One of our staff’s websites, Frugaldad.com, provides a list of 44 ways to ruin your financial life by age 30. Some of our favorites are below:
1. Take out three times as much in student loans as your first year’s salary. I’m all for following your passions, but if your passion only pays $35,000 a year, please reconsider borrowing $100k to get the required degree. Here’s more from a couple that owed more than $100,000 in student loans.
8. Borrow thousands to start a new business. Entrepreneurship is the spirit that built this country, and I’m all for it. However, consider saving and starting up with cash.
11. Cosign a car loan for your best friend. I no longer borrow money to buy cars. And I especially wouldn’t borrow money to buy someone else a car, which is essentially what you do when cosigning a car loan. As a cosigner, you are on the hook if they default. And if they need a cosigner, there’s a good chance they will.
12. Give up credit virginity for a free t-shirt. When I was in college, I signed up for a Discover Card before a football game because they were giving away free t-shirts. Dumb. My running joke is that t-shirt probably cost me $500 in interest charges over the next few years.
17. Refuse to buy a used car because you don’t want someone else’s problem. This tired saying keeps coming up when a discussion on used cars takes place. A car transforms from new to used the second it leaves the car lot. A well-maintained, previously owned car, can save you thousands of dollars over a new model.
20. Go without health insurance–even catastrophic insurance. When you are in your 20s, the last thing you are thinking about is getting sick. After all, you were just a teenager a few short years ago and the feeling of invincibility hasn’t quite worn off. Don’t take the risk. At a minimum, look into a health savings account or similar high-deductible plan that will cover you in the event of a major illness.
25. Spend six months of salary on an engagement ring. If you have to spend half a year’s salary on an engagement ring to impress someone you might want to think twice about your choice of partner. I’ve always thought one month’s salary was a good rule of thumb, and of course, pay cash. Further reading: Save Money on a Diamond Ring
32. Stretch to get into a new home because it is a good investment. Repeat after me – my home is not an investment. We need to break this thinking that all young people should buy homes because they are a great investment. Yes, they can increase in value, but like all investments, they can lose value, too. The difference is, when your shares of Apple go down, you aren’t putting the roof over your head at risk.
33. Don’t get out of debt before having a baby. Any parent will tell you, things are difficult before kids are even more difficult after kids. Getting out of debt is no exception, so if possible, try to become debt free before having kids. Having said that, I believe children are a blessing, so don’t put off having kids just because you are in debt.
44. Don’t set up a monthly budget. One of my high school teachers had a sign hanging in her room that read, “If you fail to plan, you plan to fail.” Nothing could be truer when it comes to managing your money. Get over your fear of creating a personal budget and spend a little time telling your money where to go.
Check out the full list here: http://frugaldad.com/2010/05/03/ways-to-ruin-your-financial-life/