Advice for Young People on Avoiding Debt

You know, advice is sometimes like a dose of medicine. When you first hear you have to take it, it brings on very unpleasant thoughts. But usually it Will bring good results in the long run. Avoiding debt goes back to a young persons attitude toward money. Living in a society where spend now and pay later is the norm makes it even harder for young adults to steer clear of the chains of debt. We once taught our children if they really wanted something, save their money and pay cash for it. When I was growing up most all car loans were 36 months. I remember hearing that 48,60, and even 72 month loans were available. I immediately thought to myself, “You won’t have anything of value by the time you pay for it and consequently will have no down payment for your next vehicle.”

We must teach young people the difference between “good debt” and “bad debt”. Good debt is for investments such as a house. From everything we know, if you buy right and sell at the right time, real estate will increase your net worth and your income. Video games, expensive cell phones and ring tones in most cases will just reduce your income and net worth. Young people need to build a good credit history or rating and there are plenty of opportunities to do that paying for an auto, tires, insurance, rent until you are able to buy and utilities.

Instead of keeping up with the “Joneses” or your peers in other words, work hard and read and listen about how to set your own financial goals and meet them. What does a fund raiser have to ensure it receives a certain amount of donations? A goal! At first set small goals and as you achieve them set higher ones. Don’t let commercial sales pitches talk you into purchasing what you can’t afford. Don’t charge anything on your credit cards unless you know you will be able to pay for it when the bill arrives.

Save for luxuries that you want and pay for them! Learn how to invest in things that have a track record of good returns. Unless you want to work the 9-5 grind until you’re in you late sixties, be thinking of plans to become financially independent. It’s not for everyone, but after 30 years in corporate America, I would not have it any other way!