Thanks for voting!We’ve all made our fair share of minor money mistakes over the course of our young lives, right? OK, by “minor” we mean Spring Break ‘0? (fill in the year). In sunny Mexico. Financed completely on the credit card. Hopefully, you walked away without any “issues” or a bad sunburn. And with a good life lesson.
Financial wisdom comes in many forms. 20 Something Finance has compiled a list of what NOT to do when you’re making decisions that can affect you well into your 30s and longer (we know, you’ll never be that old).
Being young and inexperienced, juggling new responsibilities – it can all seem pretty overwhelming. Amassing debt has become a rite of passage for a lot of people just a few years out of school. We’d rather you pass on the debt – and help you avoid money mistakes in the first place.
For starters, are you taking full advantage of your employer’s 401(k) program? If they match your contribution, make sure to drop in at least as much as they do each paycheck. If you don’t, you’re basically refusing a pay increase. How about borrowing responsibly? It’s easy to qualify for loans you can’t afford. You’ve seen the cheesy TV spots – if you have a J-O-B, you can get a C-A-R. Before you drive the dream wheels, think about the potentially nightmarish monthly payments. And, we’ve said it before straight up, don’t buy things you can’t afford and don’t need. On the other hand, it’s OK to “love” something on occasion. That vintage hollow-body guitar? It’s pricey, but if you save up, it could well be worth the investment. (Plus the chicks will dig it.)
But enough of what we think you should do. We’d rather hear what NOT to do, Savers. We bet you could probably fill a chapter or two. Ready to share? We promise not to judge (too much).
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I am a perfect example of what NOT to do with credit cards. Ive learned my lesson from over-spending, though I wish I learned this when I was in my early 20’s not my late 20’s. Im 32 and still paying off debt and embarassingly enough, still living with my parents.
When I was 26 years old, I became involved in the Volkswagen car enthusiast community. Over the next 2-3 years I spent truck loads of money on cars, car parts, hotel rooms at car shows, cameras, computers. I borrowed cash from the credit cards to buy older used cars, new wheels, etc. I soon amassed 23K in debt spread around on 4 or 5 credit cards, while also carrying a monthly car payment. At the time I wasnt earning nearly enough to pay for all I was spending, averaging between 32K and 35K gross during this time. I made late payments too often, sometimes out of forgetfullness and sometimes due to not having enough cash to make a payment. My rates skyrocketed, with the lowest being 22% and the high 32%. My credit score plummeted to a low of 525 in late 2006. With a small income(small for New Jersey) and a huge interest rate, I wasnt getting anywhere paying them back. I finally had to borrow $11000 from my father to get rid of the high interest rate balances.
Up until this point I hadnt given much thought to moving out. The time came for me to do that and it was an impossibility. I was and still am stuck. 32 years old and I still live with mom and dad. Pathetic if you ask me.
I can say Ive learned my lesson with using credit cards but it came with a huge cost. I have not made any major purchases with a credit card in 2 years or so. Anything I buy with it, and its usually something small, I pay off that month. My spending habits are under control and Im saving as much as I can afford to right now. Im coming down to the wire as far as paying off my credit cards. My credit score is approaching 700, though it has been stuck in the high 600’s for a year or so now. I have felt trapped for years. The relief of having this burden off my shoulders will be tremendous. I am eagerly looking forward to the day when I owe the credit card companies nothing.
Eating out instead of eating in, nothing eats away into your bi-weekly income than eating out 12 days out of 14 in a two week period lol! That has changed now, I eat out about twice a week and even then I try to keep it inexpensive. Which actually more than fits the budget and comes out with some left over change at the end.
[...] the “We the Savers” blog from ING Direct made a post called “20 Sump’ns: We wanna hear all about the money miscues. No holding back. It looks like it was inspired by a post on 20somethingfinance.com called “The 5 Best Ways to [...]
I am 25 years old, I am not big blog person. I do not general leave comments though this is one of my favorite blogs that I read often. College was great for me, I went a bit nutty with my credit cards but not as bad as many of friends and even some the people who left comments above. Upon graduation I had about 8k in credit card debt mostly on store charge cards such as Gap, Old Navy and the like and a few regular credit cards. Know I did manage to pay that back rather quickly while I was looking for my “grown up” job. As I lived with my parents and did not have any other expense and my part time job at the local grocery store went to paying those off. What killed me financially after college was not my mistakes with credit cards as I never missed any payments, it was my Student Loans. Because I always paid my bills on time I had no problem getting loans for college. Now, my grades where not steller in high school so I did not qualify for any merit scholarships and I am not athletic to say the least and coming from a somewhat ordinary background financially i did not receive any grants or need based help. I received all loans as financial aid for college. This was fine at the time however no one ever sat down and told if you barrow amount $X at an interest rate of Y% your monthly payment will be $W. Now I hear of this predatory lending that mortgage companies did by not fully disclosing how high a payment could go to the subprime market– is it not more predatory to target the fresh out of high school 18 year old and say “don’t worry you can defer your loans until you find work” and never actually say what the payment is going to equal? I’m just throwing that out there. As a 20 something with student loan payments that are more than my car payment? I know now how to figure what my payment will be roughly if i take a loan out if i know the amount and interest rate - but I did not know then and the student Loan lenders took full advantage and that is the payment that kills me monthly. Not my car payment (which i had to get as my car was totaled and i live over 20 miles from my work) not the small credit card debt i have accumulated since last spring summer when gas was over $4 a gallon it is the student loan payment that was never explained to me — and i know i am not the only one who had no idea that money barrowed for college was going be 27 years of repayment — and i even switched from a private college to a public state school and moved back home once i did the quick math and realized how bad the payment would be — but it was too little too late —— I did okay with my credit cards in college not great but not bad and pulled out from under that just to get hit with ridiculous monthly student loan payments. I think that most people between ages 24-35 would agree. I know my boyfriend is in a similar spot and it is preventing us for buying a house now. He had no credit card debt after college just his student loans. And hes no better off than i am. I feel that is far more predatory of a lending company than what they did with subprime lending. I apologize as this is much longer than anyone else has posted but i do feel that the student loan industry takes grave advantage of our very young new to the credit market people and i have not heard anything on that being addressed — I do hear they are addressing the banks giving credit cards on campus but thats something small — but that combined with the outrages amount of student loan debt its no wonder 20 somethings are in over their heads and we are only addressing half the problem with regulating the credit card companies —
Jason writes: “Eating out instead of eating in, nothing eats away into your bi-weekly income than eating out 12 days out of 14 in a two week period lol!”
Completely agree. My husband and I haven’t been able to kick the habit so instead we focus on doing lunch instead of dinner on the weekend (much cheaper), drinking water instead of soda, and using buy one, get one free coupons
I just started reading this blog a few minutes ago and I love it already. People need to understand how to exercise discipline when it comes to money. It’s not even about being in control of your finances as much as being in control of your life.
I come from a family that has had periods of great fortune and massive debt. I’ve lived on both sides of the track and either you can learn from it or forget it all and go buy something nice. Both my sisters have huge student loans, significant credit card debt and the tendency to live beyond their means. I worked three jobs in college to pay for school and living expenses and have never had credit card debt or even been late on a bill. Ever. I’ve been out of school and working for four years now, but spent the last year moonlighting as a waitress to boost my savings/nest egg/emergency fund. The economy was starting to crumble at that point and it seemed like a smart decision. I live well, but give thought to both the personal and monetary value of everything I buy — whether it’s worth it and I truly need it.
I won’t deny that I’ve made some sacrifices to get to where I am financially… but where does that leave me? Hopefully on the path to home-ownership, stability and most importantly meaningful life experiences.
Loans. They’re nice when it’s for something that you really want. But not when it’s for something your friend really wants. Don’t co-sign, no matter if (s)he offers you $500…. even $1000. When they stop paying, it’s on you. No way around it you are s-crewed and literally stuck with the bill.
Well, I’m only 21…. So I really don’t have a 20-something money horror story. Most I can say is I got married at 18 and was a bit money stupid for a while, wised up and kicked $5k worth of consumer debt before it got to be ridiculous. I have student loans, but I’m still working on my degree too, so it’s still piling up… I’ll get done someday, and, since we’ve been living on what my husband makes, I’ll get a good shot at paying them back on a reasonable time table, with no more student loan debt than some people have tied up in car loans.
For me, though, cars are my life. And, unlike commenter #1, nothing with my cars goes on credit. We just bought a 1990 Nissan 240SX project car, and got a loan for $2500. We could afford the car outright, but I’d rather keep my emergency and travel funds liquid and build my credit with a tiny, manageable loan that’s just as much a car loan as someone who has one for $25,000 instead of my $2,500. All the mods are paid for with cash, and our other two cars are owned outright. Just a tiny car loan and student loans for debt, some modest savings accounts and my investment accounts. (401(k), Roth IRA and a “play” account.)
I consider myself lucky, I caught it all at an early age and have a debt adverse husband. We could be a lot worse off, like a lot of our friends… But we’re not. Most people think we have a ton of money because of our cars, but we don’t, we just have clear spending priorities.
Student loans are the only thing killing me.
“For me, though, cars are my life. And, unlike commenter #1, nothing with my cars goes on credit. We just bought a 1990 Nissan 240SX project car, and got a loan for $2500. We could afford the car outright, but I’d rather keep my emergency and travel funds liquid and build my credit with a tiny, manageable loan that’s just as much a car loan as someone who has one for $25,000 instead of my $2,500. All the mods are paid for with cash, and our other two cars are owned outright.”
This is how it is for me now. All mods are paid for with cash or money in my paypal account, not through credit cards.
Double up on the birth control. In my masters which I maxed all the loans out for I ended up with a baby on the way. My husband was insistent that I finish anyway. But the student loans are gargantuan!
Probably would have less student loans if I didn’t love to eat out so much. We now live 45 min away from the nearest decent restaraunt which has really curtailed this spending instead of 10 mins like in college.
I never had any help with college which is fine because at 18 your only bills tend to be a cell phone and maybe some car bills. I was working a job which covered my cost to go to Comm College full time. My first mistake was when I decided I needed my own appartment. Between my car and living expenses and school I was working two jobs and would sometimes take out cash advances to pay my rent. After a year I came crawling back to my mom and paying off my debt was not a problem because my only bills where the cell and car and misc. When I began dating my husband and then marrying him 4 years later the debt just built up…..trip to Vegas, no prob, upgrade to 1st class, charge my amex….and so on. I was married last September and by this past Feb after being laid off in Nov the minimums were climbing higher and higher….I was about $18k in cc debt. I have never been late or skipped a payment….you do what you have to to pay that minimum…if you are late you better not be smokling, drinking or gambling with that money. I finnally enrolled in a service where I now pay $450 a month for the next 4 years and I will be out of debt…I do not use cc and tell my 20 yr old bro to not even get one and when he is ready to move out, buy a house, dont waste $ on an appartment. I have my as degree but am now going back to school for my bs….it will be debt but atleast its student loans and not cc debt.
Oh yea…just like Sally said….don’t get pregnant….I know babies are cute but they cost money so just get on b.c. or dont have and leave the baby for after you are married, have a house and can afford to give it a good life.
Well, I’m now 27 and about 6 months to a year away from buying a house. My bad decisions started when I was 17 years old: Borrowed $7k from my grandma for a car.
20: bought a motorcycle with a payment.
22: bought a truck at $300 a month.
23: bought another truck and lost $5k on the first truck, $570 a month. Finished college with $25k in student loans and $10k in cc debt. Then moved to California (where housing is more expensive).
24: sold truck because payment was to much and lost $5k out of pocket. Bought property and built a house to sell, could afford $250k but was in debt to $750k.
25: did a short sale for $500k because of market and left with $25k in cc debt and a newer truck that I owed $5k more than it was worth. Got married, settled $25k cc debt for 40% of what I owed (by myself, didn’t hire a service for something I could do on my own).
26: sold the truck at a loss and bought an ‘88 Toyota for cash.
27: 1 year away from buying a house in California with 10% downpayment. Have only 16k in student loans left, no car payment, and only $5k in cc debt that is at 3% (would rather have cash in bank making 8% than pay off cards)
What I learned: Only time I will borrow again is for a house or decent rate for student loans. Yes, their were loops in the system that let me get to that place but it was ALL my choices. I can say that I was the idiot and the government should not bail me out. Because if they did I probably would not have learned the lessons I now know.
I grew up in an uppper lower class home. They really didn’t teach me much about saving or the value of a dollar growing up. All I was told to do was save for a rainy day. With the current state of the economy those rainy day have come and turned into a hurricane. Lol. My parents worked very hard and struggled day in and day out to provide for my brother and I. We had all the things that we needed but didn’t have our wants fulfilled until Christmas. For me, the things I wanted were influenced greatly by my peers in middle and high school. I wanted to be the “cool kid” on the block with the nicest shoes and clothes. I believed at that time that ones worth came from what he or she owned. I fell into that trap that many of us fall into. At that time, I placed more value on material and superficial things. At sixteen, I started working at a local grocery and done so until my sophomore year of college. I was never able to save money. Every amount of money I earned was given to some other entity to be placed in their coffers. While in college I was able to rack up alot in debt. Pre-approved credit card offers were sent to me daily. By the time I was 23, I had three credit cards with the first one coming at age 19 in 2003. I had maxed my first card out twice before turning 21. Citicards alloted me a limit of almost $2000 on my first card. This was insane! I had no business being given a card with a limit like that. Especially since I had a low and volatile income. As my friend says it, “If your dumb enough to give it to me, I’ll be done enough to accept it.” Educational loans were so easy to obtain without a cosigner. I would take out loans so that I would have extra funds in my bank account, pay off credit cards, and to make major purchases. Fast forward to today, I have accumulated well over $100,000 in school loans and over $14,000 in credit card debt. I graduated from college with two degrees in December 2008 from Virginia Tech. Due to the current economic crisis I haven’t been able to find full-time employment. I basically work check to check attemptimg to pay all my expenses, but It is not enough. I have to say that this has been a serious learning lesson for me. I am starting to understand now why my parents couldn’t support my wants. I am learning a serious lesson on what it means to struggle. From having bill collectors call asking for money you don’t have, to having them turn off my cell phone, cable, almost my electricity, and place educational loans in collections
I grew up in an uppper lower class home. They really didn’t teach me much about saving or the value of a dollar growing up. All I was told to do was save for a rainy day. With the current state of the economy those rainy day have come and turned into a hurricane. Lol. My parents worked very hard and struggled day in and day out to provide for my brother and I. We had all the things that we needed but didn’t have our wants fulfilled until Christmas. For me, the things I wanted were influenced greatly by my peers in middle and high school. I wanted to be the “cool kid” on the block with the nicest shoes and clothes. I believed at that time that ones worth came from what he or she owned. I fell into that trap that many of us fall into. At that time, I placed more value on material and superficial things. At sixteen, I started working at a local grocery and done so until my sophomore year of college. I was never able to save money. Every amount of money I earned was given to some other entity to be placed in their coffers. While in college I was able to rack up alot in debt. Pre-approved credit card offers were sent to me daily. By the time I was 23, I had three credit cards with the first one coming at age 19 in 2003. I had maxed my first card out twice before turning 21. Citicards alloted me a limit of almost $2000 on my first card. This was insane! I had no business being given a card with a limit like that. Especially since I had a low and volatile income. As my friend says it, “If your dumb enough to give it to me, I’ll be done enough to accept it.” Educational loans were so easy to obtain without a cosigner. I would take out loans so that I would have extra funds in my bank account, pay off credit cards, and to make major purchases. Fast forward to today, I have accumulated well over $100,000 in school loans and over $14,000 in credit card debt. I graduated from college with two degrees in December 2008 from Virginia Tech. Due to the current economic crisis I haven’t been able to find full-time employment. I basically work check to check attemptimg to pay all my expenses, but It is not enough. I have to say that this has been a serious learning lesson for me. I am starting to understand now why my parents couldn’t support my wants. I am learning a serious lesson on what it means to struggle. From having bill collectors call asking for money you don’t have, to having them turn off my cell phone, cable, almost my electricity, and place educational loans in collections is stressful. But I have embraced this struggle and have fought it head on. Saving and cutting back is now a priority in my life. Its hard because I have friends who like to travel and go out all the time. Those material things aren’t no where near as important as they use to be. One thing I have figured is this, if I can’t live with in my means off a few hundred dollars of earnings a month, how am I going to handle making a few thousand dollars a month?
I grew up in a household where money wasn’t much of an issue. My parents spoiled me and my brother a lot. To this day, at the age of 25, they continue to help me with my finances.
I got my first job when I was 15 and I’ve always held a part-time job of some sort. I am naturally cautious, especially when it comes to cash and credit cards. I’m a great saver especially compared to my friends. However, when it comes to student loans, that’s where I’ve been well, stupid.
Between 18 and 21, I made a lot of bad choices. I dropped out of a local private college, invested in going to go to another private college before deciding not to go at the last minute, and dropped out of a third private college that included tuition, moving, and living expenses. Within 3 years, I had drowned myself with $70,000 of student loan debt with nothing to show. I ended up going to a local community college and a local state school which totaled $30,000, which would have been much more manageable alone if I hadn’t invested in all those private schools. To add fuel to the fire, I started attending a local private college for my masters which is going to add $40,000 to my huge student loan debt.
Within the next year, I’m going to be looking at at least a $1000 a month student loan repayment bill. And that’s just for my student loans. While I’ll have my masters degree completed, the thought of having to pay $1000 a month is just mind boggling and honestly, I don’t know what I’m going to do.
Looking back, I’d would of just gone to the local community college and the local state school. Then, probably, gone to the local state school for my masters too. At 18, 19, 20, and 21, I didn’t know better. The thinking is, “No payments. Okay. I’ll have my degree, a good paying job, and I can pay it off in no time.” I wasn’t thinking about the interest rates or the compounding interest. I wish before signing those promissory notes, they would tell you, this is how much per month you’re going to have to pay if you take this loan out.
I wasn’t academically talented so scholarships came far and few. My parents made too much money to qualify for federal or state aid of any kind. And, my parents and my good credit scores, automatically qualified me for student loans.
While the massive student loan debt has me worried about the future, I am lucky enough to have not gone into any other debt. I manage my day-to-day expenses as well as my credit cards. At the moment, I have great credit too. While I’ll continue to manage my finances as best I can, and continue to live the lifestyle I’m living, I’m sure in the not so distant future, my spending habits are going to have to change in order to front my education expenses.