Early Start Retirement

6 Financial Mistakes I see 20 Year Olds Make

1.) Putting too much money in savings.

It’s good to have money saved in case of an emergency, but a savings account isn’t the best way to store money long-term. This may come as a surprise, but money left in a savings account is actually losing value! Due to inflation,-although the dollar value stays the same- your money has less buying power the longer it sits. Instead you should invest some money so you not only match inflation, but gain value over time. (How Inflation Affects Your Savings)

2.) Overusing your credit card

Many college students are enticed into getting a credit card. Credit cards are a great way of building credit, but are also a great way of building debt. Many people don’t learn how to use their credit card efficiently until they already have mountains of debt. Learn how to use a credit card before you get one. ( Should You Have a Credit Card in College?)

3.) Over-speculating

In your 20’s is a great time to invest in riskier investments since you will hopefully not need your money for a few more years. However, it is possible to put too much of your money at risk. The most common thing I see millennials over-investing themselves in is cryptocurrency as a get rich quick scheme. I own cryptocurrency myself, but try to keep in a set, smaller amount of your overall investing portfolio.

4.) Not bringing in enough income

When you live at home, it is easy to live off a part-time job. Although you might not need the money now, it’s important to save and invest for the future. Pick up a side gig or barter for a raise to bring in more income. Funnel any extra money into an investment account.

5.) Overspending

Having your own money to spend is invigorating! The sense of financial freedom can encourage some people to overspend. Decide how much money you want to save and invest each month. Don’t be afraid to wait a few months for something you really want to buy.

6.) Oversharing

If your friends are having financial trouble it can be tempting to loan them money so they don’t miss a fun night out. This money adds up overtime, and you will likely not get it back. Spend money on your friends, but know where to draw the line.

Anything you would add to the list? Let us know!

Learn to Love the Spreadsheet!

My dream boyfriend is cool, always available, calculating… and a spreadsheet?! It’s true, I have a secret love affair with spreadsheets. I absolutely cannot get my hands off them. Sometimes I dream of coming home, slipping into something comfortable, and getting down and dirty in the spreadsheets.

I’m so sorry for that imagery, but I really wanted to drive home the idea that I love making spreadsheets. Spreadsheets have a bad rap for being boring and only for people who like math *Bleh*. But if anything, I think spreadsheets are best for people who DON’T love math. They do all the math for you!

Spreadsheets are the best budgeting tool at your disposal. They make is easy to adjust numbers and data if it changes. You can also make colorful graphics so the data is easy to read. Instead of estimating 12% of your income, you can use a spreadsheet to calculate the exact number for your budget.

Unfortunately, many high school and college students never learn how to use a spreadsheet much less how helpful they can be. Although not hard to learn how to use at the beginner level, there are many spreadsheet commands that can be hard to figure out on your own. Advanced mastery of spreadsheets is an impressive skill that requires mathematical knowledge and knowing where to look.

Knowing how to use a spreadsheet is crucial for many jobs. Thankfully, it’s easy to find learning resources if you need some extra help. Online there are Youtube tutorials and blogs that provide a quick answer to any problems. If online learning isn’t your forte, then check your local community college for classes! That is probably the best way to learn, as you will have an instructor available to answer any questions.

Do you love spreadsheets as much as I do? What’s your most impressive spreadsheet feat?

Should You Get a Sugar Daddy?

It sounds easy to have a sugar daddy, right? Some older rich man will just pay for your company. And you can use that money to pay for things you actually enjoy doing instead of selling yourself out to some boring job. Unfortunately, the realities of being a sugar baby are rarely so ideal.

Being a sugar baby is NOT EASY. For one thing, you have to have a likable personality and favorable looks. You don’t need to be a model to be a sugar baby, but you have to keep yourself well kept up. That’s why becoming a sugar baby is also expensive, although you can make a good amount of money, you will also spend a lot on clothes, makeup, and sometimes even travel.

If you are going to have many men after your company, you will also have to learn how to schedule your time. This may not be a job you can easily juggle part-time. You have to keep track of all the “gifts” the men give you and report them on your tax forms, but you can also get tax write-offs for things you deem necessary for your business.

Don’t assume no one will find out; your friends and family are likely to find out eventually. This is not a job you should do if you want it to be a secret. Selling your time to men for money is often stigmatized and it could hurt your relationship with jealous partners or worried family members.

There is also a safety aspect and you must be ready to protect yourself not only physically, but legally. You can’t give out too much personal information because it could make you susceptible to stalking. Learn the laws in your state for the job. Prostitution is illegal in many states so you must make it clear if you engage in sexual acts with these men that they are NOT paying you for sex.

Some women and men have been able to use sugar baby/daddy sites to fund college, a family, or even made it into a career. Although it is often seen as a way to make easy money, there are many risks and drawbacks that you should be aware of before committing to the job. If you think it’s right for you, then be prepared to do your research.

Have you been a sugar baby or something similar? Share your experience!

Netflix Method for Building Credit

Sticking to a budget is easier when you know how much you are going to pay each month. That’s why subscription services are so great, you don’t have to budget in the number of times you use the service.

Just like the Gas Method of building credit, my completely un-patented and unoriginal “Netflix Method of building credit” is a way to keep credit card usage consistent. Putting a subscription service on your credit card could be a good way to budget your credit usage, but like all credit tips, it can come with its potential risks.

How to do it?

1.) Set your payment method for Netflix (or any other subscription service) on auto-pay with your credit card

2.) Use Netflix (as we all do)

3.) Remember to pay it off every month!

The 3rd step is the real kicker. If you forget that you paid for Netflix on your credit card, the payments could add up and gain interest! Thankfully, a Netflix subscription is cheaper than a tank of gas a month, so forgetting it isn’t going to blow your credit if you only forget once. But forgetting for a year or more could easily begin to put you hundreds of dollars in debt.

Is this right for me?

If you like having a steady, consistent budget and have a good memory then I think this is a great budgeting technique. But, I do know it’s already easy to forget about auto-renewing payments and having one on a separate card than your regular account does make it hard to remember. Someone on a tighter budget may not find it worth the hassle of remembering.

Is it Good to Close Credit Cards?

Yes! But also, no! Like everything, it depends on your financial situation. You may think about closing a credit card that you don’t use anymore, but that could hurt your credit score.

Pros:

Closing your card gives you one less credit card to worry about. Whether you worry about missing a payment or having the card lost/stolen. If you have one card that you consistently miss payments on, it’s probably best to just lose the card.

Cons:

Your credit score increases the older it is. If you close your oldest credit card, your credit score will likely drop.

Also, dropping the card will decrease your overall available credit. That means any credit you do use on other card will have a larger effect on your total credit usage; which is a number you ideally want to keep low.

Alternatives:

Instead of dropping the card completely, you could make a single purchase once every few months. Don’t ignore the card completely, or the bank will close the card for you. If you have some other credit cards that are about the same age, then it shouldn’t affect you too much to drop one. I would just try to keep my oldest card, until my next oldest is at least a couple of years old.

Should You Have a Credit Card in College?

I remember when my family dropped my older sister off at college seeing booths full of exited college students trying to get other college students to sign-up for credit cards. To me, at the time, credit cards were the ultimate sign of financial irresponsibility. My dad would scoff at the students anytime one of them approached my sister. But now, as a college student who prides herself on her financial responsibility, I can give you a good guideline on when you should open a credit card for college.

Benefits of having a credit card

It’s helpful to have a credit score. It can help you with getting a good deal on loans, buying a house, or even landing a job. It also enforces good spending habits and teaches you to track your cash inflow/ouflow.

Also, having a credit card for longer increases your credit score. The longer your line of credit has been open, the higher your credit score.

Negatives of having a credit card

If you’re not careful, any debt you have could quickly grow. Many college students already have to worry about student loans, and don’t need the added stress of credit card debt.

So…Should you have a credit card in college?

You should get a credit card if you follow these criteria:

1.) You have a dependable source of income. (Or leftover income from a summer job.)

2.) You promise yourself to use it regularly, but sparsely.

Do not get a credit card if you want to use it to fund your way through college and expect to pay it off later. If you have had trouble with excessive spending, practice budgeting yourself for a few months before you open a credit card.

What about for emergencies!?

Ideally, a credit card should not be your go to in case of an emergency. Find a way to get a job and set aside money in a savings account in case of an emergency. If you have an emergency that’s going to cost you a few hundred bucks, the last thing you’re going to want to do is use your credit card and have to deal with the interest payments.

Other Options

Become an authorized user.

If you are nervous about handling your first credit card, you can become an authorized user on your parents credit card. Before doing this however, you need to have a very serious discussion with your parents about how you will use the credit card and how they will use it. Although parents can be quick to assume their children with start making excessive charges, if your parents start missing payments it will hurt your credit score too.

1.) Ask your parents to tell you their credit score. Do your research on what makes a good credit score to decide how well your parents use their lines of credit. Do not become an authorized user if you don’t trust your parents to make payments.

2.) Set a budget. Have your parents give you a spending limit. This will get you into the habit of tracking how much you spend on a credit card.

3.) Know when to cut the cord. You can’t be on your parents credit forever. Once you feel comfortable with your credit card, it’s time to think about opening your own.

Get a secured credit card.

Did you know there is more than one type of credit card? Secured credit cards require you to put down a deposit, the size of your deposit will then decide how much credit you can draw from. For example, if you put down a $300 deposit, then you will have a $300 credit balance each month. Forget to pay, however, and the bank will take your deposit as collateral. Although losing a $300 deposit may seem like a lot of money, trust me, it’s better than facing the compounding interest on a regular credit card. After using your secured credit card, you can upgrade to a regular credit card.

Is it worth it to use a Coinstar?

Coinstars offers a helpful service for a very costly fee. At 11.9% you can have your coins converted to cash at your local grocery store. Although I’m all for saving every bit of money you can, sometimes the Coinstar is more convenient. Also, it’s better to have the money in easy to spend dollars than sitting on your shelf.

Here’s when it’s worth it to go to the Coinstar:

Your personal bank doesn’t have a coin machine.

Some banks have coin machines where you can convert your change into cash for free. Personally, I haven’t seen one in any of the banks I’ve been to, but it’s worth it to call and ask around. If a local bank has a coin machine that you don’t have a bank account with, you can make an account, but this is pretty drastic unless you are converting large sums of change consistently.

You have under $100 in change.

If you have a small amount of money, it’s better just to take it to the bank. If your bank doesn’t have a coin machine you can ask the teller for coin wrappers to hand-roll them. I’m not going to sugar coat it. Rolling coins is a bitch. The first few minutes can be very relaxing, but over $100 it becomes a pain to roll and to transport it to the bank.

You don’t have lots of free time.

Going to the Coinstar and paying the 11.9% fee is sometimes worth it just for the amount of time it saves you. However, if you have a lot of free time, there are tons of fun things you can do with the coins as you roll them. Look for interesting dates or coins with a high silver content. I always look for wheat-back pennies and war nickels.

You shop at a few places consistently.

GIFT CARDS! Check the Coinstar website to see if any places you shop at offer gift cards from the Coinstar kiosk. The best part is, if you convert your money to a gift card, you don’t have to pay the fee! This is definitely the best option, but be warned that not all Coinstar kiosks offer the same gift cards. I always convert mine to an Amazon gift card, because it gives me the most options.

You want the silver content.

Because of the way Coinstar evaluates the coins, it will reject most silver dimes, quarters, nickels, and half dollars. You can sell these online or keep them for their solver content. There is some dispute online about what machines reject silver. But currently, the consensus seems to be that almost every green Coinstar machine will reject silver, but some bank machines do not.

You just want the coins gone.

If you just want the coins to stop cluttering off your shelves and are feeling particularly charitable you can use the Coinstar to donate to a charity. The donation you make is tax-deductible. Currently, Coinstar has 8 charities you can donate to including the Red Cross, Feeding America, and the Leukemia and Lymphoma Society.

Whatever you do, make sure to save the receipt.

Do you use Coinstar or prefer to hand-roll your coins?

Why You Should Take the Change in Your Tip Jar.

Working a job where you make tips is one of the most satisfying thing I have ever experienced. Even if it’s just a few cents or a dollar every purchase, it quickly adds up. When I first started making tips as a barista, I would always ignore the change at the bottom of the jar unless it evened out to a full dollar. This small daily habit could have ended up making me lose out on a considerable amount of money if I hadn’t noticed.

Below I have a chart showing how much money you could save in a year just by grabbing the leftover change at the bottom of the jar.

Days/week	Cents	Total in a Year
4	$0.40	$83.20
4	$0.25	$52.00
5	$0.25	$65.00
5	$0.40	$104.00

Although this may not seem like a lot of money compared to how much you make in dollars, you have to calculate the marginal cost/benefit. Marginal cost is how much it burdens you to do something. Marginal cost can include money, time, and stress. In this case, the marginal cost is small, because it’s money you have already earned. One inconvenience is getting the change into your bank account or into a more liquid form. But this can easily solved with Coinstar, or finding a bank with a coin machine. Just get a large jar in your house to keep your change in and convert it to cash once a year. The marginal benefit can be substantial, depending on the number of days you work.

Here’s the formula you can use to calculate how much you could earn:

Tips in a year=(Days working)*(52)*(Average change)

Do you grab the change in your tip jar? How much could you earn?

Hard vs. Soft Credit Inquiry

Creating an accurate credit score is a very complicated process. Many things decide your credit score, including those unrelated to making payments. One thing credit card companies don’t want to seeis someone gaining too much credit too quickly.

Quickly trying to open many lines of credit could be a sign that someone is heading into financial trouble or may be taking too many risks. In order to track how often people are checking or changing their credit, credit bureaus classify it as either a hard or a soft credit inquiry.

Hard Inquiry

A hard inquiry affects your credit score negatively. It tells the credit card company that you are trying to increase your lines of credit. Hard inquiries appear if you open up a new credit card, try to get approval for a loan, apply for a mortage, etc. Generally, you will have to approve a hard inquiry, but that is not always the case. Luckily, hard inquiries have a small effect on your credit score, and the effect lessens over time. If you find yourself having too many hard inquiries, the best option is to wait them out and keep your credit payments up to date.

Soft Inquiry

Soft Inquiries have no affect on your credit score. Soft inquiries occur when you track your credit or sometimes when a company asks to check your credit score. Some credit bureaus do keep track of the soft inquiries into your credit, but they do not affect your credit score and should only be visible to you.

How to know if someone will perform a soft or hard inquiry?

If the company asks your permission, it is likely a hard inquiry. Don’t fret however, because a single hard inquiry will have a very small effect on your credit score.

The Gas Method of Building Credit

It can be hard not to reach for your credit card when you see a shiny pair of shoes or drive by that expensive sushi place down the block before your next paycheck, but keeping your purchases consistent is the best way to track your credit. We’ve all put purchases on our credit card that we’ve forgotten about until we check our statement at the end of the month. These small inconsistencies can be prevented if you use the Gas Method.

What is the Gas Method?

The Gas Method means that you use your credit card only for purchasing gas. This method works because, for most people, gas is a purchase you have to make once or twice a month and is small enough to not use up too much credit, but large enough that you’ll remember to pay it off.

Did you make it?

No. I’m just giving it a capitalized name to make it sound more attractive.

What are the benefits?

Because most people use a set amount of gas each month, you are much less likely to be swayed by rewards programs or deals. Unlike with spending money on groceries or shopping, buying extra gas on your credit card is much less attractive. It is also easy to budget, because although gas prices and the amount you use may change, it is often within an easy to predict range.

Why gas? What if I don’t drive?

There are many other things you could use to get the same results. In fact, some people might prefer putting a subscription service on their credit card such as Netflix. That way, you know exactly how much you’ll be charged each month.

What purchases do you usually make on your credit card? How do you stick to your credit card budget?