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If I Could Write A Letter To Me

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The following is a post from Joe Foley, a personal finance blogger  and the author of ‘We Got Outta Debt’, the story of how his family paid off $68,000 in a little over 3 years.  His new book, “Retirement for All Ages” is due out in January.

If you know Country Music, the title refers to someone who looks back at his life at age 17 and wants to give him some advice . In this case, it refers to what I’d like to have read from myself while in my 20’s.   I’m a little (a LOT) past the target reader for this site, being that I recently qualified for AARP.  However, once you survive life this long, you can’t help but pick up a few things along the way.  And what I’d wished I’d known then… well.. that’s what this is about. So please indulge me, as David has allowed me to write this letter to me.. um.. you.

“Retirement?  Me?  I’m only 25.. I’ve got time.”  That was me, Day one of my first real job, when we talked about this thing called a 401k.  The 401k had only been around a few years when I started work (I told you I was old), and if I had paid some attention in my Economics class, I might have been able to realize this “Compound Interest” thing could really help me.  But nope, I skipped that day.. or maybe the whole week..  So, I decided I needed the $35/wk I could put in my 401k for more pressing things. Like food or beer. (mostly beer).

So what’s in this letter to you?  Some things I know are pressing for people your age and some things to look out for from someone who’s been there.

Create a budget.

Does “Budget” sound stifling or restrictive? Go with “Spending Plan” if you prefer. Whatever you call it, devise something where YOU decide what to do with your money. You’re the ‘Boss of your Money’. Knowing what you have coming in and knowing where it needs to go is the basis for your Spending Plan. This is your number 1 priority!  Without a Plan, you can’t figure out how to get where you want to be, or how to get there!

Feel free to use these resources you can use (all Free)

Once you’ve gotten a Spending Plan together, you’ll be able to tackle the rest of your Financial Life.

Student Loan Debt

A recent report shows that the average graduate of 2012 is carrying a Student Loan Debt of $27,000.  Unfortunately, That is still a HUGE amount of debt to start your post-school life off.  Hopefully, you’re carrying LESS than that.. but, regardless of how much you have, all is not lost.

You may be able to reduce or eliminate the repayment of your federal Student Loan.  But, like many things in life, there are some strings attached. According to the Associated Press, ¼ of Graduates may be eligible for loan-forgiveness programs. Your 4 main options are:

  1. Become a public school teacher in a low-income area.

  2. Apply for the Income-Based Repayment Plan.

  3. Get a public service, government or non-profit job.

  4. Join the military

If any of these sound interesting, talk to your Student Loan Provider.

Make no mistake, paying off the Student Loan Debt should be your #1 Priority.  Probably #2 priority as well. I carried my loan with me for 10 years.  And it was ‘only’ $6,000.  I realize that’s the cost of 2 textbooks today, but back then, it was money!

How does this affect Retirement?  Obviously, it decreases how much you can contribute to your 401k.  My recommendation is to focus on the Debt, but also contribute to the 401k.  Remember, time is on your side.  Remember that ‘Compound Interest’?  Here’s what I missed.

When you start your job, or when you read this, is the perfect time to start investing.  As a young investor, time is on your side to having your investments grow.   For example, if you start at age 30 and can contribute $15,000 per year, at 7% return on your investment, you’ll have amassed $1,000,000 by the time you turn 55. Take a look at this spreadsheet for the example. (Feel free to make a copy of it for your own use).

If you have Student Loan Debt, that $15,000 a year is probably too much to contribute, and that’s fine. Just start the contribution.  Play with the numbers in your Spending Plan and the spreadsheet above to see how well you can do. For example, $50 per paycheck ($1,200/yr) at 7% return would give you $16,580 after 10 years.  If you work for a company the matches, all the better!  The point is, start early and let Compound Interest work for you!


  • I know this is easier said than done, but even though you’re no longer in college, you need to live like you are. With the monstrous Loan Debt you carry, frugality is your friend.

  • If you have a good relationship with your parents, see if you can move in with them. IF you do this, it will save you a ton of money.  Have an exit strategy before asking. You are more likely to get a ‘Yes’ if you say “Mom, Dad, I need to pay off this student loan debt, so I’d like to move in for 1 year to help me pay it off”.  Set a date as both a goal for you and a promise to them.


  • Before you go to the grocery-store make a list of things you need to buy. There are plenty of great apps out there for grocery lists.  We use Our Groceries to allow us to create grocery lists on our phones (iOS/Android) and share them with others. Have a plan of what you are going to cook, what you are going to eat for breakfast and what you have to take with you for a lunch.

  • Do not step into the grocery-store hungry. I guarantee that you will buy things you don’t need if you’re starving.

  • Start drinking your own coffee. Starbucks is nice, but a cup at home is maybe $.50/cup, over the $2.00 for a Regular Venti.

  • Do not buy something you can possibly borrow.  Libraries are another best friend.


Depending upon where you live, this could be a tough one. If Mass Transit works for you, use it.  In some areas, like where I live, buses do run, but we have very small routes.

If you need a car, go as cheap as you can until the debts are gone.  Obviously, safety and reliability are important too.  But do you really need a Acura or BMW?

Technology (or “Back when I was your age”)

  • Today, technology is much more ingrained in how we live than when I was just out of college. Cell phones were strictly Science Fiction. Now, I’m not saying get rid of your cell phones.  However, if you aren’t already on your parents plan, see if they will add you onto their plan. It’s a much smaller cost for you.

  • We had an Atari 2600 as a gaming system.  Today, you’ve got a ton of options.  Resist the temptation go buy the latest PS-whatever or X-Box.  Yes, it’s entertainment, but those games can really add up. I’m not suggesting you sit in the dark and read old, borrowed books.  Or play solitaire with cards (yes, the game existed before computers).  I am suggesting that any entertainment be a line item in your Spending Plan.

And this relates to retirement how?

There is  this thing called ‘Social Security’, which I’m sure you’ve read about recently.   As far as our Retirement Planning goes, we’re not figuring Social Security benefits into our plans. Unfortunately, my expectations of Social Security for future generations is grimmer.  And so the planning and savings fall upon you. Science Fiction author Robert Heinlein coined the phrase “TANSTAAFL” which means “There Ain’t No Such Thing As A Free Lunch”.  I’ve always taken that to reinforce that people need to take care of themselves, and not rely on others to bail them out.

My point here is that once you’ve slayed the Student Loan Debt Monster, and begun saving for your retirement, the better off you will be in your retirement years.  It’s not too soon to start saving for retirement.  And if you’re Debt Free, you’ll have so many more options available to you.  Start creating your future today.

If you’ve made it this far in the article, I’d love some input in either the comments below or on my blog.  I’m putting the finishing touches on my next book “Retirement for All Ages” and expect it to be released exclusively on Amazon by the end of January.

If you’d like to be notified when my new book is published, please follow this link to my page where you can let me know!

FYI:  I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year.  I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home.  If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!).  Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!
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4 thoughts on “If I Could Write A Letter To Me

  1. Great tips! My husband and I have our eyes on (super) early retirement, so we work on our investments etc from the beginning. I especially love the bit about living like you’re still in college, that’s a great way to save.

  2. Thanks for the kind words!

    It’s a big temptation to spend that money you find yourself with after years of living on little. Unfortunately, if you don’t take the care needed, you’ll be living on little towards the end of your life.

    Best of luck!

  3. Excellent tips! The one tip that I think everyone should try to ingrain in yourself is to spend money on the things that are important to you, but don’t spend money on things that aren’t important or don’t bring you happiness! If people would just do this one thing, it would be a big help for their finances!

  4. Jon, that’s a great point.

    So many people spend money on the ‘bright shiny objects’ that attract their attention but don’t really ADD anything to their lives. Do you really need that 60″ TV? Probably not.

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