Ignorance is bliss (sometimes)

Don’t ask me how I did it, but I managed to escape college with zero credit card debt. In fact, I’ve never had credit card debt. While I wish I could say that this was because I was an extremely responsible college student (if there is such a thing), it was actually the result of ignorance. I didn’t know why I would use a CC, when my debit card worked just fine. I’m kinda dumb I guess, ’cause I never really realized I could buy things with the CC that I didn’t have the money for. I just thought it was another way to pay, kind of like cash or a check.

On another note, I started contributing to my 401K the day I began working. Not because I was a genius and knew how compound interest works, but because someone shoved a bunch of paperwork in front of me. Like a mature/confident man, I ran to the HR department to ask them how to fill out my various benefit forms. When we got to the retirement section, the lady recommended I contribute 5% to my 401k. I didn’t know what that meant, but I didn’t want to look stupid so I just did as she said.

When it came to my student loans, ignorance was the complete opposite of bliss, it was un-bliss(?). My tuition ran between $25,000 and $30,000/yr. I had a partial scholarship, my grandparents gave $5K each year, my parents paid a portion, and I took out some Stafford loans. I knew I would be graduating with some debt, but never knew exactly how much I was taking out. I just signed the dotted line and continued on my merry little way.

Fast forward to Senior year. I sit down for my college loan exit interview (where they explain what your payments will be and how to pay them, etc) and am given my student loan summary. I was expecting to see a $15,000ish balance. You know where this story is going, I actually had borrowed $28,000. I freaked out. And again, I did what any grown/mature man would do, I called my mommy. I was convinced a mistake was made. Maybe they had given me someone elses paperwork? Nope, I was just a big idiot and took on more debt than I thought.

So while I understand why the phrase “Ignorance is bliss” has become  popular, I vote it should be changed to “Ignorance is bliss when it works out in your favor, and it sucks really really bad when it doesn’t.” Seems a little more appropriate, doesn’t it?

Can you think of  a few areas in your financial life where ignorance helped you out? How about where it ended up kicking you in the butt?

If you want to see an example of where ignorance isn’t bliss, check the video below (someone needs to tell this guy he sucks at singing/dancing)…

My kid is worth the cost

Today’s guest post comes from a personal friend. Janell. Here’s a little blurb I asked her to write about herself…

My name is Janell. I met Ninja through my husband, who is in the same line of work as him. I am a married, twenty-six year old mother of one. I work part time from home, where I also spend my days with my little girl. I was a writing major in college, but don’t have a job where I can exercise my passion, so I recently created a blog to serve as my creative outlet. Feel free to join me as I write about everyday adventures, family, children, and crafts at emptyinkwell.com.

I’m a new mom; my daughter is seven months old. Too often, I hear from acquaintances—even random people—that they’d love to have kids, but aren’t ready for the financial responsibility. The look on their faces as they say this suggests something along the lines of: you look way too young to be a mom… are you sure you know what you’ve gotten yourself into? And to that, I have a few comments:

One. Something my mother taught me a long time ago is this: you will never be “financially ready” for any life-changing event.

I’m not saying it’s a bad idea to set some financial/personal goals before making a life-changing decision—I think it’s even wise to do so—but you can’t be one hundred percent prepared for something you don’t yet know about, like getting married or having children—they aren’t things you can save up to buy or set a budget for before experiencing them firsthand. Having children is full of the unknown… you learn, adjust and make-do with what you have, one day at a time.

Two. Kids don’t cost as much as you think (or I thought) they would—at least not right away.

For starters, having a baby shower will pay for the kid’s first six months of life—seriously. Kind of like how a wedding shower will practically fill your kitchen cabinets, bathrooms and linen closets, a baby shower will clothe, clean, and diaper your kid for quite a while before you end up spending any noticeable amount of money.

My husband and I didn’t buy a pack of diapers until our daughter was two and a half months old. We were given enough clothes to fully stock her wardrobe for the first six months of her life. (Of course, we bought a few outfits here and there just because we couldn’t resist how adorable they were.) We never needed to buy bottles, towels or washcloths. We have yet to buy baby bath or baby lotion. And all of the big-ticket items (crib, stroller, etc.) were also given to us as gifts.

Like I said, I am a new mom. I’m sure a lot of you parents out there are thinking… just wait ‘til your daughter gets older. And I totally agree… kids get more expensive as they get older. First they start eating real food (not free mommy milk or 90 cent jars of baby food). Then they’re in school—they need school supplies and lunch money and fieldtrip fees. They go to birthday parties and to the movies with friends. Then they’re driving and need gas money and insurance. College tuition, books. I get it. But as a child’s expenses increase, I’m guessing that so does the family income. My husband and I certainly don’t plan to be making the same income when our daughter turns ten, or twenty, as we do now.

Three. My kid is worth the cost… no matter what.

Having said all that, I’m not encouraging anyone to pop out a kid (and definitely not more than one) if you truly are in a bad financial spot (i.e. you live on the streets, don’t make enough to pay for the bills you currently have, only weigh 100 pounds because you can’t afford to eat, etc.). But assuming you have a relatively “normal” (whatever that means) lifestyle and a decent handle on your finances (and if you read PDITF, I’m assuming you probably do), you’re in as good of a spot as the next for a kiddo.

If you have young children, do you ever get the “are you ready for that” comments or innuendos? If you have older children, any financial advice you can offer to help us newer parents plan for when our younger kids get older and more expensive?

Oh no you didn’t (Mom Ninja Post)

You all are in for a real treat. I will be out of town from August 6th through August 20th. As much as I would like to blog while I’m on my honeymoon, I imagine I’ll be having a lot more fun doing “other things”. I’ve got some awesome guest posts lined up for you over the next two weeks. Many days, I’ll be publishing two articles, so be sure to check back around lunch time. See you all on the 22nd!

It’s a little earlier than expected, but today I bless you with a guest post from the infamous Mom Ninja. She hooked me up with an incredibly humbling story. Give her some shout outs and positive feedback in the comments below and I bet we can convince her to write again. On to her post…

Dad ninja and I married when we were young, 19. We had our
family early as well, first kid at 21. I was truly fortunate to stay at home
and tend to all the little ninja’s while Dad Ninja had to go to work
everyday.

I would always jokingly tell people we have a 50/50 marriage. He is
responsible for the credits and I am in charge of the debits.
While people often thought this was a joke, sadly it was true.

I came from a family with no money so I had no clue how to handle it or what
its truth worth really was. Financial freedom? I’d never heard of that.

So While dad was off toiling at work everyday, I would take the kids to the park, shopping, and even to Disneyland! This plan worked well for sometime,  that is, until our family grew. Which meant our expenses also grew. I found myself having to decide weather to pay a bill or say
no to my children. Unfortunately, I chose poorly.

I love my husband and would never cheat on him, at least that is what I
thought, until I heard the word Financial Infidelity. I had to sit back
and realize I was guilty of that. Dad Ninja can have a bit of a temper so
it was just easier to leave him in the dark. Now don’t get me wrong, his
temper would consist of a little yelling, a drive in the car to calm down
and then some silent treatment, but it was too much for me to bare so I just
would not tell him about our finances and would juggle what was paid and
what was not paid.

This all came to a head of course when something as simple as a phone call,
that was answered by the mister, informed him we were late on a significant
bill. You guessed it, he confronted me with the bill and I had to admit my
Financial Infidelity on the spot. I felt DIRTY. As if I had let him and my
whole family down. Well, after a few shouts, a long drive, and some silence, we talked
everything out. Got back on track. And I’m happy to say 29 years later he still
comes home to me after a long day at work.

So, whether you are just starting out or have been together a while, don’t make the same mistake I did and
think it’s ok to avoid the confrontation. You have to be faithful in all aspects of your marriage including financially. While it may be harder to wait for something it is always better to discuss it and avoid the mistakes I, and many others, have made.

Now, think for a moment was there any thing in your past that made you
unfaithful in your spending….no judging here but really think about
it, I don’t mean gifts or engagements rings but things you know the other
person would be surprised to find were not handled correctly.

Crappy Advice

Have you ever noticed the disclaimer I have in the left column (towards the bottom) of my blog? I put that disclaimer up for one reason….every other blog I read has one. Do I really need it though? If I didn’t have it, and someone followed my advice and wasn’t happy with the outcome, could they really hold me responsible? Regardless of whether or not I actually need it, I have no plans to take it down because I want it to be very clear I am no financial expert.

Rarely do I actually provide advice to my readers. If anything, I more beg you all for advice and insight. The roles are reversed here at PDITF. I have no financial credentials, and honestly, I’m still pretty new to this whole money/career/adulthood thing, so why would I tell you how to live your life. Answer: I wont.

Don’t get me wrong, I definitely have my opinions. I want you to beat the living snot out of high interest debt. I want you to be spending less than you make. I want you to contribute to your 401K or Roth IRA or both! I want you to live comfortably and look back on your life and say “Job well done.”

Even though I believe these things are a crucial ingredient for financial freedom, I don’t really write about them. Why? Because my advice is worth what you paid for it…nothing! I think a lot of crappy advice is the result of taking financial principles and making them universal, when they should be PERSONAL. Would you agree?

I may say something like “You need to start contributing to your Roth IRA today!!!” But the truth is, I don’t know you. Maybe YOU shouldn’t be contributing to a Roth. Maybe you need to go backpack Europe instead. I have no desire to travel, so it’s easy for me to tell you to save money for retirement. But if culture and diversity is how you want to invest in yourself, then by all means, save money for a backpacking trip. My goal is not to tell you how to live your life, but only to show you how I am living mine.

I did a little google research and came across some of the crappiest (and funniest) advice I’ve ever seen…

I know I’ve posted this one before, and I know it has nothing to do with PF, but it is too darn good to pass up….

Personally the worst PF advice I ever received was to consolidate my student loan. It was given to me by Mom Ninja, but with the purest of intentions. My sister who graduated a few years before me consolidated and locked in a stupid low interest rate of 2%. Since things worked out so well for my sis, mom (and I’m guilty too) thought consolidating would be equally beneficial for me. Turns out it was a mistake. I locked in one of the highest student loan interest rates in years. It ended up not really being that big of a deal, since I am only a month or so away from being debt free, but it definitely served as reminder to be cautious when I follow others advice and at the very least, do a little research before making a BIG decision.

I’d love to hear the worst PF advice you’ve ever been given (or heard given to someone else). Drop a comment below and let me know!

What was your epihpany?

I think it’s safe to assume all PDITF readers have two things in common…

1) At some point in your life, you decided to get your financial situation figured out

2) You’re all wearing leopard print underwear. (you followed my pictures instructions, right?)

Seriously though, you probably had a financial epiphany at some point… right? You know, a point where you suddenly went from “I don’t give a crap about my money” to “Oh crap, I did what with my money?”. If you are yet to realize the importance of getting your financial act together, I recommend you stop reading my blog and go visit this website…

www.imabigdumbhead.com

I had my epiphany at the ripe age of 22. I had no interest in personal finance, but had a close friend who worked as a financial analyst. He was totally obsessed with his money. It was weird to me. I didn’t understand how he could spend so much time learning about boring financial mumbo jumbo.

But one night, while we were watching TV, he started talking about the wonders of a Roth IRA. I was intrigued, but way over my head. I couldn’t spell compuond intrist, let alone tell you what it was. Over the course of a couple hours I became more and more curious. This curiosity soon snowballed in to an obsession with personal finance.

Realizing that I already had decent financial habits, I decided it was time I maximized my potential. It’s an ongoing process and I am definitely not the smartest kid in the room, but I’m excited I got the ball rolling at 22 and not later. I don’t even want to know what my finances would be like had I not had that conversation. It wouldn’t be pretty, I know that for sure.

Now that you’ve heard my story, I’d love to know…

When did your financial epiphany occur?

How old were you?

What prompted it?

And what means do you take to financially educate yourself?

Want results, take risks

Am I the only person that doesn’t understand why some people choose to live a life of fear? Few good things come without risk. I think the world would be a better place if anyone learned to step out of their comfort zone and take some risks every now and again.

Here are a few instances from my life, in which I took a risk, and reaped the benefits…

Career.

Did you know I graduated with a degree in Psychology, but a concentration in pre-medicine? That’s right. I wanted to be a doctor. Specifically, a psychiatrist. I did really well in my pre-med courses and, come graduation time, was prepared to take the MCAT. But then, a funny thing happened. I got an email from one of my Psychology professors for a job as a Special Agent. My professor thought that I would be a great candidate for the position and recommended I apply. So apply I did (not thinking I’d actually get the job). That summer I worked as a Psychiatric Technician so I could gain relevant experience to what I thought would be a long and prosperous career in medicine. Fast forward three months. It was the morning of my MCAT and I was playing “Eye of the Tiger” to pump myself up for the big test. Suddenly my phone rings. I answer it, and low and behold I received a job offer for the Special Agent position I applied for. I accepted the job offer that morning. I took a huge risk in accepting a job I knew little about, but 2.5 years later I am confident I made the right decision. Although it was always my dream to be called Dr. Ninja, I think Special Agent Ninja has a pretty nice ring to it… don’t you?

Girl

Girl Ninja and myself quite possibly have the most unique/weird/frustrating/awkward/awesome love story ever. I’ll save the story for another time, but I can tell you this; Taking a leap of faith and giving my heart to Girl Ninja was the best decision I’ve ever made. There were a few occasions in which we almost didn’t make it, but through a lot of hard work, and an evolving love for one another, I am absolutely confident every frustrating moment was worth it. There is no one else in the world I would rather be frustrated at than Girl Ninja (aren’t I so sweet :)).

Money

You had to know this one was coming right? What kind of PF blogger would I be if I didn’t tie in money somehow? By investing standards, I guess I am considered a risky investor. 100% of my retirement accounts sit in the stock market. And, as we all are aware, the market can be nightmarish rollercoaster in which it seems the only direction is down. Although I hate seeing my account balances drop 50% in a relatively short time span, I am more than happy to weather the storm. I am confident the risks I take in the market will pay off ten fold come time to retire. In fact, I would argue that I take on very little risk. The real risk takers are the people that put no money in to retirement out of fear or stupidity. They squander away their cash now, but will be in for a rude awakening when they go to retire and have little or no funds available to them. We all know the social security situation is not looking good. Is it really smart to rely on a suffering program? I’ll bet on the stock market over social security any day.

Yes, life is about taking risks, but that doesn’t give you an excuse to go be a stupid-head. If you want to start a basket weaving business and leverage a $100K in debt to start said business, you aren’t taking a risk… you’re just being dumb. Life is about taking a leap of faith, but only if you have done your research and are confident that leap is likely to have a positive outcome.

What areas in your life have you taken on some risk? Have you ever held back from “taking the leap” and now regret it? Would you consider yourself a ‘risky’ or ‘risk adverse’ individual? Have you ever taken a big risk and had it bite you in the butt?

p.s. I’m currently on business in Miami for the next 2.5 weeks. If anyone is familiar with the area and has any restaurants or recommendations on things to do, PLEASE LET ME KNOW.