Financial advice to my 22 year old self

I’m almost 30 now which gives me License to Dispense Advice. Home improvement, life optimization, and financial security are a trio of BFFs. Sometimes alliances shift, but ultimately they’re inseparable.

At 22 I was just starting out.

22_years_old

Me at age 22 dressed up for work

I just got my first “real job” (full time pay just above minimum wage, but with health coverage!) and I moved away from home for the first time ever to a 1-bedroom apartment some 45 minutes from where I grew up. I now had grown-up things to do, like buy groceries and wash my own clothing.

I managed to do pretty well in the intervening 8 years, but here’s what I would tell myself:

1. Maximize your entry level income

Money doesn’t buy happiness, but it does buy everything else.

My biggest regret: I wish I had negotiated my first salary. I didn’t have the confidence to ask for a little more because I had no idea how good a candidate I really was.

Let me tell you this: every company I’ve worked for has been careful in their hiring. Phone screens, all-day interviews. If you make it to offer stage, you are a good candidate and we want to hire you. Asking for a (reasonable) increase over the offer at this step is likely to succeed.

I did not negotiate my first job’s salary, but I did:

  • successfully negotiate my first raise at my first job
  • successfully negotiate a higher starting salary at my second job
  • successfully negotiate a and a higher starting salary at my third job

I have found it easier to increase my income by changing jobs and negotiating a larger salary upfront. Feel how you will about what this means for the relationship between employees and employers, the fact is this is the game and this is how it’s played.

Things you can do at your current job:

  • Be a top performer. If you can’t identify the person in your organization they’d lay off before they got rid of you, you’re it!
  • Keep track of your accomplishments! When review season comes along, you’ll have plenty to say about your contributions to the company
  • Outright ask for more at raise time. To be frank, I’ve had mixed success with this one. I’ve succeeded at it once, but every other time the “raise pool” was locked at some fixed amount for the department and couldn’t be negotiated. What I did have success with, though, was working for an excellent manager who negotiated larger portions of the raise pool for his top performers.
  • Keep your resume/portfolio up to date and loaded with accomplishments.
  • Remember, it’s a business relationship. Don’t become emotionally invested in working for your company. Your employer will dump you the second they need to in order to make their numbers. It’s not personal, it’s business. Likewise, you need to be ready to dump them if they aren’t paying you a competitive wage.

Things to do when you change jobs:

  • Consider cities better for your industry. A thousand times this. Moving from the midwest to the west coast was the best career decision I’ve made.
  • Ask for moving expenses to be rolled into your salary instead of taking them as a lump sum upfront. I got a $3k annual increase doing this, and it was a gift that kept giving year after year
  • Just outright ask for more when you get an offer. Cite increased responsibilities, your amazing performance record, anything that justifies your argument. The Internet is full of advice on how to phrase this. This has been my most successful tactic for increasing my income.

One last word on this topic:

Don’t get your heart set on any promises of bonuses or profit sharing. Your game is salary. Salary is consistent, reliable, and your salary history will follow you to your next job. Bonuses are not reliable income and in many cases, they don’t materialize. If I had every bonus I was reassured was coming, I’d have thousands of dollars more in the bank.

2. Learn how to prepare food you like

This will save you thousands and thousands of dollars over your 20s alone. This will also save you time, and will probably keep you thinner than you would be relying on takeout and restaurants.

Start simple (chicken roasted in a pan!), work your way up (homemade cake!). Don’t run out and buy a shitload of exotic cookware. You’ll feel bad when you give it all to charity 5 years later, hardly used.

3. Don’t buy DVDs / entertainment

I’ve lived without television service for 7 years. I don’t miss it (your mileage may vary) or need it. I don’t want to sound like a crazy media-hater, and I’m not. Hell, I work in entertainment. :D I just find that I have plenty to entertain myself with using only Netflix streaming and the Internet.

At roughly $100/month x 7 years, I’ve saved $8400.

DVDs frighten me. Next time you’re visiting a friend who has a ton of DVDs, try to estimate how many and multiply it by 10. That’s how much that collection cost. DVDs are sold everywhere and are seemingly inexpensive. It’s easy to “just $10 bucks” your way into a serious pile of cash spent on movies you’ll never have enough time for.

4. Drive your car into the ground… gently

A rule of thumb I heard somewhere: driving the car you drove in college when you’re 30 is a sign of financial well-being.

I acquired my first car at age 19, and I still drive it 10 years later. I love that it’s paid for. I love that it still looks new inside because I didn’t crap it up with food wrappers or junk. Take good care of your vehicle – and keep it as long as you can.

  • Park in covered parking as often as you can: Doing this reduces the odds of it getting pooped on / hailed on / baked in the sun. Plus, the covered parking is where people with nice cars park. They won’t throw their door into your car.
  • Don’t eat in your car: A “no food” rule will keep your car cleaner and nicer smelling. Plus, eating in your car is sad. Eat at a table or on a sofa in front of a favorite show, it’ll do you good.
  • Vacuum its interior regularly: You’re less likely to want to crap up a car that looks and feels nice.
  • Park far from other cars: The extra walking is good for you anyway. If you have to park near other cars, try to park it next to an expensive car.
  • Wax it regularly: This one’s somewhat debated, but twice yearly waxes seemed to work for mine.
  • Rent a car for long trips: Depending on season and location, you can often score a rental for as low as $12/day. Put all the wear and tear of a road trip onto their car, not yours.
  • Don’t do stupid things in your car: I used to try to make my car airborne when going over a particular set of train tracks that seem designed for the trick. Wait, I still do this. You’ve got to have some fun your car!

5. Wake up way earlier than you need to

What makes this financial advice? Because it helps make you awesome at your job.

Being somewhere (like work!) on time is the easiest way to succeed ever. You don’t want to be known as someone who oversleeps and comes into work late. That’s not the path to promotions and raises, even if you’re the best worker in the office. Someone will hold this stupid thing against you, so just get it right – it’s easy.

When you’re accustomed to waking up earlier than you really need to, you have a buffer zone. If you oversleep, you can still make it to work on time. If you need to run an errand, you have a block of time. If you don’t need to do anything and you’re up early anyway, exercise. Read. Accomplish something. This is your time!

By doing what’s most important to you first thing in the day, a bad day at work or working late can’t ruin it.

6. Open a savings account as soon as you earn income

Savings are the best thing you can give yourself. Having a big pile of money saved up lets you do awesome things like:

  • Quit a shitty job
  • Move across the country for a better one
  • Buy a Nice New Thing once in a while
  • Not live in an utter state of panic

You want options, right? Then open a savings account and put money in it.

Set up automated transfer out of your checking account. Without any help from you, this humble account will receive money and grow in size. Get addicted to that feeling of reaching a milestone. $1,000! $5,000! Can you reach five digits? Six?!?

Here, I even broke it down into steps:

1. Go to https://home.capitalone360.com/ and open a 360 Savings Account. It’s free.

2. Connect your new Savings Account to your existing Checking Account

3. Wait a couple days for the accounts to link up

4. Set up an automatic transfer so money goes from your Checking Account and into Savings Account without you having to lift a finger

7. Open an IRA investment account

These are fancy words but the concept is simple. Every year that you earn income, you can set aside up to $5,000/year in a special account called an IRA (individual retirement account).

You won’t be allowed to contribute to past years, so put as much in as you can (up to the limit) each year. Start as soon as you are earning money. My IRA is with Vanguard in their Retirement 2050 fund. I highly recommend them, and this fund, as it seems to turn a small profit each year.

I would have lost years not contributing to my IRA if it wasn’t for my boyfriend (now husband) who insisted I open an IRA and spelled it out for me. I didn’t think I had money to sock away like that. I opened the account, and I put a little in every few months. I didn’t make it to $5,000 my first year, but once it was habit it became easier. I met my IRA savings goal every year since. I now have $45k socked away for retirement in that account.

That’s pretty cool, especially since the earlier your money goes into the market, the longer it has to earn money (interest), which then gets rolled back into the investment to make even more money. It’s like earning money for doing nothing.

29-year-old me says thanks 22-year-old me!

8. Continue to develop your skills

Learning didn’t end at college graduation – it started.

Once I was on my own I struggled with inspiration and general despair over how much of a burden working full time placed on my ability to build my skills (artistic and otherwise). It was quite a shock going from developing my talents 24/7 to selling them to an employer 40 hours a week. I endured some inspirational droughts as I adjusted, but over the long haul, this was an essential step. Learning how to invent my own free time projects and challenge myself to learn new things outside of work was crucial.

Working on “hobby skills” gives me:

  • A clear sense of identity: I am much more than my day job
  • Something to work at: When I come home, I can work on any number of projects
  • Something apart from work: I don’t think about work at home, I think about my hobbies.
  • A safety net: When I was laid off, I had so many opportunities in so many directions I was nearly paralyzed. I could easily have reinvented myself as a freelance artist, a full time artist, a web developer, a writer, a fledgling programmer – I went back into game design, but if that ever dries up I’ve got numerous safety nets.
  • A side income: I sell plush, I freelance art. I can ramp this work up or down depending on my needs.
  • Something to talk to people about: Not that most people want to hear about it, haha.

Learn something outside of work. If nothing else, you’ll be more interesting than someone who communicates entirely in movie plots and Internet memes.

9. Don’t buy it unless you REALLY. NEED. IT.

Try to do without it for a week. If you can return it, buy it and hide it (don’t unbox it) for a week.

Did you survive? Did you even think about it? If so, you may not need it.

Did you think about it every day? Okay, you pass – go buy it.

You’re going to toss A LOT OF STUFF when you move, and no, not before you move. After you move. After you’ve paid thousands of dollars to move it. Because you moved in a hurry and it made no sense to toss things you thought you would need.

Your next apartment won’t have room and your house will have next to no storage space. Plus, most of what you bought when you were 22 was cheap junk because you didn’t earn much back then.

10. Marry Jim!

Okay, that advice is specific to me.

What I really mean is marry the right person (or partner with, if you’re in one of those shitty states that doesn’t yet let you marry the man or woman you love).

Your partner must be someone you can work with, someone you’re on the same page with in regards to money, how free time should be spent, what your hopes for the future are. Don’t move in with (or marry) anyone who falls short of those standards. Warren Buffett, who is super insanely rich, has said plenty on this.

Jim is my best friend, my co-conspirator, and my partner in everything. We work well together, and we’re on the same page financially. We agree on how much money should be saved and how much should be spent. This simple arrangement has spared us both the drama many couples get to live as they fight (and sometimes divorce) over money. I know it’s not super romantic, but it sure does simplify our relationship. I’m super glad I found him.

Best Couch for Our Budget: IKEA’s Karlstad

We bought a couch!!

What? Yeah, I am surprised too. :D  Our new Karlstad from IKEA is our first furniture purchase since buying our home two and a half years ago(!!!).

On break during work, Jim and I walk through Bellevue Square which has no shortage of extremely expensive couches on display. I’m talking $7500-$12000. Seriously, who spends that on a couch? That’s car territory.

But this got us talking about how we’d love a larger couch: one we can both stretch out on, and one that can accommodate a third person so we aren’t stuffed like sardines when Dad comes to visit.

So we went couch-hunting at My Home and a few other neighborhood stores. All of these stores wanted a lot of money for their couches, like $3000-$5000. I suppose I could *theoretically* spend that much on a couch, but I don’t want to. A couch isn’t worth that kind of money to me. My last one was $700 and it’s great, just too small.

Alas, this is when we realized that Jim and I like very different things in a couch. He wants something to sit on, something with support. I want a mushy bed to melt into. And we both dislike spending more than a thousand or so bucks on this. Realizing this, we shelved the idea again for a couple months.

Then we ended up at IKEA to return an unneeded desk leg.

We sat on some couches. We sat on Karlstad. It happened.

newCouch_2

Couch nirvana.

Jim loves it. I love it.

We both love its price.

$900 for the whole thing? What? How is this possible, IKEA? Don’t you know stores 10 miles north in Bellevue want $7000 for an uncomfortable couch half this size? And that’s about when I realized that Young House Love has the exact same couch and raves about it regularly. SOLD!

Karlstad didn’t fit in the Subie so it’ll be delivered Saturday, plus we bought assembly for $39. I’ve never bought assembly of anything before (I even build my own computers!) but $39 seemed like a bargain when weighed against the misery of spending Saturday putting a couch together.

We bought a bookshelf to put together instead.

subieBookshelf

December 2013 update: We still adore our Karl couch!  The cushions have stayed firm and crisp, and the cushion covers still fit tightly.  If I have any complaint at all about our Karl couch, it’s that we both seem to spend more time on the couch now that we can both lay on it at the same time!

Happy Birthday, Taurus! (Sentimentality about an old car)

The Taurus has been my much-beloved car for ten years now. Happy birthday, Taurus. :)

Some fond memories and stats:

  • First song ever played in the Taurus: Trent Reznor’s version of Supernaut
  • CDs burned for use in the Taurus: like, at least a hundred or so, all of which are in the car’s storage console
  • My first solo driving trip was in the Taurus: I was 19, and I drove it home from the Ford Dealer in Roselle, IL
  • The Taurus has traveled to: Wisconsin, Minnesota, Missouri, Iowa, Indiana, and Michigan (where Jim proposed!), Washington state, Oregon, Vancouver B.C.
  • The Taurus was once shipped cross-country on one of those giant car-carrying trucks. I don’t know what adventures it had, but it arrived absolutely caked with bugs.
  • Driving home from ILIAS in a crazy blizzard
  • Driving home from Jim’s house in a crazy blizzard
  • This car took me to my first job, my second job, and my third job

This car and I have done a lot. I tend to think of it as a tank, rugged and strong, able to clear parking blocks, curbs, and piles of snow. I loves it and it’ll have to be pried from my fingers when it’s no longer roadworthy.

After much (MUCH) careful debate over the course of about four years, we bought the Subie to offset the risk of relying on aging car in a 1-car family. Part of the reason this took so long is because WHAT CAR COULD POSSIBLY REPLACE MY BABY?!?! The 2013 Forester came the closest of everything we’ve test driven over the years, so that’s what we got!

Here they are, my darling car children. :)

 

GrantFleet

But this 10 year anniversary brings up some important questions in my mind.

  1. How much longer will the Taurus remain reliable? The Taurus has been completely solid, aside from a failed cylinder last year (a fun $1200 repair). 85k miles was about when Jim’s 1999 Ford Escort started having serious problems to the tune of $1000+ every other month for repairs and new parts.
  2. Do we really need two cars? We work at the same company (and even when we didn’t, we found a way to make the commute work even though it meant I ate dinner at the office) and we do our errands together. In the three months that we’ve had two cars, we’ve had just one day where having two cars was very helpful. It’s about $1000 a year to insure the Taurus, and that’s probably worth it, but is it worth the cost of replacing the Taurus?
  3. What would we replace the Taurus with? We love the practicality of the Subaru, but do we need another practical car? Or can I get a flashy sports car instead? :D

My favorite aspect of the Taurus when compared with the Subie is its power. It feels heavy, tank-like, and sturdy. The Subie is bouncier, more upright, and more agile. These are good traits. But sometimes it’s fun to just VRROOOOM, y’know?

We took a quick “just looking” trip to the Ford dealer today, just to, you know, look. Because I like to look for about 5 years before I actually make a decision. My favorite thing to look at was this blue Mustang:

Mustang

I didn’t test drive it (because therein lies the path to damnation and a more crowded driveway), but it sure was fun to sit in. And at $18k / 30k miles it’s a pretty sweet deal. But is it too silly to get a fast, fun car instead of another practical car?

My dad, who just got a convertible Mustang of his own, advises me to buy myself nice things while I’m still young. He played it safe his whole life, just like me, stashing away savings and buying few luxuries. So I don’t know yet what we’ll do. Fortunately, the Taurus is in fine shape (knock on wood) and should last the many years it takes me to make a decision.

Meet Subie! How We Chose the Subaru Forester as our Next Car

We finally did it: we added a second car to our family! Welcome, Subie! It’s a 2013 Subaru Forester and we SUPER LOOOOOOVE IT!!!

NewCar_0

Ever since Jim’s ’99 Ford Escort croaked mid-WA-move, we’ve been sharing my 2002 Ford Taurus.

We did this for four and a half years and it went pretty well, but that was because we worked at the same office and that office was just four miles from home. After buying the house and after Jim accepted a job 10 miles from home in a different direction than the office where I still worked, we started to feel the need for a second car. (Also: Bah at America’s stubborn reliance on personal vehicles!)

Our Next Car Needs

If we were going to add a car to our fleet, we wanted all of the following:

  • All wheel drive for our neighborhood’s hilly terrain in the winter. Getting trapped on our hill in winter snowstorms sucks… and I don’t even want to think about what being trapped at the bottom might be like.
  • Hatchback for upgraded hauling capacity. The bigger the better.
  • A second car for times when we need to be in two places at once
  • A newer car, quite simply, because our beloved Taurus is now 11 years/85k miles old

We were pretty sure we wanted a Subaru, after a decade+ of admiring other Subies on the roads. We also needed a car that Jim (6’3”) and I (5’8”) both fit comfortably into, and a good number of hatchbacks failed at meeting that basic requirement. We liked Subaru for its AWD, general driving experience of their vehicles, brand reputation, vehicle comfort, and dealership’s presence in our neighborhood. We also figured that since every other car here in the PNW is a Subaru, it’d be hard to go wrong.

Test Driving & Lot Shopping

Over the course of six months (seriously, we are that slow!) we visited the dealership five times to test drive and browse inventory. We’re definitely reluctant spenders, so purchasing a new vehicle, even one we felt the need for, was something we wanted to consider over a long period of time. (We also both went into this expecting to buy a pre-owned vehicle, but used Subarus seem to go for as much as new ones.)

I have to give a shoutout to the guys at Eastside Subaru here in Kirkland, WA.  Not only did they put up with us dropping by the lot many (many) times to sit in cars, look at cars, and test drive cars, they did it with grace and friendliness.  No hard sells.  No nagging.  No asshole jokes like “when are you guys going to quit teasing us and buy a car already?!”.

This is why we kept coming back and this is why we bought Forester car here.  (And this is why we never went back to the Honda dealer.)

Test Driving the Forester

In January, a friend offered to take us along with her on a Saturday ski outing. We rode in her 2012 Forester and absolutely loved it. She probably thought we were nuts gushing about her car for an hour.

Then, a few weeks later, Subaru announced a 0% financing event. We took this as a sign and headed on over to the dealership to test drive a Forester.  We loved the Forester.

It met all our criteria, and the lot had two cars with all our desired features: back up camera, cloth interior in the dark color, tinted back windows, all weather package, silver exterior.

Outback vs. Forester

We’ve loved the Outback for years. I was certain that we’d bring home an Outback when the day came. We even referred to it, long before we even got serious about a second car. “When we get an Outback…”

We ruled out the Impreza as being too small for us, but we were wrong to overlook the Forester.

  • We had perceived the Forester to be larger than the Outback (it’s not, it’s actually narrower and shorter).
  • We has also read that the ride isn’t as nice as the Outback’s (we can’t tell the difference).

Debating whether to get an Outback or a Forester was a main topic of discussion for a long time.  The two cars are pretty interchangeable, but this is what made is choose a Forester:

  • The Forester is narrower and shorter, which made it fit better in our garage 
  • The Forester is a couple thousand dollars less
  • The Forester feels perkier, more “upright”, and a bit more nimble (to us – your mileage may vary)
  • I was going to be craving major Bloomin’ Onions if we had an Outback in the garage (as it happens, the Forester’s first trip ever was that night to Outback Steakhouse)

Purchasing

The 0% financing sealed the deal.  We went into car buying with no intention of leasing (we intended to buy it outright), but at 0% you’d be crazy to spend all $30k right now instead of slowly, over time, letting your money earn interest in an investment.

We did, however, use a chunk of the money we’d been saving for years towards a new car as a down payment to lower the monthly payment.  I hate monthly payments, even when they’re good deals like this one.  We drove our new Subaru off the lot an hour later.

The car has been nothing short of fantastic, unlocking all sorts of new capabilities like hauling large purchases and letting us drive places we couldn’t before. I feel good about it not just because we like the car so much, but because we researched it exhaustively and saved for years in preparation for it.

So, in short, yay!

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