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3 Often Overlooked Disadvantages of Going to College

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.

Two Twenty-minute Tasks That Will Boost Your Financial Confidence

Most of the financially successful people we read about in magazines, books or see on social media are often portrayed as charismatic, energized, stage magnets. While a lot of them share many of these characters, what these men and women share more than any other trait is confidence. How did they get this confidence?

Confidence is often portrayed as something you can act or be or do. But while you certainly can “be more confident” simply trying to act this way won’t create the lasting change you’re looking for. When trying to build more personal confidence in yourself you have to be drawing this confidence from somewhere.

For example, while hosting at a sushi restaurant I have often heard fellow employees give me advice to “be more confident.” While I was certainly able to heed their advice and stand up straighter and with more confidence for short periods of time, I never was quite able to stick with it long term.

However the days I found it easy to be confident were the days I was diligently working, succeeding in customer service, and completing restaurant tasks with excellence. In a lot of ways it was a self-feeding cycle. I’d begin my shift with energy and confidence in my abilities and as the shift progressed my confidence would be reinforced by continuous action.

In our financial lives as well confidence can’t come from self-talk alone. Your mind has to feel both the emotional side as well as the logical side telling you to be confident. When you know that you are working hard, and have a plan it becomes easier for your emotional mind to reconcile the feeling of confidence with the logical one. Here are two major tasks you can do that each take about twenty minutes to complete:

1. Make a general (very rough) outline of where you want to be financially.

This doesn’t have to be complicated or long. Just take a piece of scrap paper out or grab your tablet and start brainstorming what kinds of things you really want to get out of your financially life over your lifetime. This task isn’t a one time event. You should be reinforcing this plan as well as refining the details of it, over the course of your life.

However this first basic exercise should catch the gist of where you’d like to be in the next year or two to help you get where you want to be with your long-term goals (5, 10 or more years down the road).

Organize your finances to see where you are

This step is just to catch a brief overview of where you money stands at this point. Get out your bank statements, look at your investment accounts, estimate the rough value of your home and the mortgage you have on it. Once you know your assets, liabilities, and the rough monthly budget you take in (income) and the expense you take out (expenses) you’ll have a very general picture of where you are.

These two, first steps alone will give you a sense of clarity about what really matters to you and where you are financially, thus what is needed to get you to the next step.

3 Things I learned Getting Ready for College

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?

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 Ways to Get Your Own Cinnamon and Blueberry Financial Plan

There are a lot of ways to prepare a breakfast. Toast and jam, eggs (scrambled, sunny-sideup, over easy, etc…), milk and cereal, pancakes and syrup, bacon or sausage, yogurt with granola and fruit and then there’s oatmeal.

To be honest I’m not the most exciting person when it comes to making breakfast. I have the philosophy for myself to keep my first meal relatively healthy, to keep it simple, and to keep it consistent.

The last couple years have seen a great deal of changes in my life; I officially finished high school, got my first real job, took 3 big camping trips (2 to Canada, one to Pictured Rocks MI), had a chaotic semester (with both full-time work and full-time school), said goodbye to my family of two parents and four siblings who moved to Zambia, Africa, Visited them for 3 months, came back and took a 2300 mile road trip by myself, and now am finally beginning my first regular semester at University.

With all this change I have kept my morning routine fairly consistent. I wake up early, do pushups, run, do jumping jacks, or sometimes none of them. I take a shower, read, write, and I have my oatmeal.

The same is true with my money philosophy. While I am at this early stage of my career and investing I have only a few basic tasks to put my money towards: living (food, insurance, college, etc…), generosity, savings and passive investing. My goal in this period of life isn’t to make billions or millions – my goal is to set up my future.

Just like my breakfast isn’t meant to be fancy or complicated, neither should your finances. This rings especially true for those of us who are younger. The People who end up broke are almost always those who either spend all their money trying to feel rich or spend all their money trying to get rich (fast).

To follow in the footsteps of responsible millionaires you need to keep these three ingredients in your financial life: responsible actions taken simplistically over a long period of time (consistency).

3 Things to Value More Than $1M

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.

The 3 Areas of Personal Finance and How To Master Them

I want to discuss the three factors that determine where you are financially: Inflow, Outflow and Accumulation. Inflow can be regarded as the personal income your household takes in. Outflow, on the other hand, can be broken down into four areas: Living expenses, taxes, optional expenses and giving. Accumulation can be broken down into saving and investing.

Inflow (income):

When most people think of income they think of a job. But this isn’t always the case. Many people have rental income, stock dividends, royalties, and passive income from businesses. Income earned at a job, however, is the most common source of financial inflow.

Outflow:

Outflow is the consequence of living in a monetary society. Everything costs money. Food, storage, shelter, transportation and even water. Being weary of how you spend money as well as prioritizing the things that are important, is a must for anyone wanting to live according to their values.

What’s the best way to decrease unnecessary spending? Getting a B–U–D–G–E–T. I know what you’re thinking. “It can’t make much difference anyway,” you’re telling yourself. “I only spend money on things I need.” The surprising thing is the most people, as soon as they get on a written budget, are able to eliminate expenses they knew they had.

@AfricanSoulGoddess wrote a very insightful post on this topic titled Best budgeting: Personal finance.

Growth and Accumulation:

This is the final aspect of your finances. In this area you are beginning to experience a little success. This is the area in which the Billionaires and Millionaires of the world were made.

As income flows in, most people spend most of it on outflow (whether necessities, optional spending, taxes or giving). While each of these things are part of any healthy financial plan, contributing to a retirement account or other investment account should be coming right off the top of your paycheck!

Not only is setting up an automatic withdraw helpful, but it could mean the difference between retiring at 55 or 65. Don’t believe me? Do that math. If you’re receiving a 10% return on your money your money is doubling every 7.2 years. That means if you postpone or weaken your contributions by even 7 years you’ll be losing out on almost half of what you could’ve had.

In retrospect, most people will look back and regret not contributing more. So for those who have time on their side, now is the time to start preparing for your future.

What Every Single Rich Person Has – And How To Get It

As the years roll by most people find that they continue to need to pay the mortgage or rent, buy food, and pay insurance. But There is a moment in everyone’s life, whether in college, after a life changes, or in old age, when the money coming in is less than the money that needs to go out.

Rich people don’t have this problem. While they certainly have their own financial problems coming in many different directions and flavors, lack of cashflow isn’t one of them.

However, no matter how much wealth, or how deep their pocket book, rich people all have one thing in common. This similarity runs through the tech titans, the real estate tycoons and the financial gurus. What is this key ingredient? Leverage.

Leverage, is actually a general term. There are many contexts in which leverage can be used and what it can mean. This kind of leverage to which I am referring is in the context of effort and resources – not necessarily debt.

In this context we use googles definition. Leverage is to: “use (something) to maximum advantage.”

You’re probably wondering what leverage has to do with Mark Cuban, Donald Bren, or Bill Gates. Mark Zuckerberg, for example, utilized the leverage of personal engagement to bring attention to his platform, in a way never seen before.

Leverage in the context of the rich is the act of utilizing resources in order to maximize and grow the results. The Rich in every industry have learned to use their effort, along with the effort of others to build great companies. Warren Buffet leveraged his money (in a non-debt way) to turn it into something bigger than he could have every achieved on his own by working a regular job.

So, how can you utilize this strategy of leverage? It starts with finding your “niche” or the thing that you believe you can provide the most value to people than any other. Pick thing one thing and begin building your skills and network in this area. As soon as you see some progress begin to leverage other people’s time, money, resources and connections in a way to build your brand.

Don’t make this one-sided. These should be give and take relationships in which you provide as much value or more to the other person. Often leverage involves borrowing each others skills in a net positive way. Begin learning about your area of interest and learn how best to use the power of leverage…

Financial Steps to Take in Every Economic Season

As the US economy continues its steady recovery from the 08 crash, many people have started to worry about the next economic disaster. When will it happen?

To be honest no one, not even the Fed Chair or the Billionaire class, or economists know when a crash will occur. However, simply looking back at history, it wouldn’t be far fetched for a crash to happen sometime in the next few years.

Going back to our Nation’s founding, we’ve experienced all seasons of the economic cycle consistently over and over again. Some cycles have been longer than others, some have been more dramatic, and various sectors and asset classes have experienced the results at slightly different times. But we know a crash is coming – sometime.

The following are the four economic seasons and where we’re at right now:

Spring: A period of time in which business recovery increases, job growth rebounds, home foreclosures slow, and generally consumer confidence and credit stops diminishing.

Summer: A period of months or years in which the economy, stocks, real estate prices, and even consumer confidence grow. This period usually lasts the longest of the four seasons.

Autumn: The season in which consumers are overly, even extremely confident. Disposable incomes are rising, stocks are selling rapidly higher, and home mortgage applications continue to rise. At the end of Autumn a cooling in economic expansion begins. That’s when the temperature starts dropping…

Winter: This period is by far the most difficult on the average consumer and investor. Prices in real estate and stocks drop, consumer confidence plummets, credit dries up and the media starts panicking.

Which season are we in? While it’s difficult to say, we certainly aren’t in Spring or winter, which means we’re either in late summer or early autumn.

How do we deal with change? Is there a way to behave in each economic season?

The answer is that number one you shouldn’t behave in a groupthink mentality. Don’t follow the heard. In fact when everyone is behaving a certain way, consider doing the opposite. When everyone is selling stocks, consider buying. When people are retracting and reacting to the disaster, try to expand.

While this strategy isn’t best 100% of the time, even seeing things through this perspective can open your eyes to which actions are best to take.

Outside of being a contrarian, simply focusing on your life and less on the economy can go a long way. Just because “everyone” is getting laid-off at work that doesn’t mean you won’t find work. You might have to work extra hard, but try to get out of that mindset of thinking that what’s going on in the world has to be true for your life – it doesn’t.

The ultimate outcome of your financial life in both great and horrible times is up to you.

7 Financial Levels – And How To Get To The Top

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.