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The Ultimate Cost Saver in College: 4 steps

My father during his last semester of college told my mom, “Wait… I don’t want to major in business. I want to be a chef”.

Needless to say, he didn’t go to chef school. Many of us spend years bouncing around in majors of college and end up with all this needless classwork.

This is the key to saving both Time and Money in college.

Get the Right Major the First Time

This is easier than it sounds. First, you need a vision. If you don’t have one, use this nifty little template. (Jokes, that’s a link to my article about writing a vision statement)

But seriously, the most important thing in deciding your major is knowing who you REALLY are. Who are you? What makes you tick? Figure that out.

Here’s the process:

  1. Lists about you
  2. Interviews
  3. Comparison Charts
  4. Have 1 “figure-it-out” semester

This is the process I used to break into my major quickly. The reason it’s so good in saving you money is because of the time you spend going to college. Sure, earning a couple scholarships for $400 or $500 a piece is great, but if you can go to school for 2 semesters less because you didn’t change a major, then you just saved 2 semesters of tuition which is average about $9-10,000 dollars.

Here is, The Ultimate Cost Saver in College.

Step 1: Lists

List out 20 majors you’re interested in.

List out 20 Jobs you could enjoy doing.

It’s important to get to a larger number, so you really consider things you actually enjoy. Everyone is able to find 3 or 4 things they like, but can you get 20? Narrow it down to a top 5. Maybe a trusted friend, or therapist, or coach, or school counselor could help you narrow the list down a bit.

My Step 1: I was deciding what I wanted to do with my life after finishing a 2 year service mission in New Zealand.  The starting list included skills with dancing (I was a 4th place Titleist in Youth-American-Smooth at BYU Nationals in Ballroom in 2013), a love for computers, good conversational skills (I hope), loving people, loving group interactions, breaking ideas into pieces, loving competition and other factors. It was easy to identify event planning, financial services, and global supply chain management as 3 possible majors, among others.

Step 2: Interviews

Find people in each industry that you know (or don’t!) and interview them. This is cake. Ask people on social media, google companies that work in that industry, it’s not too hard to find someone. Most respectable people will give you 15 minutes to interview them.

You need good questions: Here is a basic list:

What makes your job worth it?

How did you end up working in this industry?

How much do people get paid working in your industry?

How do you help people?

What are the best certifications or skills to learn success?

What personality types work well in this industry?

How do you get into the industry running fast?

Is this a 40 hour a week job? How much time do you need to invest to achieve excellence?

Interviewing  5 people in each industry will give you a good way to benchmark what they enjoy, pros and cons, income levels, what they hate, skills they utilize frequently, career path and progression, and other little details you want to know.

My Step 2: After calling up a few old friends, and posting on Facebook about wanting to talk to professionals in these areas (in separate posts on different days. Posting a list of things on Facebook gets zero responses. and you want more than zero), I was able to interview a few event planners, financial planners, and a few supply chain management experts. The leader of my service mission (over 200+ of us missionaries) was a supply chain expert for UPS during his working days, my old dance partners father is a financial planner, and a man from my church back home is a very successful event planner. This grew into more interviews. My Girlfriend sent me to the finance guy for her company at a local Edward Jones branch. My interviews grew and grew and I really learned the good, the bad, and the ugly of each industry.

Step 3: Compare

If you’ve read many of my articles, you’ve probably seen that I often say “Ask your friend, boss, etc to shorten down this list with you.” or “Ask your friend if that’s really you”.

Same here! Ask people what they think, and maybe make a weighted list or pros and cons for each, then weight how important that is to you. Then you can almost make a weighted average of how important it is.

My Step 3: I didn’t make a weighted list for this (Such a Hypocrite, ae?) but I’ve done this with many projects. Deciding where to spend money, choosing to live at home or live on my own during college, If I should paint my room blue on the top half or blue on the bottom half, and other ‘very important’ decisions, or less important decisions.

 Step 4: It’s okay to have a “Figure-it-out” semester

Maybe it’d be good to take one semester and take 1 or 2 classes in each major you’ve picked. It’s also a great time to talk to counselors and teachers and continue working on clarifying step 3 (compare) and spend more time on step 2 (interviews).

Realize that rushing through college isn’t fun. There are scholarships you can get while in school, there are lots of governmental aid that you can get, and there is college life. Do you really want to be out of school in the big world at 21? Consider studying abroad, finding side hustle opportunities, start a business, do something epic during school time. Summer is the opportunity to work at a hotel in Alaska, work on a fishing boat on the sea, working in hospitality in Australia, or building up certifications, skills, and hobbies that can contribute to your overall balance in life.

Remember,

Lists, Interviews, Comparison tables, and Take a semester to figure it out.

Jacob Johnson

The Financial Ginger

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Homeownership: Still the American Dream?

Is Home Ownership Still the American Dream?

Home ownership is at the lowest level in decades in the United States[i], and many industry pundits lay the blame squarely on millennials.  But is that fair?  Or even true?  Let’s examine this.

How did home ownership become equated with the American Dream?

The term “American Dream” was first coined by James Truslow Adams, an American writer, in his book The Epic of America published in 1931.  At the time, America was caught in the grip of the Great Depression.  Millions of families had lost their homes and found themselves homeless and starving.  The American Dream describes an ethos that folks desperately wanted to believe at the time that hard, honest work would result in financial security, the ultimate symbol of which was owning one’s own home.

We have found, however, that not all folks who work hard ever achieve financial security, or for that matter own their own home.  As faith in the traditional ethos fades, fewer Americans own homes, and the trend toward not owning is still growing.

Will it come back?

Traditionally families bought their first homes in their late 20s or early 30s, so we are looking to millennials to begin buying homes; but they are not – at least not in the numbers necessary to stabilize homeownership rates.  While many pundits posit that the reason is that millennials only want to rent in urban areas, Uber to work and walk to a coffee shop, there is really something else at work here.

Millennials are getting married and starting families later in life than their parents did, so they have less reason to buy a home early.[ii]  Add to this a decline in the belief that real e state is always a good investment, since many millennials watched their parents struggle to keep their homes during the Great Recession, or lose them altogether.  Moreover, because of low starting salaries, massive student debt[iii] and the lack of dual incomes, they have less ability to pay for a home early in life.

If we recall Econ 101 in college, we remember that the demand curve in the supply-and-demand model is driven by two factors: the desire of consumers for the widget and the ability to pay for the widget.  Homes are no different than any other commodity that way.  With less desire than their parents to own a home for multiple reasons, and less financial ability to jump into the market, it isn’t surprising that millennials aren’t buying at the same rate as previous generations.

But is this a wise move on their part?  If you can’t buy a home, then of course the decision is made for you.  But if you can buy a home, should you?

While watching their parents lose everything in a severe recession understandably made folks question the traditional wisdom (that homeownership is always a good investment), new regulations and lending safeguards make the financial crisis very unlikely to happen again, at least to the same scale.

Some folks have noted that it is much more expensive to own a home than to rent, and that it true – at first.  But tax deductions make up some of that difference for most folks.

Further, rent goes up, while mortgage payments do not – at least if you have a fixed-rate mortgage.  Property taxes and insurance go up over time, but usually at a much slower pace than rent, and they are only a small part of your monthly housing cost.  And with homeownership, eventually your mortgage is paid off and your payment disappear. *

Finally, there is the principle of leverage.  When you home appreciates, you are not only making money on the money you have invested in your home, but on the money your lender invested as well.  This simple principle will double or triple your return on investment.  You cannot leverage your savings accounts, and most folks can’t leverage their investment accounts, either.

Mortgaged real estate is the only real leveraged investment available to the average Joe.  The sooner you buy the sooner your monthly payments begin paying down your mortgage rather than paying someone else’s, and the sooner you eventually pay off your mortgage.

Still, owning a home is really not for everyone.

  • If you have to stretch to the very limit to buy a home, it may not be wise, because the first emergency could bury you financially.
  • It costs about 10% of the purchase price of a home to get in and out, in real estate commissions, title fees, etc. If you don’t plan to stay at least three years (or more, depending on the appreciation rate in your area) it may not be wise.
  • If you are likely to move for any reason within the next three years you should probably not buy a home. (Although I have clients who buy a home in their destination area a few years before they move.)
  • If you love to travel and want to spend your money there, the responsibilities of home ownership may not be for you.

However, if you want the stability of knowing you can never be forced to move, want the satisfaction of creating your own home exactly the way you want it, and want to build wealth over time with the greatest certainty, consider re-thinking your negative thoughts about the American Dream.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)

Mortgage Advisor, C2 FINANCIAL CORPORATION

My Blog: www.loanguide.com

Facebook: C2 Financial Corp.

Facebook: The Loan Guide Book

Follow me on Twitter for interest rate updates: @TheLoanGuide

[email protected] NMLS 344375 / BRE 00889527

[i] Tuttle, B (2015 July 28) U.S. Homeownership Level Drops to its Lowest Level Since 1967, retrieved from http://time.com/money/3975212/homeownership-rate-record-low/

[ii] Davidson, J. (2014, November 12) What Everyone Gets Wrong About Millennials and Home Buying, retrieved from http://time.com/money/3551773/millennials-home-buying-marriage/

[iii] Notte, J. (2014 December 11) Why Millennials Aren’t Rushing to Buy Homes, retrieved from http://www.cbsnews.com/news/how-will-millennials-buy-homes-if-they-dont-know-their-credit-scores/

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Financial AutoPilot: Why to Just Do It

When you have talked yourself into what you want, stop talking and begin saying it with your actions.

-Napoleon Hill

 

Ever heard of money scripts? Money scripts are the core beliefs and things that set off your “money button.” How does money make you feel? What role does it have in your life? Do you pursue money and think you can’t have enough? Do you wish money didn’t exist but accept that you need some? Psychologist Bradly Klontz made 4 general groups of people and how we respond to money.

  • Money Status: When you believe your net-worth equals your self-worth
  • Money Worship: Happiness is contingent upon having enough money
  • Money Avoidance: Money is bad, and it causes you anxiety
  • Money Vigilance: When you see yourself as your money’s Lord and carefully handle and direct its flow

Understanding your money script will help you see where some of your struggles lie. Everyone is weak, and everyone is human, but we also have some amazing strengths. We can recognize our weaknesses and find ways to avoid them, improve them, and sometimes overcome them and make them strengths. Key is: there is a struggle; people struggle to do things when they take a lot of mental effort and consistency. So, here’s the secret.

Put yourself on autopilot.

Let me say that one more time.

Put Yourself On Auto-Pilot

What do you think of when you think of an autopilot? If you saw something that was automated, perhaps driving or flying, without the need for constant human supervision, then you are on to something great.

As soon as your idea is strong enough to have a goal and a beginning action, don’t delay, put it into autopilot. Why do you struggle to wake up in the morning? Why can’t you stick to going to the gym? Why are you worried you can’t buy a house or go to college? It’s because you either didn’t start, or you didn’t follow through.

Here is how to put yourself on Autopilot, Financially:

1) Prioritize

First: Set your priorities. Where does your money belong? In 2-3 short sentences, or 5-6 individual words, summarize the most important things to allocate your precious hard earned Washingtons.

2) Where do you stand?

Second: List all of your obligations monthly. Figure out your debt, income, savings, and lastly, estimate how much you spend on different areas. Add it up. Does more money go out than in? Does more money get spent on areas you don’t want them to be?

According to Success.com‘s author Tom Corley, here is a standard budget draft you can think about to where you money goes and it looks something like this.

  • 25% maximum on rent/mortgage
  • 15% max on food
  • Limit entertainment (you know what that is) to 10% , Vacations should top out at 5%
  • No more than 5% on auto loans

In addition to these Guidlines here are a few more from my notebooks and practice

  • save 12-15% of your money for retirement (If you’re saving 10% and your company matches 3-5% then you’re good!)
  • Donate 10% of your income to charities that you love.
  • Get an accountability partner for your spending that you can share goals, numbers, and facts with

3) Auto Pay

Third: Auto Pay. Here is how many people try making their money work.
This is called “Mental Accounting.” It is a horrible thing.

The Real Slim Shady
Normal Person Mental Accounting

The problem with managing our money like this is all of your money is in the same place! We are normally poor at mentally accounting for our money. I won’t attempt an explanation of how, but the book, Why Smart People Make Big Money Mistakes by Gary Belsky & Thomas Gilovich will give you great insight to the many pitfalls of mental accounting, in addition to many other common money mistakes.

Alternative: This is called budgeting, and planning, and auto-piloting. It’s amazing! With mental accounting, if you have $500 (for simplicity sake) in your Selfish Money account for the month, then you know, I have that much money and it’s for whatever I want. When it’s gone, it is GONE. But I recommend going one step further, and this is called AutoPilot mode.

Establish separate accounts to be used. With your money in a different location it can’t be spent on what it isn’t budgeted for. Here’s how you can harness the power of Voluntary Automation (doesn’t that sound blissful?):

After Shady been slimmed
Each is it’s own account?

What if, when you got your paycheck, you set the money to AutoPay certain quantities to other accounts: 10% to retirement, $1400 for the mortgage, $500 a month for student debt, $200 selfish money, etc etc etc. The credit card in your pocket is only linked to the “Selfish Money” account, and the card you keep in your dash for fuel is linked to your car payment and gas money account. None are linked to the mortgage account, because the bank takes the money out of that account each month. I’m making this happen with several bank accounts and auto transfers set up.

Basically, the money is out of sight, out of mind (and you now have a license to be at peace. *Poof* Peaceful dust descends upon you).

There are many apps that can conglomerate multiple accounts so you can have a snapshot of how much money you have at any given point in all the accounts, or help you refine how much money you allocate to different accounts over time.

Then, once a year when you check your accounts, you can clear out the extra money to savings, more retirement, or maybe a surprise Christmas present.

4) Lastly: Stop checking your accounts daily! Stop checking your investments, your stocks, your 401(k)’s, your Roth’s, your {InsertYourAccountNameHere}. Just STOP. Although many want to argue differently- your human fear is going to have you selling things when they are dropping in value, and buying things that are rising in value.
The reason why is because of the Stair Effect. Over time stocks are going up, but experience highs and lows throughout the incline. This is because as you step up a stair, one foot follows the other, rising and falling, rising and falling, over and over and over. Walking up stairs doesn’t scare you, because you know you’re going to go up.
Investing should be like Christmas, or your birthday; best thought about for about 1 month a year, (all you people that play Christmas music in November… I’ve got my eye on you). Try this: pick the month (fine, semi-annually is acceptable) when you allow yourself to look at your accounts and mark it on your calendars.

 

Now you can kick back, relax, and go back to your beautiful life with one less item of stress going on in your mind. What ideas have you used to put yourself on Auto Pilot? I’d love to add to this list of ways to put yourself on autopilot! If you have an ideas, or critiques please let me know in the comments or email me:  https://jacobbradjohnson.wordpress.com/contact/
If this is helpful let me know also!

— Jacob Johnson is a student of personal financial planning (PFP) at Utah Valley University. He enjoys Oreos and Bacon with the occasional bowl of muesli and wakes up to read Napoleon Hill as a start to his day. He is an adept listener of Behavior Gap radio by Carl Richards, loves the blog of WorkableWealth by Mary Beth Storjohann, and ponders Jeff Rose the Finance Warrior’s blogs also.

— Our guest editor is Rebekah! She is a phenomenal editor with a degree in creative writing. She is such a blessing and help in defining what the purpose of a writing is, and helping individuals to craft language to not be redundant (well, at least in my case). Thank you Rebekah!