t be the end destination of every college senior.

3. College Students are Still Considered “Kids”

The last thing I’ve realized is that while college students are technically considered adults, they aren’t, by the middle aged and older crowd, considered real adults. I don’t necessarily agree with this by itself, but it gets a bit annoying for me being called “college kid” when I know that my actions say anything but.

Whether you’re a freshmen entering your undergraduate studies, or a senior wrapping up the last official school of your life, remember: college isn’t the ending point, only a beginning.

Can Debt Ever Be Good?

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Most people have heard of Dave Ramsey. His financial advice has helped millions of people get out of debt and free up their financial inflow (their income). So is this simplistic advice the whole picture when it comes to debt?

The list of successful people who have made fortunes with debt says otherwise. When’s the last time you heard of a wealthy person who built a massive business without borrowing money in some sort of way? It’s not very common. In fact, the three richest people in the US, and the world for that matter (Jeff Bezos, Bill Gates, and Warren Buffet) have all built businesses or bought businesses that used debt regularly in their operations.

But why is Dave Ramsey so against debt? While I can’t get into his head, there are three legitimate reasons I can think of why he dislikes the idea of borrowing money entirely:

  1. Debt has to be payed back. While the future ability to pay off debt is uncertain, the requirement to pay it back is definitely certain. This represents risk.
  2. Debt gives control and responsibility of part of your financial life to someone else. While you are still responsible for taking care and utilizing whatever you purchased with the debt, you are no longer owning this thing altogether by yourself.
  3. Debt costs money and time. To borrow money it usually takes time and complications. On top of that there are costs associated with borrowing like origination fees, legal fees, and (of course) interest. While the rate of return you get on your money might be greater than the interest rate, you are involving more risk into your financial picture.

So, after close examination, do Dave Ramsey’s probable reasons and concerns for not using debt seem pretty well founded? I’ll leave that up to you. However they can be summarized in one word: Risk.

Debt represents risk. Whichever way you borrow money, whether for a home, real estate property, or college, recognize that debt is a risk that cannot be overlooked. While I believe debt cannot or should not be eliminated from our lives completely, taking a careful look at it can go a far way in eliminating pitfalls.

3 Things to Value More Than $1M

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As the U.S. continuous its decade-long economic improvement, it’s hard for many of the younger folks to remember a time where fear was prevalent and jobs were scarce. While I was much younger in 08 and 09 I remember the feeling and conversation around money during that period.

Not only am I confident that hard times will hit the U.S. economy again, I suspect (based on history) that some sort of crash or drawback isn’t too far away. Simply looking back at the last couple decades of market crashes gives us some picture of how rare the past 10 years have been.

We’ve seen relatively low turmoil in the market, particularly stocks. Except for a few difficult weeks, the U.S. stock markets haven’t experienced a real drawback since the mortgage meltdown. But just 5 or 6 years before that the markets were down in 2002. And just two years before that the markets were down in the technology bubble of 2000.

Consistently throughout history we’ve had market crashes or corrections every six to 10 years. Here we are in 2018, with trade fears on the horizon, wondering if another crash is near. It’s been about a decade.

With all the turmoil, fear, anxiety and uncertainty in the markets, it’s very easy to become focused so much on the world of money that 1) we lose historical perspective on a potential loss, but 2) we lose life perspective on the true importance of money as it relates to our life.

Which matters more, a 50% drop in the Stockmarket (which won’t be a permanent loss unless you panic and sell) or a loss of a close loved one? While most people would value the close relationship above a temporary financial loss, it’s strange that so many of us put more energy worrying about areas of finance we can’t control and less time improving our current relationships.

Don’t get me wrong, money is important. Money has power, both in our life (to buy things and help others we care about) and in politics (to influence people), but there are three big things more important than money we can’t forget:

1) God

2) Close relationships (friends and family)

3) Health (physical and emotional)

Deepening these areas of your life both in depth (deepened commitment and improvement) and in length (time spent improving and investing in) is a great first step in not only improving these three areas but also setting yourself up to improve the 4th area: Money.

Next time you’re planning or prioritizing your life in a way that isn’t consistent with your values, remember in what order your values lie.

7 Financial Levels – And How To Get To The Top

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Here in the US, with higher standards of living than pretty much any other place on earth, Americans have surprising difficulty getting their finances to a healthy point. But here’s the truth: I believe with all my heart that it is possible for anyone who has time, mental health, and true commitment to become a multi-millionaire, and even potentially a deca millionaire within their life.

I have broken down the levels of net worth by category. The numbers I chose are somewhat subjective. But I believe they paint a picture of what true riches look like here in the US.

Before I start the list, I want to clarify what net worth is. Net worth is the value of everything you own, minus what you owe. For this example I have decided to focus solely on financial assets (not clothes, furniture, or cars), which are things like that can be sold at roughly what they’re worth (like houses, stocks, bonds, etc…)

1. Upside-down Wealth – Net worth anything less than $0:

This is a position that many young people, particularly college graduates find themselves in. They get out college with loans, no money and therefore are upside-down with wealth. How can you move up to the next level? Work your way into a job, continue to live like a college student and pay off those loans.

2. Poor (real or fake?) – Net worth between $0 and $10,000:

If you find yourself in this circumstance you have to pick one of two decisions: 1) are you going to stay here forever, or 2) are you going to make the move to the next level? This is a position many people are in. Maybe they have a house, but have only a few thousand dollars of equity. Or maybe they are just starting out in the workplace. Either way, being “poor” should not only be a temporary situation, you should run from it as fast as possible.

You know what you need to do: get a better job, live on less, and begin paying off consumer debts.

3. Currently Broke – Net worth between $10,000 and $50,000:

No one I know wants to be here long. At this point you have enough to feel a little room in your finances, but even just a new roof and a few bad emergencies can wipe you out completely. While stopping by broke on your way up the levels is a necessity, staying here for longer than you need to is too risky.

4. Middle Class – Net worth between $50,000 and $500,000:

The most sought after class of all the classes is the middle class. This is what the “typical” two parent, two kid household is supposed to look like. Maybe you own a home, a couple cars, have a retirement account, yet carry a small credit card balance.

Middle class can feel nice… while you’re working. But what happens when you’re 70 years old and think, “I can’t keep working forever”? You need more wealth to be able to have the flexibility and peace of mind that’s necessary for a happy life. Here you can stand on your two feet financially speaking, but you know there’s something more.

5. Upper-middle Class – Net worth between $500,000 and $1.5M:

Almost everyone knows it – $1M isn’t as much as it used to be. But it definitely isn’t easy to achieve. When you’re net wroth approaches $1M it’s easy to think, “I’ve made it.” But really you haven’t – yet.

The truth is, what happens when you want to help someone else out financially? Or what if you want to explore Europe for a few weeks? Or what if you want to retire a decade early? It’s harder than ever to do those things on $1M.

6. Well-Off – Net worth between $1.5M and $10M:

It is completely feasible for most people in their mid 20’s or 30’s to reach this level in their lifetime. It simply takes hard work, steady contributions to retirement accounts, and a full-blown commitment.

7. Rich – Net worth anything more than $10M.

By now you know what you’re doing. You may not know everything, but you have a skill set that is very useful to say the least. You have discipline. Use this discipline into the future on whatever goals you set for yourself.

I hope this exploration of levels has helped you conceptualize where you’re at and what you can become. It’s never too late or early to start. Right now has never been better.

How I Drove 2,300 Miles Without My License (And Why You Shouldn’t) Part 1

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You might be thinking this is clickbait. Or is that a typo? No, I really did drive 2,300 miles, without my license, by myself, at 18 years old across the country. Now before I tell you how I ended up in the middle of Kansas, at midnight, with no license I need to give you some background.

In the summer of 2017 I started thinking about what I wanted to do with my life and what I wanted to become. This was around my 18th birthday in July. As the summer finished and the School year began, I started realizing that I could, if I wanted, take a trip that would give me further knowledge about what was out there.

In December 2017 I decided to follow through. During this time I was working full time as well as doing school full time so there wasn’t a lot of access time for spare planning. But I did manage to put together an incomplete document that would start me on my preparation.

Around Christmas I headed over to Zambia, Africa (I was visiting my family who moved for orphan missions, but more on that in another post). In Zambia I finalized my plans, which were fairly detailed, deciding against the 8,000 mile trip I was originally planning.

My new plan was to head down to Florida, explore, head back up through Louisiana to Texas, explore, and then head home to Michigan. All with a few minor stops along the way. The trip was around the corner. I was so excited!

It was a bittersweet moment for me. My time in Zambia was about over. And, in March 2018, I said goodbye to my family after 3 very special months. This had been a great period to rest, learn, and spend time with the most important people in my world.

I flew back to Lansing by myself, pondering and searching for a single feeling to feel. But there were so many. I felt alone. Even though I was going to live with my Grandma (and what a blessing that is), I was missing the people who had been with me my whole life.

I also felt anxiety. Here I was, 18 years old, with so many life changes like college, work, summer plans, and then my trip, all coming up just around the corner.

But I was also excited. My life had been, for the most part, out of my control up till this moment. And now the pen and paper were finally getting handed to me to write my own story. I thought I was ready.

With these emotions and so many others spreading around in my mind and nervous system, I really was starting to grow up. Not all at once, but slowly.

The plane landed.

I got to Lansing, spent time with friends and Grandma, and after one week it was time to leave. Finally, the moment I had been waiting for had come. Again, I thought I was ready. So, in the first few days of April, I left.

 

The Cost of Not Spending

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Often when it comes to money we get the basic financial advice of reducing spending, increasing income, and investing the difference. However there is an extreme that this can be taken to.

Most have heard the tale, “A Christmas Carol”. In it, Ebenezer Scrooge is portrayed as an old single bachelor who has been hoarding his money, keeping to himself, and worrying pretty much only about himself. While we’d like to think we’re exempt from this behavior, it can become difficult at times to see that we’ve started to show some of his characteristics.

For example some people think that it’s a smart life choice to not tip. A guy I used to work with told me he “didn’t do tips because they don’t need it.” I understand decreasing the tip for bad service, but doing so for other reasons is being cheap. Understand, that’s how many of those people make their money.

Another area where people often lack clarity is in the area of giving. Some think, that by giving, they’re somehow benefiting themselves. While it’s certainly true that giving all your money away isn’t a smart life choice for pretty much everyone, there are genuine benefits to honest, purposeful giving.

Giving doesn’t have to be financial either. I was quietly reading in the park once, in downtown Lansing, when a homeless dude walked up to me. We talked for a while, and I feel that the encouragement I gave him, as well as the insights and story he gave me, were a mutually beneficial exchange.

Whatever your philosophy on giving, tipping, and sharing, keep in mind that sometimes there’s a non-financial cost to not giving.

Everything Wrong With Making a Lot of Money

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Let’s say you get out of college and are starting your first “real” job. You’re a young doctor so you already start out making more than the average person. Or maybe you’re middle aged and making the most money you’ve ever made in your life. Let’s just say you make a lot of money.

Where does the money go? Well most people who make a lot have a lot of expensive education required to get the job in the first place. That means student loans. If you were disciplined enough or lucky enough that your parents payed for you, then you won’t be in the same boat as most people.

Other wise, though, you’ll have student loans to pay on. That’s expense number one. The second big expense is more of an optional thing but most high-payed professionals usually opt in. It’s called lifestyle extravaganza.

Most doctors, lawyers, or well-payed professionals start seeing the bigger paychecks and begin making larger purchases to live up to what other people expect of them. It’s less of need for comfort than a need to impress and fit in with what people expect of them. “I have more income,” they tell themselves. “Why not?”

While most of us would like to think that these people are banking dough(and a lot of them are), most of the time, that’s simply not the case. People who make a lot of money are just like everyone else, they want to fit in.

The problem is they’re missing a valuable opportunity. Having a high income is not only a great thing for lifestyle, it can become a fabulous thing for your finances. Simply keeping your lifestyle low and investing the difference can make huge differences over 10 year timeframes. Still not convinced?

It might be hard to believe but putting off buying that boat today could mean, 10 years down the road, being able to purchase any home you want. Compound interest is simply that powerful.

Not only does making a lot of money come with disadvantages like the expectation of lavish lifestyle and larger student loan debt, it can also turn into a financial blessing if you manage your money well and stay disciplined. Just because you make double as much money as someone doesn’t mean it’s smart to buy a home double as large.

So if you are in the situation of making good money, be weary of the obstacles that stand in your way to having a better future. Realize what your income could turn into – both good and bad. And for students who think more income equals more net worth, be careful…