Financial Advice For Your Twenties – Episode 214

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[00:03] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your hosts, bestselling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome back to the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we’ve got bestselling financial author, Kim Butler, with us today. We’re going to be talking about an article that’s online, and it’s 10 pieces of financial advice I wish I knew in my 20s. And believe it or not, I was actually kind of surprised because there were some things in here just glancing through it that I did not know. It’s interesting that just in one short generation, all the rules are changing again,

[00:58] isn’t it? Yes, so true. You know, the difference between 20 and 40 is 100 years. I mean, it’s just amazing. I think I’ve heard financial memory is seven years. Like we’ve already forgotten what happened in 08. Yeah, I can believe that too. All right, so we’re going to start off and just go through these 10. And number one, right off the bat is report your rent to the credit bureau. Did you know you could do that? That is very interesting. I’ve only heard about it recently from another source, and it’s actually Jimmy Vreeland and the guys at join ops because they help their least owned buyers report their rent. So I don’t know when that capacity started, but I don’t think that that has always been

[01:55] in existence. But that’s a pretty cool strategy. I used to do a lot of owner financing on the properties that we would rehab and sell or subdivisions or whatever. And I always made sure that I reported because you did, you could build people’s credit histories. But that was as the lender, not as the renter. Like I said, it’s their number one thing. If that can be done, wow, I mean, you know, that’s I mean, I would say average rent in this country has to be thousand fifteen hundred dollars a month or something. That’s a huge, huge bonus to your credit. Absolutely. Love the strategy. Great suggestion. Number two, learn how to use a credit card the right way. So I totally agree. And interestingly enough, I also recommend people have two credit cards, which is just

[02:52] unheard of, I think, in a lot of circles. And yet, if you have two credit cards, you are forced to think about things from a business standpoint. And even though you may not have a business today, if you start identifying things that could be potential business expenses and put those on one credit card and then put the personal stuff on another, then that can help you when you do get ready to maybe just even create a little network marketing business or something like that. And of course, using a credit card and paying it off every month is a fabulous way to build credit. Here’s another interesting fact that I’ve recently learned. The credit card companies and especially the banks when they’re looking at you

[03:36] really only want you to use 30 percent of your available credit limit. Yep, that that kind of surprised me, too. And it kind of goes into some more detail. And I think it’s it’s saying the same thing. And that’s that the baby boomer generation tended to keep credit cards for large purchases and they would make those large purchases and then pay them back in chunks over time. The millennial generation charges everything on the credit card and then pays it off at the end of each month. Right. So, again, that’s amazing. And if I think of the people in my life, that’s exactly the way they do it. Don’t inquire until you know for sure. This is talking about credit inquiries. Yeah. So this is also not possibly super common knowledge, even though it

[04:36] should be if you go car shopping, possibly even furniture shopping or house shopping, mortgage shopping, that kind of thing, those credit requests are all going to show up. And if you do too much of that, it can hurt you if you’re just doing a little bit of it, not a big deal. And then there’s the whole difference between a soft pool and a hard pool. And so maybe someday we can get a credit specialist on the phone or get them on our podcast and share some additional information. But without a doubt, you want to be super careful and not just be willy nilly having your Social Security out there that is causing people to look at your credit. By the way, one thing I do know that’s for sure is there’s a lot of TV

[05:19] commercial now out there now about people pulling their own credit score. And that is for sure a soft pull and doesn’t affect your score. Right. Yep. All right. Number four is build your credit. So, yes, this is important. Do they give some suggestions? Well, they don’t. But I can be of some help here. I I have a nephew who’s in the process of buying a house. And this will be his first house. And one of the things his dad was a contractor and one of the things that I had him do three years ago was to make the son authorized signers on some of those business account cards. And in a way, it looks kind of stupid because he has credit cards that were in existence before he was born, but he has an incredible credit score.

[06:17] Love it. Yeah. And so people could do that personally, too. Right. You just correct. You know, there’s a risk to that. But you take your 18 year old and you put him as an authorized signer on your account so that the 18 year old can start to build credit. But you can do other things, too. You can get cell phone bills put in the individual’s name. You can do, you know, maybe like a little staples card or a Best Buy card or something like that. You know, it’s literally fifty hundred dollar limit, but it gives them something and they literally should put something on that card every single month and pay it off every single month. That builds credit. There’s also actually prepaid isn’t the word that I’m looking for.

[07:03] They’re secured credit cards where you send in a thousand dollars and they hold that and give you a credit card with a credit limit of a thousand dollars and you make payments. And so if somebody doesn’t have any credit at all, that’s a way to start to get one established. Number five, you don’t have to be rich to invest. Definitely one of the fun things that we like to help clients with is getting into investments at, say, twenty five thousand dollars. Now, for some people, that does seem like you need to be rich. But for many others, that’s a nice, easy starting point. Something else that I love about the life insurance, even though we don’t call it an investment, is it’s a really good place for you

[07:51] to start if all you have is a little bit of money every month. Your hundred, two hundred, three hundred dollars a month contribution can actually do a young person a lot of good and then enable them to build up to that lump sum where they could have their twenty five thousand and go do something. But then you can also get involved in the peer to peer lending environment and look at the various websites that provide the peer to peer loans as a provider, as an investor. You can do that for, I think, as little as five hundred dollars and get a decent rate of return with some risk. But you choose that risk. You choose the caliber of loan that you’re going to provide your money for and get paid accordingly.

[08:38] I think it’s the habit that’s the most important part. It’s the regularly setting and designating money aside as investment dollars. Don’t care who you are. There has to be a dollar one at some point. And even those amounts may seem small in the beginning. That habit is what will get you through to the end. Number six, save enough for rainy days. So critical. I’ve shared it before, but I just am amazed at the flexibility that my two kids have because they have a couple thousand dollars. It’s not a lot of money, but at their level of the game, it’s everything. Kaylee was in the process of trying to get out of one job environment and find another. And she was able to do that without completely stressing over where the

[09:28] food and the rent was going to come from that next month. Savings. And you’ve talked about it so well. The importance of building a habit of saving is what creates peace of mind, a more balanced approach to life, an ability to not have to take the first job that shows up. I mean, there’s just so much good value in it. I have a friend that’s got a new baby in the family. I think it’s a niece that just had a baby or something. And she said, you know, I really want to get this kid started on something, but I don’t have enough money to give them something that’s worth doing in an account. Is it worth giving them $20 every year for Christmas and birthday? And I said, absolutely. Go get a piggy bank, give them the money in ones, like go to

[10:14] the bank and get brand new $1 bills, give them $20, $1 bills, and teach them the idea of put a couple away for charity, put a couple away for long-term, you know, put a couple away for whatever else, you know, maybe a friend or a treat or whatever, and then spend the rest on a toy for today and just teaching the child that little bit so you could up that. If, you know, if you’re a 20 or a 30 year old and you don’t feel like you have any capacity at all, take 20 bucks, split it up into ones, get yourself three envelopes or three jars or three bags or boxes or whatever, and start to just get in the habit. Buy those little gold dollars. I don’t, do you know of anybody who’s ex been able to spend one of those?

[11:02] No, every time I see them, they’re so cool to play with in my pocket. I just leave it there. Hold off on buying a car, even if you can afford it. Now that’s interesting. So that’s going to be very state specific, you know, in some cities, New York, Boston, absolutely. That’s what you should do in other cities. You couldn’t work if you didn’t have a car now, public transportation may be okay. So, uh, that’s a toughie, but if you can awesome, I would add that if you do really find yourself needing a car, then consider used. I’m so saddened when I see a 22, 23 year old person that is buying a brand new car and frankly wasting a lot of money on that off the lot depreciation that occurs so quickly when they could be in great shape with a two or

[11:57] three year old used car. Absolutely. And I think, you know, maybe more so of, of holding off on buying a car. I guess I kind of took it as, you know, maybe keep this one a couple of years longer, not, not having a car at all, but hold off on, you know, you don’t always have to have the newest models. The cars these days seem to do a, I don’t know what I can always remember working on cars when I was a teenager and a young man. And I just, you just don’t have to work on them anymore. Absolutely. A car can last a hundred thousand miles piece of cake. And if you can hold that car, that 10 or 12 years, whatever it takes to get to that level, then that’s money that could be saved that two, three, four, five, $600 car payment.

[12:48] And if you’re in a profession that really looks at people’s cars, I understand that. So maybe you get a new one every seven years or 10 years, but it doesn’t need to be every two or three. And furthermore, I still like the idea of buying one that’s two or three years old, it’s just so much more efficient and, or trying to find one like we did that has hail damage or has been maybe in a cosmetic accident or something like that, where you can get that tough retail price just knocked off a little bit. Oh, this is a goodie. Number eight, beware of predatory lending. Hmm. We just got in the mail the other day, a $150,000 credit card. And it was an actual card, a physical credit card that said you have

[13:41] been reserved for $150,000, you know, 0% for 90 days and then Lord knows what after that I didn’t even look and my assistant said, is this a joke? I said, no, it’s somebody trying to get us to borrow their money. And hopes that we can’t pay it back right away. And those interest rates move up. So I don’t know if that’s what you mean by predatory lending, but there’s a lot of different games out there that companies are playing. I was thinking kind of like the payday loan thing. Yeah, great thing to bring up. So that’s such a scary environment. Those interest rates are horrific. So you see these little places that will do payday loans or paycheck loans, and also the ones that lend on your car title, et cetera.

[14:29] When you’re, if you’re in a spot that is that bad, then I guess you have to do it. I mean, that’s what those are there for, but good heavens. That’s why we want people saving. That’s why saving provides peace of mind, because even though your savings account may not be earning any interest, it will keep you from having to pay interest to somebody else to get yourself out of a jam. If that’s what’s required. Number nine is stop spending so much money on socializing. Yeah. So I’ll agree with that one. A hundred percent. I I’m one of those cheap dates. You know, I get happy with Taco Bell and a diet Dr. Pepper, but it is amazing how many dollars can get spent on alcohol or, you know, dinners out or what have you just hanging out with friends.

[15:20] And that’s fine have at it. But for people that are really serious about their money, that’s something that they’re going to want to track, figure out, okay, this is an okay dollar figure for me, and if that means I only go out every other Friday, or I only go out for one hour or two hours or whatever, or I don’t go to this place, I go to that place instead. Or if all my friends are going to an expensive place, I order a salad and water. I mean, there’s a million ways to get around that situation. And I think you have to just go back to what your values are. If it’s super valuable to you to be going out with your friends, but it’s also super valuable to you to start save money, then find a way to do both.

[16:00] And if it’s not super valuable for you to be out on the town and seeing and be seen, then don’t do it, or at least don’t do it as often as everybody else is super. And then before we wrap up our, our number 10, if any of the things we’re saying here makes sense to you. I wanted to give you an opportunity to offer your book to our listeners. Absolutely. So we have a fun little book called financial planning has failed. It’s a great read for somebody in their twenties or thirties that might be trying to learn a little bit about personal finances and it’s available as an audio book as well. And it is only at partners number four prosperity.com slash ebook. So that’s partners for prosperity.com slash ebook.

[16:45] You can’t get it on Amazon. It only exists on that special link on the website designed for our podcast listeners. Super. Now the final number 10th, the one is it’s harder to get yourself out of a hole than it is to get in one. Yeah. So true. So back to what we’ve talked about, have a credit card that’s empty so that it’s available for emergencies if needed, have savings be a habit so that you can have the peace of mind that comes with having savings as a noun. Saving as a verb is the habit noun is the peace of mind part. And then when you’re ready for the next step, reach out to us. Let us know that you feel like you’ve got the credit card game down, the car game down, the savings game down, and you’re

[17:35] ready to step it up a notch. We’d be happy to help. And the best way to do that is email us. Hello at partners. Number four, prosperity.com. Super. Well, thanks so much to Kim Butler and thanks so much to all of our listeners. This is nobis money guide, Todd Strobel saying take care and we’ll see y’all soon. Thank you for listening to the prosperity podcast to take control of your money and have it work for you. Visit us at partners for prosperity.com. If you liked this episode, make sure you subscribe and leave a review.