I’ll never forget this one particular revelation I had in college on a particular Saturday night. I was in a bar, but I wasn’t drunk. And everyone was going nuts. And I remember peering at the alcohol-fueled frenzy unfolding before me and asking, “Where are all the Asian college kids?” After all, Buffalo University was primarily an engineering school, and it had a sizable number of Asian students. If any group deserved to let their hair down, it was them. They studied their butts off.
It was a very odd juxtaposition. The Asian kids, who were pursuing tough majors and doing extremely well, and who theoretically earned the right to party, weren’t partying. And the non-Asian kids, who weren’t pursuing tough majors and weren’t doing extremely well, and who had no business wreaking havoc on their livers and brain cells, were partying.
Ah, but my first round of college was in the early 80s. America still had a robust manufacturing base. Most middle-class jobs required nothing more than a high school diploma. College was cheap, and college graduates were still more or less a novelty. Only around 17% of Americans aged 25 or older had a bachelor’s degree in 1980. Today, the percentage of Americans aged 25 or older with a bachelor’s degree is approximately 32%.
So, yes, my first round of college was a dismal failure. I was more concerned with partying than with capitalizing on an awesome opportunity. But because of the factors mentioned in the previous paragraph, I had a very comfortable margin of error. My early screw ups in adulthood didn’t materially hurt my chances for a middle-class life.
My generation was probably the last generation to enter adulthood with a comfortable margin of error. Today’s young people aren’t so lucky. For the vast majority of them, their margin of error is razor thin. Several minor screw ups or one gigantic screw up will doom them to a lifetime of financial woe.
How Do You Know Your Financial Margin of Error Is Razor Thin?
For young people today, the importance of not screwing up has never been more paramount. But what if you’re different? What if normal socioeconomic forces don’t apply to you? After all, not every young person has a razor thin margin of error (e.g., Baron Trump and Malia and Sasha Obama). For our purposes here, then, you will possess a razor thin margin of error if you answer “no” to each of the following questions.
Are your parents rich enough to backstop any gross stupidity on your part? In other words, can your parents rescue you from a life of penury if you commit a felony, develop a drug addiction, or fail to acquire any worthwhile employment skills?
Are well-paying middle-class jobs widely available in your city for anyone with a high school diploma and a marginally passable work ethic?
I could be wrong, but based on the two questions above, 90% of young people today have a razor thin margin of error. Let’s now see what screw-ups young people need to avoid early in their adult lives if they want a decent shot at a middle class life.
Nine Things Not To Do
Adorn your body with visible tattoos or body piercings
One of my favorite co-workers at my last job was Wanda. She ran our call center in Florida. And she was bright, articulate, and skilled at managing others. So when a program director opportunity opened up in our region, I naturally suggested to my boss that Wanda might be a perfect fit. My boss agreed but said it wasn’t going to happen. When I asked why, she said, “Wanda has a neck tattoo. And because a program director deals directly with clients, we can’t let someone with a neck tattoo be the face of our company.”
At some point up the career ladder, image matters. I’ve yet to see a CEO with a neck tattoo or a nose ring. Nor have I ever come across a high school principal, judge, or doctor with a neck tattoo or a nose ring. I have nothing against tattoos or body piercings. But young people be warned. If not done discreetly, these things will put an artificial ceiling on your employment options and your career advancement.
Get convicted of a felony
Sorry about this. Another work story. Several years ago, we interviewed a bunch of people for a customer service position. When our boss asked us who we liked the best, we all picked the same young lady. “Great,” exclaimed our boss. “She was my favorite too.”
A few days after we all chose the same awesome young lady, our boss returned to us and asked, “Okay, who is your second choice for the customer service position?” “Whoa, what happened to our awesome young lady?” we all shot back. “She has a felony conviction,” our boss replied. “And because we deal with sensitive healthcare information, there’s no way we’re hiring a felon.”
If you dabble in crime you’re a schmuck. Not only are you doing something immoral, you’re doing something that is bound to get you a felony. And once you have the Scarlet Letter F, your employment options are seriously constrained.
Have a child when you’re not financially established
A few years back, Mrs. Groovy and I were vacationing in Louisville, Kentucky. And as we were driving from the Louisville Slugger Museum back to our hotel one late afternoon, we happened upon a White Castle—our go-to restaurant of St. Valentine’s Day past. Pumped, because we hadn’t had any belly bombs since we left New York, we stopped for an early dinner.
The place was empty so the cashier who took our order had time to chat. She was an attractive young lady, maybe 18 or 19 years old, and very well spoken. I asked her if her shift was ending soon. She laughed and said thankfully no. Her manager needed someone for the night shift and she jumped at the opportunity. When I asked her why, she said she had two small children and she needed all the extra money she could get her hands on.
I was pissed. Here was a young lady who was surely capable of being more than a cashier. But because her time, energy, and money were being devoted to raising two small children rather than to honing her job skills in college or trade school, her odds of rising much beyond her current position were highly improbable.
Don’t have children until you’re financially established. Life comes with enough challenges as is. It makes no sense to willfully burden yourself at a young age with a challenge as difficult as child rearing.
4/28/2017 Update: I neglected to point out that the cashier discussed above was an unwed mother. She is probably still so, but I can’t assume that. Anyway, at the time of our conversation, she was living with her mom and her mom watched her kids when she was at White Castle. The father of her children wasn’t in the picture. Needless to say, he wasn’t providing child support.
Also, I came across the below YouTube clip yesterday. It’s an interview between Tommy Sotomayor, a controversial YouTube personality, and an unwed mother of two children. I added this to the post because the unwed mother, Evelyn, reminds me very much of the cashier I met in Louisville. It’s also a nice window into the mindset and culture that generates the self-destructive behavior of babies having babies. Be warned, however, the language in this video clip is very salty.
Get a dog or a cat
When I was growing up, people didn’t go to extraordinary lengths to extend the life of a family pet. People loved their pets, for sure, but when nature frowned on Fido or Fluffy, people accepted the will of nature. No more. I learned this the hard way when our cat was diagnosed with stomach cancer and the vet recommended chemotherapy. On its face, chemotherapy for a cat is absurd. But when I looked at that poor thing quivering on the examination table, I couldn’t say no. Goodbye several thousand dollars.
If you’re a mushball like me, hold off on getting a pet. A pet will invariably get injured or sick and you will spend oodles of money securing its health rather than securing your finances.
Give money to charity
My favorite Dave Ramsey quote is the following:
“Broke people can’t help broke people. Only the strong can help the weak.”
When you’re young, whether you’re in high school, college, or just entering the workforce, you’re financially weak. And you have no business giving money to charity. Your primary charity is still yourself. So until you’re more established (i.e., you have a six-month emergency fund and you’re saving 15-20% of your income), you give to charity by giving your time, not your money.
Get a credit card
The pain of parting with money is far less visceral when the bill comes a month after you’ve made the purchase. And this is what makes credit cards so dangerous—especially for young people.
I learned this lesson well when I got out of college and got my first credit card, a Sears card. My first purchase was a $1,000 stereo system. It took me over 5 years at 24% interest to pay it off. (By the way, when Mrs. Groovy read this she called me a putz.)
A debit card does essentially everything a credit card does. Until you fully appreciate the dangers of credit cards, and are financially mature enough to handle them judicially, stick to a debit card.
Party and/or play more than you study
In my very first semester at college I played in the intramural touch-football league, was always available for a pick-up basketball game or a lacrosse catch, and rarely missed a Thursday, Friday, and Saturday night of partying. Perhaps that’s why my GPA for my first semester in college was 1.7. Three Cs, a D, and a withdrawal. And the syllabus for the class I got a D in said the following:
“Any well-manicured ape can get a B in this class if he or she attends the lectures and reads the assigned books.”
If you spend more hours partying and playing rather than honing your job skills, you’re doing something wrong. America is no longer kind to slackers. Globalization, automation, and immigration have made the slacker class very expendable.
(By the way, when Mrs. Groovy read this she called me a putz again.)
Borrow money for college
In Ric Edelman’s latest book, The Truth About Your Future, he offers some very disturbing statistics on higher education.
- For several decades now, tuition has increased faster than the Consumer Price Index.
- The average college graduate today leaves school with $37,000 in student loan debt.
- Roughly one in three college students never earns a degree.
- The average salary of a college president is over $400K. There are currently 34 college presidents who make more than $1 million annually.
- According to the authors of Academically Adrift, 45% of college students make no material improvement in critical thinking, complex reasoning, and writing skills in their first two years of college. After four years of college instruction, 36% have still failed to generate any material improvement in their cognitive abilities.
- According to a 2013 study, only 27% of college graduates were working in a field that was remotely connected to their major.
- According to a 2014 study, half of recent college graduates were working at a job that didn’t require a college degree.
Question: For what other consumer product would you accept such a dreary ROI? Would you pay thousands of dollars for a gym membership and a personal trainer if after four years you were likely to weigh the same and do the same number of push ups?
For most people, the vaunted bachelor’s degree has a very poor ROI. If college cost a quarter or a third of what a typical college graduate earns in his or her first job, I would gladly advocate borrowing for college. Until that’s the case, though, I can’t in good conscience suggest that student loans are a defensible way to fund a college education. A bachelor’s degree and the college experience simply aren’t worth it. Don’t borrow a dime for college. If that means living at home, working part-time, and going to a community college, so be it.
Buy a car that’s less than ten years old
The average price of a new car in 2016 was $34,000. In 2019, those 2016 cars will be worth around $18,000. If you’re debt free and have an investment portfolio in excess of $1 million, you can afford to throw away $16,000 in three years. If you’re not, stay away from new cars like the plague.
My advice to young people is simple when it comes to cars. Your car should reflect your net worth. If you have a crappy net worth, you should be driving a crappy car. It won’t do much for your ego, but it will do a heck of a lot for your finances. Hail the crappy car!
Whoa! Am I a curmudgeon, or what?
Yes, I admit I’m a little cranky in this post. But I’m only being cranky because I care about young people. Our economy and world has changed much since the days of my youth. I could get away with being a dunderhead. Today’s young people can’t.
Okay, groovy freedomists, that’s all I got. What say you? Has the financial margin of error become razor thin for today’s youth? Or is this post overwrought? I’d love to hear your thoughts. Peace.