Sunday, July 25, 2010

Couldn’t You Have Picked a More Exciting Hobby? (2)

For those of you who follow: I sincerely apologize for how long the continuation of my last post has taken. I feel like I wrote a cliffhanger the last time, and made you wait for the new fall season to reveal more of the storyline.  As I am sure you all know - Life can get busy.  Several things have kept me away, but not from thinking about this thread.  Maybe later I can write about the several things.  For now, here is Part II in a Series...

Perhaps I should get a job writing prequels. It wasn’t long after writing my last post that I started thinking I needed to back up – I had not started at the beginning. Realistically, we all start our life being debt-free. Technically, if we include our portion of the national debt which we will pay on during our adult-working life, we do not start debt-free. But, I’m talking about personal debt here. At the time of the mid-1980’s, like most teenagers, I was debt-free; not a care in the financial world. I believed I would graduate high school, go to college, and like most graduates finish with some student loans. But, given the unfounded belief that I would be rewarded for my diploma with a high paying job, those student loans would disappear quickly.

Well, after high school, I joined the Army Reserve and decided to attend Junior College for two years. This would give me the opportunity to not spend so much on college at the beginning. I could get the basic courses out of the way without spending too much, or taking out a loan. This plan was a good one as the tuition was less expensive. By working hard and a payment plan through the semester, I could pay as I went for an Associates Degree. I would be able to enter the big University still debt-free.

For my generation, most often, our elders taught us very little of personal finance. They did not sit us down and explain personal finance to us. Perhaps they believed we were picking up those lessons in public school. But the truth is: when the Great Depression became ancient history, people stopped teaching personal finance. With credit being in large supply, there was no more demand for the lessons learned during that era. We learned indirectly what little financial knowledge we gained from our parents. By watching the habits of our parents, most in my generation received this personal finance golden rule:

“Money = Spend; No Money = Spend with Credit”

I, too, followed the notion that I should start “building my credit”, and opened up an account of credit with a national chain. I did not go crazy, only buying some tools with the card, and quickly paying it off. I never really felt that I had a problem with credit cards. In fact, I despised them, but considered them a necessary evil in this world of "needed credit". When I got to the University, my financial problem was that I had no idea how to handle money. I thought I knew! My personal finance golden rule was this:

"money in the bank meant time to spend; no money in the bank meant time to stop"

My problem with following that rule, was I always spent until I had to stop, with no thought about what I might still need in the future.

To be continued...(much sooner this time, I promise)