Young Man Movin' Out

I saw on Facebook, over the weekend, that the (grown) son of a good friend of mine, a boy I’ve known since he was a baby, is itching to get the hell out of the general area in which he’s spent his whole life, and set out on his own for Destinations West. His comments met with mixed opinions.

Not wanting to put a public stake in the ground and start taking sides, I decided to send him a private message.  It’s a big decision to up and leave an area with which one is so familiar and head for a place where there is no more support system.  I don’t know why he decided to leave… whether it’s to get away from a small town, or his family, or his girlfriend’s family, or loan sharks, wild bears, or just to claim his own independence and stand on his own.  Even though he lives on his own, he’s still very much wrapped up in the family business and vise versa.

As I’ve been around the block a time or two, and moving away something I’ve done a number of times before, I thought I might be able to offer some friendly advice.  It was advice that I might have given a younger me, when I was just starting out. 

So I did that, he saw it, and was appreciative.  Most things, he said he knew, which meant that there was some he didn’t.  I made myself available for any further questions or concerns, but I have the feeling he’s got things well in hand… or at least he thinks he does.  Time will tell.

But because nothing is worth doing unless you can blog about it, I thought I’d turn my advice on the matter into another post, where I get to pretend I know what I’m talking about.  (And… you know… so many young runaways read this blog.)

I felt I had to point out, right off, that the place where he lives right now has a ridiculously low cost of living, and that once out west, prices range from Expensive to Insanely Expensive.  It is possible, I said, that one could become independent without moving clear across the country.  He could move away, but still remain in the vicinity of low cost housing, groceries and bar food.  I said that the appropriate distance would be just far enough away that it’s too far to come home to do laundry.

Anyway, these are the things I said to keep in mind.

Control your own cash flow.  Make sure that you’re the one controlling the checkbook. Have a parent, or someone else, teach you exactly how to manage your checkbook, balancing and all.  (It’s not brain surgery or Sudoku…  I’ve been doing it since I was 23.  And I hate math.)  The thing is, online banking has made it very easy to keep up on your balance and what you have outstanding. 

Another benefit of online banking: unless you take up birthday cards or letter-writing, a pack of stamps will last for years.  The bank either pays your bill electronically (when you tell them to), or they mail the check themselves.  Just try to find a bank that doesn’t charge for online banking.  I’ve got it, but I set it up a long time ago and I’m unsure how widespread the free checking is anymore.

But remember that whoever controls your checkbook controls your life.  Your primary mission should be to become financially savvy enough to not get yourself into heavy debt.  (And I mean real, “OMG How Am I Going to Pay This?” kind of debt.  More on that in a sec.)  But you need to know how much is coming in, how much you need to cover your month’s bills, and how much you can stash away.  You need to have your thumb on the pulse of your cash flow.

·       Establish credit.  Regardless of what you may think of credit cards, they represent something essential… Your credit history will color every business transaction you may seek.  Your next landlord will do a credit check.  You need a car loan?  Or any loan?  Credit check.  Set up utilities for your new apartment?  Credit check.  Job application?  Many times… credit check.  It’s imperative that you have reasonable credit.

The theory is that the credit score values the difference between how much credit you have available versus the debt you carry.  So, the higher your credit limit, and the lower your balance, the better your credit score.

If you’re not a regular credit card user, here’s how to start…

Obviously, you don’t go straight for the American Express gold card.  Start with a department store card; someplace you shop often, like a Target card.  Then, just use it every once in a while.  Make a couple small purchases every month, on stuff you would buy anyway, then when the bill comes, pay it off in full.

Never, EVER, pay the partial amount or the “minimum payment”… that’s where they screw you.  You end paying 20% to 26% interest, and that’s what gets people into credit trouble.  It’s a sucker bet that the banks just love people to make.  People end up paying many times the price of their goods by paying the “minimum payments.”  If you pay in full every time, you’ll never have to pay a cent in credit card fees. 

I’ve had a card since I first moved out at 23.  Over the next 27 years, I’ve paid less than $20 in fees.  (There was one cycle when I had a big car repair, so I paid half on one bill, and the rest on the second.)

A lot of people think that credit cards get people into trouble.  They’re incorrect.  Undisciplined users get themselves into trouble.  The card has nothing to do with it.  A lot of people use debit cards.  These do not help your credit score.  Also, if your debit card gets lost or stolen, you’re screwed.  With credit card purchases, you’re not liable for unauthorized purchases, once you notify the card company.

One thing I do is keep a notebook and jot down every credit card purchase I make.  Then when the bill comes, I reconcile the two to make sure that there’s nothing extra on the bill.  Also, it helps you keep a handle on what you’ve already charged.  I just put every receipt in my wallet and when I empty it, I write down the date, amount, and retailer.  Be sure you empty the receipts at least once a week, otherwise you’ll end up with a George Costanza wallet, about the size of a Big Mac.

Anyway, once you’ve run your Target card for, say, 6 billing cycles, try applying for a Visa or MasterCard.  It doesn’t much matter which one, just make sure that there’s no annual fee.  I pick the one with the best rewards program for me.  I used to use an “Airline Miles” card, but now use a Citi card, for their Thank You points program.  (Which can be cashed in on airline tix as well as hotels, trips, electronics, and other goods and services.)

The key is to never use the card to buy anything you can’t pay off on the next bill.  But by merely getting some charges done and then paid for, you will raise your credit score.  Also, once you establish a good payment history, the card issuer will normally raise your credit limit.  (My first card had a $300 limit.)  Now don’t take a raised limit as a sign to begin charging your brains out.  You still need to pay each bill in full.  No cash?  Don’t charge.

They’re also important for emergencies, like if you’re in a far off state and your car breaks down.  Having a credit card can make the difference between getting your car fixed, and a long hitchhike home.  But if you do have to make an large, emergency charge, put the card away for a while until you can pay it down.  Don’t make matters worse by piling on.  That, my friend, is the beginning of the end.

But as long as you’re careful, the card will serve you, and not the other way around.

Note: If you are the type of person that buys stereo equipment or other high-ticket merchandise on impulse, you may want to table the credit card idea.  If you can’t tell yourself ‘no,’ you can get into serious debt and kill your credit rating.  But as long as you consider a credit card as nothing but a way to access money that you have in hand, you’ll be OK.

·       Research apartment rents in your desired location.  You’re probably already doing this, but a computer can make this a snap.  There are loads of sites that can give average rent costs by location.  Having a solid idea of what the costs will be will help you not only pick a suitable location, but let you know how much you’ll need to stockpile and how much it’ll cost per month, to live.  Your rent is generally your largest expense.

·       Keep up to date on your current utility bills.  Your new power company is likely to check with your old one before signing you up.  Even when blowing town, you can’t ditch your debts.  They will take their pound of flesh, even if they have to take it out of your ass.

·       Consider taking some classes online, to learn a skill.  With the advent of online classes, it’s easier than ever to take a Community College class or two.  I’m not necessarily talking about getting a degree; just learning a particular skill that you might find useful.  It’s a good first step, if you ever want to make a living that doesn’t involve sweating your ass off.

·       Be sure to have some nice clothes.  Current fashion trends be damned; it’s not a good idea going into an interview looking like Larry the Cable Guy.  Same for if you ever need to apply for a loan or something.  Be sure you can clean up well.  If you look like a punk, you’ll get treated like a punk.  And (if applicable), no smoking before an interview.  No one wants to hire someone that smells like an ashtray.

That was it. I ended by telling him that I wasn’t trying to be one more person trying to tell him what to do, and that he was a grown-ass man capable of making his own choices.  But making the right choices will be the difference between being a broke or successful grown-ass man.

So, am I missing anything?  I’m sure there’s stuff I missed… What would you add to the list?  Or is there anything here with which you’d disagree?  Drop your thoughts in Comments…