#2 – Avoid debt as much as possible.

Debt is bad.

You are probably thinking, “Dad what is debt?”

Sorry, here is the definition of debt from the dictionary: the state of owing money.

Basically, most Americans buy things.  Big, expensive things.  Resist the urge to do that.

This is often difficult to do because stores put commercials on radio and television trying to sell you stuff.  Mostly stuff that you don’t need.  Resist the urge to buy these things.

Save your money and invest it.  I’ll write another post on investing your money.

Most kids graduate high school, and go to very expensive colleges which their parents can’t afford.  So, the parents take out loans, but the loans are in the kids names, and are known as student loans.  When the kids graduate, they are responsible for paying back those loans, which can sometimes take 20 years.

So the kids, now adults, graduate college with the student loans, also known as debt.  Then they usually move out of their parents house so they can live in a big city with their friends, and they take on a yearly lease where they agree to pay a landlord a lot of money to live there. More debt.  Then they buy a car to drive home and visit their parents. More debt.

So basically they work, make money, and then by the time they pay their student loans, rent, car payments, car insurance (yes you need this), food, and other living expenses, they have no money left.

Here are some options for avoiding this:

• Consider attending a college that is reasonably priced, maybe even a community college for 2 years.  There is enough information online these days, that you can be successful with a degree from any school.  This will yield less debt upon graduation, if any.
• Consider living at home after college for a few years (we love you and it will be rent-free, as long as you cook, clean, and take care of the yard). Less debt.
• Buy a good, economical car, like a Honda.  Take care of it and when you pay it off in 4 or 5 years, it should last for another 8 to 10.  Less debt.

I’ll stop rambling now, but hopefully you get the point.

Below are two books that had a HUGE impact on me and really helped me be smarter financially.

Love,
Dad

P.S. If I forget about the rent-free part of this post, remind me to read this post.  Here are the books:

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!

The Ten-Year Turnaround: Transform Your Personal Finances and Achieve Financial Freedom in The Next Ten Years