Basic financial literacy 101 - Or things I wish I knew 15 years ago.

[Just Some Other Guy]

But going to university does open up a vastly wider range of options

Only if you know what you're doing with it. Which is why I laugh when hoodrats say shit like "My babiez deserve to go to college!" Do they? Would they even have the initiative to do something productive with a college education? Would they even pick a worthwhile course in the 1st place?

Maybe it works different in other countries, but so many kids here get swallowed up in the idea of paying for classes while "discovering yourself". College should be used as a tool to achieve something you already know you're going to be doing.

 

[Ugandan discussions]

Only if you know what you're doing with it. Which is why I laugh when hoodrats say shit like "My babiez deserve to go to college!" Do they? Would they even have the initiative to do something productive with a college education? Would they even pick a worthwhile course in the 1st place?

Maybe it works different in other countries, but so many kids here get swallowed up in the idea of paying for classes while "discovering yourself". College should be used as a tool to achieve something you already know you're going to be doing.

It seems to me that part of the point of college/University is to give people the opportunity to explore more about what they might do for a living.

I'm deeply suspicious of any fucker who knows at 18 what they're going to be doing with life. It usually comes with a level of entitlement which means they're ill-equipped to deal with set-back, or it leads to bitter, jaded human beings whose vocation turned out to be the same miserable slog as a job is for most of the rest of us.

 

[PaleTay]

So my grandfather bought a 100k car with 20k of extras by pulling money from his portfolio. I assume that was really stupid for tax reasons as well as that it would be cheaper to lease or finance and keep the investments.

Is it at all defensible to do that, or is it as dumb as it seems on the surface? Ignoring the fact that the car is a massive loss regardless.

 

[nigger of the north]

Minor powerlevel, but being raised in a shitty lower socioeconomic background, that came with it a host of shitty habits and zero financial literacy. It took me most of my 20s to learn how to unfuck myself financially, and only in the last couple of years have I really gotten a handle on things.

Solid post OP. The purchase interest on credit cards in combination with 'rewards' is a clever backdoor scam even many traditionally financially literate people don't catch onto.

 

[CharlesFosterOffdensen]

Minor powerlevel, but being raised in a whotty lower socioeconomic background, that came with it a host of shitty habits and zero financial literacy. It took me most of my 20s to learn how to unlock myself financially, and only in the last couple of years have I really gotten a handle on things.

Solid post OP. The purchase interest on credit cards in combination with 'rewards' is a clever backdoor scam even many traditionally financially literate people don't catch onto.

It boggles my mind that consoomers still don't understand that. Just have a set budget and use your credit card for everything. Pay it off immediately after you make your purchase. Not difficult at all.

 

[Just Some Other Guy]

It seems to me that part of the point of college/University is to give people the opportunity to explore more about what they might do for a living.

I'm deeply suspicious of any fucker who knows at 18 what they're going to be doing with life. It usually comes with a level of entitlement which means they're ill-equipped to deal with set-back, or it leads to bitter, jaded human beings whose vocation turned out to be the same miserable slog as a job is for most of the rest of us.

Let me put it another way. You said college gives you the greatest "chance". I agree with that, as in college is a gamble.

Like all gambles, you should know the risk and be willing to accept losing. The problem is that many don't see it like that. Most simply don't have the drive to actually persue a career, or the market is so saturated that even low skill menial jobs start looking for a BA or higher.

This is an issue because now your investment into education is shot. Now obviously this is a problem if you took a loan out.

But what about your UK example? You make it sound like it's free money for the taking. The thing is...it isn't. The school and faculty got paid, and you're not paying the bill. So who is? The taxpayer. Everytime someone doesn't pay thier bill because they don't earn enough, they're a detriment to the tax base.

When it gets written off after 30 years because you did absolutely nothing productive with that tax funded education? You're leeching.

Everytime this happens, it crumbles the system more and more. When you think "well I'm not paying for it", you will be. Maybe not now, but it'll come later.

Now we can talk about the insane amount of money unis demand for the increasingly worthless education they give, but that's entirely a different matter. It doesn't help that more and more people keep tossing money at them, thinking "well, it's not my money".

TL;DR: Not everybody is meant for college. Even if it's government (tax) funded, it's still not good to waste it. Either have something lined up for that education, or know the gamble you're taking BEFORE going to college.

 

[melty]

This was being shared by my peers this morning. Tl;dr author leaves grad school to be a writer with $80k in debt, can't pay monthly bills, is an absolute retard and stops paying so Sallie Mae starts adding all the interest she should be paying off to her principal. I'm glad being a poorfag led me to community college when I was young.

This is so typical lol
>I am very smart, everyone says so
>I am a science journalist doing important work and meeting important people
>Can't do basic math

She also apparently got a degree in biology but is known for talking about magic troon genders at TedX and in a radio series she started, so that was a waste. Good cautionary tale, just not how she thinks.

 

[Ugandan discussions]

But what about your UK example? You make it sound like it's free money for the taking. The thing is...it isn't. The school and faculty got paid, and you're not paying the bill. So who is? The taxpayer. Everytime someone doesn't pay thier bill because they don't earn enough, they're a detriment to the tax base.

When it gets written off after 30 years because you did absolutely nothing productive with that tax funded education? You're leeching.

That's a bit of a segue from the topic of the thread, no?

Whether you agree with the policy aims or not, a key component of financial literacy is to understand, and use to your best advantage, the opportunities available to you. I've deliberately shied away from any kind of value judgement here, just reflecting that if you're young and in the UK, there's an entirely different set of calculations to be made which will significantly swing the decision for many in favour of University.

 

[Spasticus Autisticus]

So my grandfather bought a 100k car with 20k of extras by pulling money from his portfolio. I assume that was really stupid for tax reasons as well as that it would be cheaper to lease or finance and keep the investments.

Is it at all defensible to do that, or is it as dumb as it seems on the surface? Ignoring the fact that the car is a massive loss regardless.

It depends on how old he is and where the money came from. After a certain age, retirement funds have required minimum distributions. So that might have been money that he had to withdraw anyway. And depending on what type of account it was and what tax bracket he's in, the tax hit may have been small or even zero. Plus, as you get older you generally want to have less in high-risk, high-return assets like stocks, and more in low-risk, low-return assets like bonds. So the opportunity cost of not having that money in the market, depending on his desired asset allocation, may not be an issue. That said, personally I think spending that much on a car is a bad idea regardless of what your situation is, but I'm also boring and no fun.

 

[Tealeaf]

I am fairly conservative with my cashflow. I just have one advice that really underpins what I do: know where of your money goes. This allows you to confidently automate the payment of bills and other expenses, freeing your daily/monthly routine of having to remember to do them and risk late fees for no reason but your own laziness. Monitoring is more satisfying than repetitive data input.

All my personal expenses drain automatically from my checking account, including a credit card that is 100% paid off every month (no interest in this case). Peace of mind is priceless.

 

[HOMO FOR LIFE]

This is so typical lol
>I am very smart, everyone says so
>I am a science journalist doing important work and meeting important people
>Can't do basic math

She also apparently got a degree in biology but is known for talking about magic troon genders at TedX and in a radio series she started, so that was a waste. Good cautionary tale, just not how she thinks.

We live in a society that rewards unproductive and overburdened and leveraged individuals who again are unproductive.

 

[Marchesa of the Vast]

This is so typical lol
>I am very smart, everyone says so
>I am a science journalist doing important work and meeting important people
>Can't do basic math

She also apparently got a degree in biology but is known for talking about magic troon genders at TedX and in a radio series she started, so that was a waste. Good cautionary tale, just not how she thinks.

Imagine brainwashing yourself to latch onto the most lucrative grift going and still failing at it. How pathetic.

But yes, as others have said, bless us for having DSPs in this world to subsidize the rewards on our credit cards that we pay off every month.

 

[Never Scored]

Here are my contributions. If you think anything's retarded feel free to point it out. These are just a series of logical conclusions I've come to after around 20 years of working.

For the sake of a discussion, let's say you're living somewhere where most of your income is in a 20% income tax bracket and a 10% sales tax. This may seem high in the US but is not atypical in Canada and Western Europe. I'm purposely going to work with small numbers here for the sake of a series of logical arguments. We're going to pretend $10 is a lot of money here.

Everyone In Power Benefits from Your Debt

Banks benefit from you being in debt because they collect more interest the longer you're in debt.

The government benefits you from being in debt because you have to pay your interest in after tax income. For example, if you accumulate $10 in interest, you need to earn money to pay that off. In order to get $10 to pay off the debt, you need to actually earn $12 before taxes, so the government has just collected an extra $2. Maybe you're thinking, "I would have been working and paid that money to the government anyway." Well, you're going to need to buy other things down the road. Maybe because you used this $10 on interest, you have to work an extra shift over the course of your working life to save for retirement. Maybe you took on an extra shift or a second job you wouldn't have had to otherwise to pay that $10 in interest. In both these cases you've cost yourself the opportunity to do things you enjoy to give that $10 to the bank and $2 to the government. That time has value too. Instead having an extra day to go fishing or read a book, you've used your extra day to give $10 to the bank and $2 to the government

Cooperate entities like Amazon and Wal-Mart benefit from the increased liquidly consumer debt provides because it encourages people to spend more.

Debt Suppresses Wages and Drives Inflation

How does debt suppress wages? Debt increases peoples liquidity without actually increasing their assets. Let's say your car breaks down and you need you car to get to work. The repairs will cost $30 and you only have $10 in cash. You do not have enough liquid assets to pay for the repairs and get to work. Today, you can put $20 on your credit card allowing you to repair your car and get to work. Now suppose you couldn't take on that debt? You can't get to work. This sucks for you, but it also sucks for your boss. Employers generally make a profit from their employees' labour so if you are not able to make it to work, he can not make a profit off you. Now, if this happens with just one employee he's going to fire the employee, but suppose that none of the employees have access to easy consumer debt to stabilize themselves financially? It would be in the employer's best interests to pay enough to ensure his employees are financially stable enough to keep their cars running so they can continue to come to work to continue to make him money.

How Does debt drive inflation? Tuition costs are a good example. If student loans did not exist no one would be able to afford to go to college at current tuition rates. Colleges would be forced to lower tuition rates or close. Therefore the existence of student loans enables colleges to raise tuition rates, inflating the price of tuition. The same argument can be made for higher end good such as cars, computers and smart phones.

Saving a Dollar is Worth More than Making a Dollar

Let's say you want an item is $20 new. If you manage to save $10 by buying it used or getting it on sale or fixing an old similar item, you have actually saved more than $10. Remember, to get that $10 you would have paid for the item at full price, you actually have to earn $12 because 20% of whatever you make goes to the government. Besides that, you would have paid sales tax on the extra $10, so the true cost of that item new is actually $26, not $20. By getting it for $10 you have actually saved $13, maybe $14 if you get it used on a classified site or a thrift store where there is no sales tax.

The Consumer Price Index is Bullshit and Inflation is Higher than the Government tells You

The CPI only takes the cost of items into effect, not changes in quality. If a pair of sneakers are a third of the price that they were a decade ago, but they last half as long because those savings were found by reducing the quality of the item, the true cost of maintaining acceptable footwear has increased over the course of several years, but the CPI will make it seem as though it's declined. The CPI also doesn't seem to account for the fact that many of these savings are found by exporting manufacturing to jurisdictions with lower labour costs ,which has a suppressive effect on the cost of labour here. This means that even though an item may be cheaper, it doesn't necessarily mean it's more affordable if you've gone from working in a sneaker factory to working as a Wal-Mart greeter and you've gone from buying a pair of $15 sneakers with cash to taking on debt for a pair of $5 sneakers.

Increasing the Supply of Labour Decreases the Cost of Labour

Many movements big corporate entitles and the government have gotten in on over the last 50 or so years increase the supply of labour. Encouraging women to get into the workforce doubled the supply of labour. Increasing immigration increases the supply of labour. Free trade increases the supply of labour, because it enables you to move your factory to Mexico and use the labour there instead. This is not an anti-feminist or anti-immigration argument, just a simple statement of facts.

Most jobs are not very hard and just require pulse., therefore if you increase the supply of labour, you decrease the bargaining power of workers. If your factory worker wants better pay you're just going to tell him to go fuck himself because you now have a virtually endless supply of people to replace him. If wild apple trees are growing all around my neighbourhood, someone trying to sell apples in my town has to offer them at a price that has less opportunity cost than spending the time to pick them myself. If I have no access to the apples besides the store, the store can charge more for apples. Labour is no different. If you have limited access to labour, you will be willing to pay more for labour.

 

[Jemn Oopi]

One useful resource (at least for people who live in the USA) is the Consumer Expenditure Survey, gathered by the Bureau of Labor Statistics. The dataset is very detailed, and can be split up by several different criteria (annual gross income, number of people in household, age of head of household, etc.). You can use it to make a budget for yourself.

For example: the average single male whose annual gross income is less than $15,000 per year has* total annual expenditures of $20,057. That includes, inter alia:
- $5,776 per year ($481 per month) on "shelter" (including both rent for renters and mortgage/maintenance/insurance for homeowners)
- $873 per year ($17 per week) on entertainment
- A whopping $1,314 per year ($25 per week!) on "food away from home"

So, if you spend less than that, you can be sure that you're frugal.

*This particular set of numbers actually was gathered during the 2018–2019 period, so they need to be adjusted for inflation before you can use them.

 

[mindlessobserver]

Just bought a home so I figure I need to addendum this thread with MORE things I wish I knew before I needed to know them. First up? Closing is damn expensive. You better have 10,000 in the bank before you even try. This is on top of any down-payment. I sort of knew this in the abstract and saved up but nowhere near enough for a normal loan. Then discovered VA loans don't require a down payment or an agent fee. Which saved my shit. My closing costs came to a "mere" 7,000 dollars. And it HAS to be cash money.

Another thing I discovered is that while Experian and Trans Union are competent credit agencies, Equifax are mouth breathing retards who let literal pajeets they hire off the street of Mumbai to run all their stuff. These guys barely speak English and I swear trained monkey's could do better. They also hopelessly fucked up my credit report and delayed my Approval to underwriting by 2 weeks. By the time I got to closing I had SEVEN aliases on my legal documents for the deed because the retards could not type English into the database.

My agent commented that this is not unusual and that she had one client have their offer contract fail because Equifax stuck his cousins mortgage on his file and over 2 months would not take it off. Before you even try, make sure you are in good standing with all three credit bureaus. Any changes take time, and in the case of Equifax are impossible. In my case the issue is they had entered my first name and middle name backwards. Getting that fixed ended with me having seven different combinations of my legal name in various configurations and spellings. Hence all my new aliases. I called them damn near every day for 2 weeks.

And of course once you actually get the house prepare for a few thousand more dollars to buy furniture, appliances, food...

 

[General Tug Boat]

My experience in the wonderful world of adulthood has led me with the impression that it is indeed true that people do not appreciate the power of fiscal responsibility. Being a poorfag my whole life, I had to learn how to make the subpar things work. As much as I wanted the nicer status tier goods when I was younger. Always found that there was little pay off from watching other people in my life. I think a good cardinal rule is always watch the stupid choices of others and learn from them.

If you are going to make a purchase on something, research it, and don't pay more then you have to. In regards of shopping, some retailers just have better offers on certain goods, and is always good to monitor prices, and compare.

I see nothing wrong with credit and I use my card and make sure to make annual payments always at the first of the month.

The way I save money is I usually divert my savings into either PM or crypto. Only because flat sitting FIAT depreciates very fast. So I find that I would rather hedge my savings into other avenues that I know will remain stable in the long term. I also do this so I am not tempted to touch my savings, because I had a bad habit of dipping into my savings account when I was a little bit younger for fun things.

Everyone has their own number for savings and reasons for saving. For me it is my rainy day fund, when some stupid shit comes up, and I have to pony up some cash for that. Opposed to using my credit card. Or else I need some spare cash to survive.

Learning how to cook, grow your own vegetables, brew your own beer, grow your own dope, are also good ways of saving yourself extra money you do not need to spend. Learning also how technology works and developing your mechanical skills is also good, because not only helps pass the time, but also you don't have to pay extra. I learned this with computers, I would rather diagnose and fix the problem myself for a quarter of the cost, opposed to taking it into a shop.

There are tons of nifty ways of being able to save money, but also get more value for your goods. Consumerism banks on people that are either to worried about status, or want to live in a world of convience. Sometimes convience is necessary, but most times is out of laziness, not necessity. A lot of these things become habitual if practiced and takes a great deal of will power.

Don't treat yourself like shit either, what I mean by this is feel bad if you want to occasionally get a luxury item, or treat yourself to something nice. Just be practical, don't incur unnecessary debt into paying for a vacation you can't afford. I ended up learning this one lesson the hard way, because it not only fucked me over for college. I also, ended up finding out my job was shutting down only month after getting back. So I was stuck with some bad debt that caused me some issues down the road.

So these are things I've just learned from personal experience, usually when you are younger you eat shit and do bad purchases. Don't beat yourself over them, just learn from them. Incur the wrath from your own mistakes and learn from them. Don't take debt to pay debt either, THIS IS A REALLY BAD IDEA. This is what those quick loan places bank on, never use those places. I know people that are thousands of dollars in debt from these places, because they fucked up, and had to default on car loans.

 

[mindlessobserver]

Addendum to the house thing. This is a checkpoint you need to clear by the age of 35. You will have a hard time retiring if you don't own your living space. And most loans are 30 years. The sooner the better though, as every month you pay a rent check to your landlord you are ritually setting your money on fire. Paying back a mortgage instead means your money is going into a hard asset. Property. That you own. Paying a landlord does you nothing.

 

[nets_awesome]

I recently decided to finally fix my finances after fucking them up for a looong time. Here are my points of advice:

-Check your credit reports at least once a month. Even if you know it’s garbage start looking at it. Credit Karma or other sites do it for free, but know that they use a different model (VantageScore vs. FICO) so when your credit does get hard-pulled it might show a different score. But it is good at seeing where you’re at in general. The quickest thing you can do to improve a score is lower your utilization (open balances on credit cards). Even if you pay off the balance in full, that shows up on your credit report that you used $3k/$5k that month. If you have revolving month to month balances, I’d recommend snowballing, where you pay the minimums and on whatever card has the highest interest and/or lowest balance, pay the minimum+ extra. Once that’s paid off, take what you paid on the paid off credit card and move it to the next one and so forth. It may take a while but seeing that credit score go up month after month is rewarding in itself.

-Once your cards are paid off, set a budget and use your credit card for everything and pay it off every month. Not only does it build credit but credit cards give you more protection on your purchases, it protects you if your card gets stolen. There are also benefits too; if you are renting a car most credit cards give you renters insurance. Also for your debit cards, set up something that alerts you if you withdraw more than $100. If someone skims your debit card, you have 24 hrs to report it to be 100% reimbursed. After the 24hrs, depending on your bank you might be able to recoup some $ but it will be more difficult.

-Look at the last month of spending across your credit cards / checking accounts versus your income. You’ll likely be surprised at how much those small expenses or subscriptions add up and where you can cut back on spending. Sharing a streaming service with roommates / friends lowers the cost if you absolutely can’t cancel it. Also, some phone plans or credit cards give you the service for free so check that out. Amazon Prime (streaming and the delivery) can be shared as long as you reside in the same household.

-Stop upgrading your phone every year. We’re at a point where the version differences are minimal. That’s either $1000+ all at once or spread out monthly for two years on your bill for a Samsung or iPhone. Also look at your plan; you can downgrade some extras or your data plan and save there. Stuff like insurance might be covered by your homeowners or renters insurance instead of Asurion or whatever insurance your phone company charges you.

-If you are planning to buy a house, now may be a really good time to do so even if prices are high because interest rates are so low and are expected to go up. If you already own see if you can refinance. Also, get preapproved first and try it at multiple lenders so you know what your budget is and what you can realistically afford. And that’s a hard credit preapproval; prequalify involves no credit pulls and is based on what you tell them. If you do this within 30-45 days, even if there’s multiple hard pulls on your credit, it will only count as once in scoring models. Also remember that the mortgage underwriters look at the lowest score of the two of you at all three bureaus. Talk with your lender but it might make better financial sense to have one person on the mortgage (as long as they have the income and you have joint assets with them because nothing that is exclusive to the other spouse will be taken into account). You can still be on the deed after closing. And yes, closing costs are outrageous, especially in blue states. An example is paying $1500 just for going to the office to sign all the paperwork.

-BEWARE OF SERVICES THAT SAY THEY’LL SAVE YOU MONEY ON BILLS. Those Instagram ads that say they’ll negotiate your bills for you? They charge you a hefty fee. If they save you $10 /month by calling your cable and threatening to cancel, they’ll charge you up to $30 (25% of your annual $120 savings because of their work) when you can just do that yourself in 15 minutes.

-Ignore FOMO/drops/limited edition/consoomer shit. If you want that new vidya, wait a month or two; except for Nintendo flagship titles, most video games go on sale either in regular stores or on secondhand markets after a few months. If you’re really patient you can wait even longer and get the full version+ all the dlc for even cheaper. Same with the limited edition crap. Most of it is poorly made and you can probably find it cheap a year or two later if you really want it. Most of this crap is what’s called a depreciating asset; except in very rare cases you won’t be able to sell it for more than you paid for. You don’t need to live like a monk but spending for the sake of spending is dumb.

-Make/rehab your own shit. I found a dresser in the garbage, spent less than $100 on a sander, paint, hardware and supplies and it looks brand new. Also randomly, tie dye is back in style, and there are places that will sell you tie dye shirts / hoodies for upwards of $200+ when you can make that shit at home for less than $25 if you really need one that bad. Plus you get the satisfaction of knowing you made that.

-Sort of financially related but if you want to get promoted and make more money, start documenting everything you do that goes above and beyond your current level, even if it’s minor. When you apply or ask for one, and they say why, you have a case based on all that information you collected over the months/years. Don’t expect your hard work gets noticed, because most of the time it doesn’t or is quickly forgotten.

 

[CryoRevival #SJ-112]

But what about your UK example? You make it sound like it's free money for the taking. The thing is...it isn't. The school and faculty got paid, and you're not paying the bill. So who is? The taxpayer. Everytime someone doesn't pay thier bill because they don't earn enough, they're a detriment to the tax base.

When it gets written off after 30 years because you did absolutely nothing productive with that tax funded education? You're leeching.

Its worth noting that any system which was competently constructed for 'free' or 'pay as you earn' university education is structured around the assumption that at least 40% - 60% of debt incurred will not be paid back.

-Sort of financially related but if you want to get promoted and make more money, start documenting everything you do that goes above and beyond your current level, even if it’s minor. When you apply or ask for one, and they say why, you have a case based on all that information you collected over the months/years.

You should absolutely do this, it is so incredibly important, and it makes interviewing for new jobs / positions so much easier, especially if you have documented yourself having been in the driving seat of a project (not just supporting someone doing it) but actually making something your baby that you saw through.

Also, people interviewing are pretty open to people who don't have experience doing 'exactly that' (so long as it isn't hard skills). What they are usually looking for is people who will be easy to train, and won't require someone constantly making sure they're on track. In service industries that's usually the ability to multi task, manage your time, deal with conflict/manage expectations, and reliably meet expectations.

 

[Chillguy69]

Guess I’ll give my two cents.

One thing that helped me immensely in my formative adult years was getting in the habit of keeping a budget notebook.
You can do this on the computer, of course, but I found it harder to remember to use it that way.
I recorded every single transaction and investment I made (no matter how small) and paycheck I received in that book. Then, at the end of the month, I reviewed what my biggest money sinks were and where I needed to start buckling down. Eating out is a common moneysink. Over the course of one month, I realized I was accustomed to spending around 100$ on eating out. That was equal to two weeks of my grocery shopping budget.
Now, of course, it takes discipline to change these behaviors. But I think most people will find that once they have the evidence of their bad spending habits right in front of their face it serves as a good motivator and reminder to change. It did for me, at least.

This may sound like common sense to some, but this post is aimed towards young people who grew up in similar circumstances. All of my good financial habits I had to learn on my own as I grew up poorer than Kevin Gibes’ self awareness.