As a 20 year old personal finance advocate and connoisseur, I breathe, sleep and ponder money.Â
Not in an addictive way, rather in an enjoyable and inspirational way.
Although Iâm only two decades old, I already had to make quite a few life-changing decisions that coincidentally all involved finances to sway the main decision. Thankfully they could all be reversed yet at the time they were terrifying and felt as if my life was on the line.
The main decisions Iâve had to make include:
-Age 16: What happens next after my fatherâs passing
-Age 18â19: Which college to attend
-Age 20: How to finance and buy my first rental property to lease out to
Of course, there were many more decisions in between but these are the ones that really stood out for me.
When itâs time to make any decision in life, what influences us the most is the price.
You may be asking, what if there was no price? Wouldnât that be a wonderful life?
Well, we would probably make worse decisions, feel miserable and have an abundance of choices and stuff.
Regret would loom over us forever because even if we could do everything, something would feel off and not special.
Too much of anything is a bad thing and everyone has to weigh the pros and cons; even Bezos taking flight to zero gravity.
Thereâs no doubt money plays a massive influence in our lives. I would be wrong to say that I donât think about money or love it. We all do and itâs okay because we need it to survive, achieve our dreams and live a life we deserve.
Dad
When my father unexpectedly passed, my mother and I didnât realize how vital it was to never be dependent on someone. Iâm talking to you females. Thankfully my mother always worked since she migrated here and we had a backup plan which included an emergency savings account, contact list, couple income sources on the side and knew where our assets were at all thanks to preparedness. This allowed us freedom and flexibility. We didnât have to move, downsize or do any major life switch. We of course had to spend less until we supplemented my fatherâs income but it was already there in plain sight. Simply by reducing our spending, investing more and charging more for our businesses, we recovered swiftly. It was important for me to stay in the same HS to wrap up 13 years since Kindergarten and for the both of us to live in the same neighborhood so we tweaked other parts of our life. We moved, generated more uncorrelated income streams, got into alternatives from real estate syndications to eREITS and crowdfunding to farmland and even art which helped stabilize our net worth and allow us to get back on our feet.
For all the women out there, realize that planning for the worst hoping for the best is vital. You never know when something can happen. My father was extremely healthy, exercised daily, slept enough, loved his job, had fun but unexpected he passed as a middle-aged father.
80%+ of widowers are women. Women live longer and finances come first as the main responsibility to secure happiness and stay afloat.
College
When it came down to the biggest financial decision of my life upon adulthood, college, the main reason I chose NYU was for the support and of course because itâs NYU! I was fortunate to get a full-ride for 4 years to the most diverse institution in the world in a school that is centered in an innovative, vibrant and exploratory city. The last place I wanted to study at was in an institution 60 miles away from civilization without any career opportunities.
NYU certainly wasnât the end all be all. There are thousands of colleges that are just as great but with the sweet financial package, people, environment and my circumstances, I knew it was the best option for me and Iâm proud to say Iâm half-way through this journey!
Rental
Lastly, I took advantage of the dip in the housing market at the start in 2020 and secured a deal on a property. You may be asking, how could I possibly afford this at 20? Through diligent savings, my frugal minimalist stealth wealth lifestyle and pent up funds from my Roth IRA working for practically a decade now, Iâve been able to secure a deal.
Iâve been looking for a while, this wasnât a spontaneous decision. Buying a home is the largest emotional and expensive decision and through my funding of my ROTH IRA, 529C plan, and savings, I secured the deal on a studio to lease out. I wanted to become invested in physical tangible real estate and knew this was the time! Owning my own business (rental) and taking care of tenants, a grueling and daring process is right up my alley since I have hands-on experience helping my family with their portfolio of properties. Real estate accounts for about 40% of my portfolio at the moment and I would highly recommend adding some to yours! Bonus tip, it doesnât have to be tangible. Read here what I mean.
In The Books
Back to school.
The problem with the admission process, besides the standardized ancient tests that donât actually test whatâs learned in school, is that a majority of students in the world apply to the same 10â20 schools, mostly in the U.S. and unexpectedly are devastated when they donât get in.
Before we move on, realize things happen for you not to you. Thereâs always a hidden reason. Youâll thank me later.
What Iâve learned from college is that what you put in is what you get out. College is beyond text book or lectured learning, itâs developing connections, taking advantage of the clubs, events, meeting alumni, professor and future generation a.k.a your classmates! Networking is key and something I knew would be the best opportunity to seize at NYU.
When it comes to deciding, as much as students are enticed by the prestigious rankings and IVY League titles, which by the way in French means deceit, money is all on the line and the main driver.
Whatâs strange is that the U.S. government, the largest debt issuer is super stringent on who they lend out Investment Grade Insured Treasury bills/notes/bonds to yet when borrowing student loans, it can be an infinite amount with no barrier.
When it comes to certain schools and graduates, they got hit hard with this promise. The no-limit loans make masterâs degrees a gold mine for universities, which have expanded graduate-school offerings since Congress created Grad Plus in 2005. As a result, graduate students are for the first time on track to have borrowed as much as undergraduates in the 2020â21 academic year, federal loan data show.
A recent article in the WSJ accounts âColumbia University film alumni had the highest debt compared with earnings amongst graduates of any major university masterâs program in the U.S. The New York City university is among the worldâs most prestigious schools, and its $11.3 billion endowment ranks it the nationâs eighth wealthiest private school.â
Granted, as much as we would like to, following your passion doesnât always pay the bills. Similarly with personal finance, even if you donât study finance and hate business, you still must be prepared for life because money will sure be a part of it and is today since most institutions carry hefty price tags.
Institutions raise prices because they can. There will always be students who want to learn and get a degree to be on the safe and reliable path. To be clear, thereâs absolutely nothing wrong with that. Thatâs why Iâm here and graduates are known to be more successful and earn more than those with only a high school or associate degree.
Just like personal finance should be a mandatory class, understanding and getting a feel for the fields that will allow you to make a living, match up your risk tolerance, time horizon, comfort zone and expected pay will keep you best afloat and let you survive as the fittest especially in a city like NY that is gouging prices left and right recovering from the pandemic.
The Columbia program offers the most extremely example of how elite universities have not provided graduates enough early career earnings to pay down the atrociously high federal student loans according to an analysis from the Education Department.
Donât be allured by the title or prestige since masterâs students at Ivy League universities across the U.S. cannot support themselves out of college for a good few years and having a degree wonât always land you a foot in the door if youâre not creative or unique in your approach to a competitive grueling cutthroat industry like in entertainment.
Although this report only covers the earnings and loan repayments two years after graduation, it still proliferates until adulthood. A few retired neighbors of mine who went to prestigious IVY league schools not only changed professions upon graduation to just get easy grades in school and actually enjoy it but are still chipping away at paying off that pesky balance 6 decades later! Thatâs a true burden and you are never free until you get rid of that debt. The funny thing is they are entrepreneurs as well so they didnât need it anyway!
Guaranteed Plan
Since Columbia had the most indebted master students relative to income, letâs identify what these low-paying high promise fields include:
Film and the Arts
Liberal Arts
Writing
Production
âColumbia graduate students who borrowed money typically held loans that exceeded annual earnings two years after graduation in 14 of the schoolâs 32 masterâs degree programs tracked by the Education Department, the Journal found.â
Itâs no surprise these industries are competitive, selective and risky. Actors to comedians donât start making a living until a few years in, if theyâre lucky and catch their big break. J.K. Rowling got rejected by hundreds of publishers before one finally accepted and then she went on to produce a best selling series, Harry Potter that supported her living forever.
Rags to riches + social mobility is tough and wishing and dreaming wonât make the cut anymore. You have to stand out elsewhere to be truly prepared.
Debt Debate
The real test is to speak with a debt counselor. Overall, never bite off more than you can chew. Risk whatever you are willing to loose. Although many say school is an investment and qualifies to use âgoodâ debt, at the end of the day itâs still debt and you are taking a chance!
Thereâs no doubt these Columbia students can be successful and become the next Ryan Seacrest or Maria Shriver but how realistic is that? If you want to go there, start with doing something outside of the classroom that gets you noticed. Donât put all your eggs in 1 basket. Finding something special in yourself isnât just discovered in the classroom for 2 extra years.
Increasing your side hustles, passive income streams, extreme saving until it hurts, and living below your means to name a few options are all difficult as a college student ready to party all day yet down the road, you will thank yourself. Now is the time to rent a 1 bed with 4 roommates eating Ramen, not when youâre retired.
Fortunately, there is some hope on the horizon from the U.S. Government for these desperate students.
Biden is considering and attempting to pass a bill to elevate roughly $15k worth of debt for each student. Even employers from Target to Starbucks promise to pay full-tuition for student employees at select schools.
Read here the risky promises for student borrowers.
Debt Timeline
Of couse getting rid of debt earlier than later is better. Paying down principal and not letting those interest rates accumulate will help you save more. More debt = less savings yet when it comes to other debt from a mortgage to a business loan, paying it off consistency over time, isnât harmful considering you donât mind a lower cost of living and sticking to a budget.
Everything is a business and just because itâs offered, prestigious or sells beautiful promises, doesnât mean itâs right for you. Do whatâs best for you to keep yourself afloat. Do you really want to have to pay off your debt for the next 80 years just to receive that degree you couldâve gotten elsewhere for less? With tuition rising and wages stagnant, if you are relying on institutions to jump social classes, I would suggest taking a personal finance class first.
Achieve your dreams by knowing what you can handle. It starts with having a realistic support plan not one that drags you down for the rest of your life.
Learn to choose wisely.