Pure, Driven, Snow

I have been struggling lately with how to communicate this sense of urgency that I have for young adults to value financial education. While I can see the value of "if I knew this when I was your age..." education, students never appreciate the value of learning from other peoples mistakes until they are on the precipice or have already made the mistake themselves.

Roy H. Williams said "A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether"



Its a shame that what should be valued most is mostly despised. 

So, for what its worth, here is why I think that this information is so important.

1. You haven't made any financial mistakes that need time to fix.
2. You don't have any bad financial habits that need to be corrected.
3. You have unlimited potential.
• That's precisely why this information is so important.

You want so badly to be an adult, and rightly so, being an adult is awesome. But don't make a hash of it. Don't be average. You have the potential and the access to education to be great. Go Be Great!
You just need to decide.

http://insights.schwab.com/personal-finance/financial-planning-by-decade

Justin Prince

We had a great guest speaker in Financial Literacy. Justin Prince shared with the class some very important thoughts about how to prepare for and manage your life. Below are some of the highlights, as captured by the students in attendance.  If you missed this opportunity or even if you were there but found it difficult to "drink from the fire-hydrant" here are some key points to review:

Secret to getting rich... Pay Yourself First

10% Charity/Tithing

10% Saved

10% Invested (The #1 investment is yourself! Learn new skills.)

70% Spend 

Elements of Success:

1. Ambition

Always do more than what you’re paid for as an investment for future

The marketplace is your employer

The market place will pay you what it thinks your worth

We are paid by the value that we bring into the marketplace

Dream big

2. Mentor

Give your mentor permission to hold you accountable.

Have multiple mentors. Pick mentors that are the best for each facet or your life.

Surround yourself with great people, those who believe in you

Learn from the mistakes of others OR learn from your own.

It's far better to learn from the mistakes of others.

Drive Time Learning: Use this time to read/listen to great information

You tend to earn the average of your five closest friends... choose well. 

Apply what you learn, this is what truly makes you extraordinary

3. Opportunity-

Life is the challenge to become more than ordinary.

NET: No Extra Time

It's he that doeth the deed that hath the power.

Do the thing you fear the most and the death of fear is certain. (If you don't like checking skyward/checking account, then you must check it often and the fear will go away.)

Never quit on a bad day

Make words physical. Live your life so that your words are meaningful

Maximize the potential of every opportunity

You are paid what the marketplace believes your worth. The more you demand of the marketplace the more the marketplace demands of you. Are you worthy of the price you demand? Can you become worthy of the price you desire? You absolutely can be worth what you want from the marketplace.

How to be successful… 4 ways to increase your value in the marketplace

Read Rich Dad Poor Dad, Miracle Morning, Richest Man in Babylon

Listen to good things

Surround yourself with great people

Apply what you learn

How to shake hands:

Look them in the eye

Give a sturdy grip

Say, "Hi, I'm (use your full name)" - With confidence

Ask, "How are you doing?"

There is no power in mumbling. If you’re going to say something, say it and own it!

When you’re hungry you want to grind up your grain seed to make flour to eat. But if you grind your grain you will have no seed to plant for the future. You've got to give up the thing you want now for the thing you want most. If you plant some of the grain seeds now you will have food for your future. 

The Poor use their income to pay expenses.

The Rich use their income to buy assets that are used to pay expenses.

Assets = Investments or Business's 

For more information or to connect with Justin:

iamjustinprince website

modere website

     Enter code: 564914 to receive $10 off your purchase.

Poor, Car

Purchasing a used car is like the Iliad of old. The young and inexperienced picking a fight with the strong and unyielding. You see, an average person will buy something like 20 cars (1.5 cars every 5 years from 20-75) in their lifetime. However, a car dealership will buy/sell something like 20+ cars a month. If your feeling a little bit like an underdog, your right.

So lets try and level the playing field and see if we can't keep your Achilles heel intact.
First, do not attempt to finance a car with bad credit. No credit history is better than bad. So if you have some dings to your credit, take the necessary time and drive "cash-only clunkers" until you get your credit score fixed (700 or higher).

Here is why this is so important:
I was talking to a sales rep at Ken Garff West Valley a while back. Ken Garff corp. is a great supporter of secondary education in Utah through their Keys to Success program. While speaking with the sales rep. he related a few stories from different customers who they were trying to help, despite their bad credit situations.

One type of situation sounded particularly desperate:
Customers come in looking for another car because their previous one has been repossessed (taken back by the bank/dealership because the owner wasn't making payments anymore). This is a major hit to your credit score; and typically, repossession is a symptom of other bad debt/bill payment issues. So, generally speaking, repossessions results in credit scores near the 300 minimum. In other words, you have a proven history of NOT PAYING FOR CARS.

As a result, the interest rate of your new auto loan will be around 24%. However, if you make on time payments for a year, then trade it in, you can finance into another car with a better credit score and a lower rate. This can be a great way to fix a bad credit situation. Except... you have a proven history of NOT PAYING FOR CARS!

According to this sales rep., most people who have these low-score high interest rate loans don't make the on time payment consistently for one year in order to qualify for the better rate. Why? Because they haven't fixed their bad debt/bill payment habits and therefore couldn't get our of their bad situation.

There was one more, very telling, outcome of this situation. As we walked around the car lot looking at the inventory, one thing was very noticeable, the cars at this particular lot were dirty, and many had dents, scratches, and other blemishes. It was obvious that this location catered to a low income, low credit score, low financially educated population. Cars that looked like they had been repossessed and the dealer expected that they would be repossessed again from their next owner.

I can't think of a better metaphor when buying a used car. The car you buy will reflect the condition of your financial education/credit score...
If you have "dirty" credit with some "dents" "dings" and "scratches" your car will too!

How to Clean Your Room

Cleaning your room can be a monumental undertaking. All the different toys and all the pieces of toys can make the proposition of cleaning your room seem overwhelming. "A problem so big and unfix-able why event start?" - Right? The other thing about a messy room is how quickly it can become messy. Often times the room was clean just a couple of days ago and now look, its a mess again.

Here's how to clean your room. 
Organize all of the different toys into categorizes based on the number of pieces. For instance, stuffed animals, dolls, accessories, building blocks, cars, action figures, books, clothes, unmade bed. Pretty overwhelming list. And, some of these items consist of many parts and pieces.

Arrange the toys according to the number of pieces the toy has.  There is only one bed so its first on the list. The building blocks/doll accessories contain many small pieces so they are last on the list.

Attack the list by first maintaining the amount of mess from the other items (don't get distracted and begin playing with the other toys). You will feel a sense of accomplishment with each "easy" victory. This will motivate you towards completing the ever-increasingly larger chores. But soon, you will have a clean room again.

Debt is a lot like a messy room. Lots of different types of debt and lots of different amounts and its amazing how fast the debt can grow. Soon the amount seems so large and unfix-able "why even start?" - Right?

Paying off debt is much the same as cleaning your room... enter, the Debt Snowball.

The Debt Snowball is a method of debt management where you organize all of your debts smallest to largest, by amount. While paying the minimum amounts on all debts, you put all of your excess funds into the smallest debt first. Once the smallest amount of debt is payed off you take the money that was going to it and roll it into the next largest debt. You continue this process of rolling ever-increasing amounts of money into the next largest debt until all the debts are paid off.

There are more effective methods to paying off debt, but I believe more personal satisfaction comes at a quicker pace through the snowball method than any other option.

Lastly, while the Debt Snowball is usually used for credit card debt, the principles can be applied to all debts. For instance, your credit cards may be the smallest debts so they would be paid off fist, but then, continue the process for your car loans, students loans, and even your home mortgage. Paying the smallest amount of debt to the largest. Within a few years you can be totally debt free!!

Adding Bubbles to your Bathtub

Last time I introduced the idea of stashing money in your bathtub. If that doesn't sound perfectly reasonable to you then I invite you to click the link and read the earlier article: Spend Yourself Wealthy

Now, its time to add "bubble bath" to your bathtub. As you recall you are saving AT LEAST 30% in your bathtub. But, there are a lot of demands on this saved money so we need a way to categorize what and how much of this savings you can use, and for what.

First, a quick refresher of the 60/20/10/10 rule. You are living off of 60% of your net income. 20% is being saved, 10% invested, and 10% for charitable contributions. The +30% that is going into your bathtub is the combination of savings (20%) and investing (10%) because the bathtub represents your cash net worth. Also, that 20% savings is a "fluid" amount (no pun intended). In the beginning you will be saving 30%, soon you will starting investing (10%) into retirement accounts, and eventually you will be investing into a variety of accounts at the rate of 20% and saving only 10% for major purchases.

Bubble bath.
The bubbles represent the different "budgets" or categories that you are putting your +30% into. For starters, you should establish an Emergency Fund account. At first, this "bubble" will consume all +30% of your Net Income (N.I.). Once your Emergency Fund bubble is fully funded ($1,000) then you can work on your next "bubble," 3-6 Months Expenses. This bubble will also consume all +30% of your N.I.
 

The next "bubble" to be created is your Retirement account. This "bubble" will account for +10% of your N.I. leaving 20% for other bubbles. This is where the "fun" begins. Unlike children who like to pop bubbles, we want our bubbles to get as big a possible; then, when you do finally pop them it will be awesome. So, here are some examples of other "bubbles" that you can grow with your +20%.

Emergency Fund ~ $1,000 + (as your standard of living rises so too should this amount)
3-6 Months Expenses ~ Less risky job = 3 months; more risky job = 6+ months

House Down-payment
Car (purchase/down-payment)
Home Furnishings
Moving out expenses (transportation, first/last months rent, security deposit, furnishings)
Wedding Ring/Honeymoon
Vacation
Religious Service/Mission
Birthday/Holiday Gift purchases
College Savings
New Technology (phone/computer replacements)
Etc.

You can have as few or as many bubble as you wish.  With fewer bubbles each bubble will grow faster. Have lots of bubbles (at the same time) and their growth may become agonizingly slow. Here again, delayed gratification will help you be successful as you will have fewer bubble and can watch them grow really fast.

Then, when the time comes and you have a nice big vacation bubble to "pop" that will be even more fun than popping bubbles as a kid.

As for the Investment percentage it too can be divided into various "bubbles" such as:
Retirement ~ (401k, Roth IRA, Mutual Funds)
Investments ~ (stocks, bonds, funds, trusts)
Real Estate/Land
Jewelry/Precious Metals

Just make sure that as your income increases and your 10-20% investing percentage grows, you need to have a fully funded 401k (if its matched by your employer) and a fully funded RothIRA before you use the extra dollar amounts on individual stocks and real estate purchases.

Supply & Demand and Star Wars

Crazy re-sale ticket prices on eBay for opening night within hours of tickets becoming available.

Supply and Demand is alive and well. It will be interesting to see if anybody gets the thousands, even tens of thousands they are asking for on e-bay for 7:00 showings.

Spend Yourself Wealthy

Its your spending, not your earnings, that count most toward wealth. I think we all know someone who makes an incredible amount of money and still ends up poor. (cough: "Athletes") It really is "what you do with the money" that matters most.

All else being equal (steady and improving income, no major medical expenses, etc.) you can have at least a million dollars in wealth by the time you are 65. Its all about putting your money in your bathtub.

Your bathtub represents at least 30% of your net income (N.I.) each month or pay period. It is the amount that is captured and saved. Now, its very important that you look at your bathtub as capturing AT LEAST 30%.  There are a lot of demands on this saved money so the more you can capture the better.

Spend Yourself Wealthy. Its all about opportunity costs. If you choose a housing situation that costs you 25% of your N.I.instead of 30% then you can capture an additional 5%. If you choose transportation options that cost you only 12% instead of 15% then you can capture an addition 3%. Every little percentage counts and soon enough you are capturing enough water to overfill the bathtub. Its all about what better thing you can do with the money in the future.

Speaking of the future; the next step is to add bubble bath to your tub. No joke, bubbles!

Learn VS Earn

In Financial Literacy today we were talking about resumes, jobs and interviews and while talking about where to apply for jobs, a discussion began about Learning V/S Earning. While being young and inexperienced may lead many students into thinking that low wage manual labor jobs are their only option, I showed that there is a whole world (business park) of options.

The Deseret News had an article about the 50 best companies to work for in Utah. Of the top 10, most students had only heard of one company.  My point was that of all of the companies in Utah to work for, why limit your search to the same companies that most other high school students look to. There are great companies in the various Business Parks along the free-way.

Now, can a high school student expect a high paying part-time summer job? No, of course not. But what if that summer job could be leveraged into a high paying post-high school job to help finance additional certification/education?

While your expenses are low (there may never be another time in your life when so much of your costs are being paid by someone else) what wrong with a job that may not even pay? That's right, work for free! Your payment will be experience and networking. These will pay you more in the long run than any minimum wage job ever could.

Go knock on the doors of your local business/technology park, dressed professionally, with copies of your resume in hand and start learning!

But what if you really want to own your own business or there isn't a business/technology park near you? Start a Summer Entrepreneurial venture where you can learn about starting and running a boot-strapped business. It may be small, but your gaining experience, not just doing a task.

DECA & SLC Comi Con Partnership

Below is an affiliate link Salt Lake Comic Con has provided to Utah DECA to share with friends, family, and co-workers. When anyone clicks on the link to purchase tickets, photo ops, autographs, or other event admissions, Utah DECA will receive 10% of of the purchase. We will use money generated for student scholarships.

https://goo.gl/uYGqCu

Salt Lake Comic Con has been an excellent partner for us. They are providing incredible access in addition to almost $20,000 in ticket value. 

Graphic for the 60/20/10/10 Rule