"You're what?!" "Mom, I've lined up a job in New York City—and an apartment, too. I'll be moving out on Saturday." "Where will you be living?" "I found a great place in the Bronx!"
Not exactly what my mother wanted to hear. I had just graduated college, and rather than take the customary interval to bum around our house in upstate New York and empty the refrigerator and the gas tank of the family sedan while I contemplated my future, I decided to plunge right in to the adult world. So at age 22, I took a job at a small hospital near Fordham University and rented an apartment—a spacious two-bedroom in a fifth-floor walkup a stone's throw away from the Bronx Zoo—with a friend from high school. Freedom and independence were mine at last.
Of course, nothing is as easy as it seems. I wondered at first whether I could cover my share of the monthly rent—$106—but that worked out O.K. (Yes, it was a long time ago.) But as the rest of the financial picture began to emerge, it became clear that there were many more responsibilities than I first thought: Gasoline, repairs, and insurance on the clunky old Gran Torino I inherited from my grandfather; student loan payments, food, beer, electricity, phone, concerts, nightclubs, movies and miscellaneous entertainment, beer, clothing, linens, furniture, dishes, silverware, beer, and so forth. I was 22, after all.
And then came the credit-card offer.
EIGHTIES REDUX. I don't recall which bank sent the mailing, but it was the easiest money I ever made. Soon I had some nice new clothes, a new turntable (I told you it was a long time ago), a state-of-the-art Commodore C64 computer (yes, a very long time ago), and lots of other nifty things, and later, one not-so-nifty thing— an alarmingly large balance on my new Visa card. The hard lessons about financial independence began in earnest that day.
Why am I telling you this fascinating tale? When we decided to put together a special report on achieving financial independence for young people (more about that later), my own experiences came immediately to mind. And while the words "cautionary tale" can often cause glazed eyes and diminished higher-brain function for the listener, it occurred to me that what I went through was not all that different from what twenty- and thirtysomethings are contending with today. Like the mid-2000s, the early '80s featured an uncertain economic outlook, a challenging job market, and an easy-money, you're-breathing-so-here's-a-credit-card lending environment.
I could offer specific recommendations for those starting out—buy low and sell high or open up a 401(k)—ut I'll leave those for the stories in our report. Instead, I will simply ask three questions and leave you to think about what they mean:
Why is debt like fire, water, and the Internet? Fire comes in handy for warming the cave and roasting chunks of mammoth meat, but if it gets out of control it can incinerate the forests where the food is found. Water is good for boating, and you can't beat it for growing crops and hydrating cells, but a great big wall of it can wash away the Winnebago just like that. The Internet has greased the wheels of global communication and commerce to run at hyperspeed, but has also given rise to spam, spyware, and the MySpace pages of lascivious 45-year old dentists. This is a long way of saying that debt is a tool like any other, useful for funding educations, businesses, and dwellings, but must be used carefully in other respects lest you burn down the hunting ground.
Which TV has a better picture, a $200, 20-inch set from Wal-Mart (WMT) or a $4,300 55-inch plasma beauty from Best Buy (BBY) with 1366 x 768 resolution, HDMI inputs, a 16:9 aspect ratio, and a cable card slot? Of course, this is a trick question. The person who opted for the econo-box from Wal-Mart is more likely to be able to watch his tiny screen with the clear-eyed, contented gaze of the financially secure. The person who plumped for the plasma, and put a gaping hole in his or her savings or took on a big chunk of debt to watch reruns of South Park may one day find it difficult to view the high-def images through the hot tears of financial regret.
Some people are said to have "more money than sense," usually in a disapproving tone. Is it better to have more sense than money?
Yes. Common sense is a rare and wonderful thing. And one of its most important manifestations is to have a strong notion of where you are, and where you want to go. However much money you make, it's important to have a plan, whether you are pursuing a career or a graduate education. Define your goals and be realistic about what you'll need to achieve them. And don't be afraid to ask for advice, whether it's from friends, parents, or mentors.
O.K. so I slipped in some advice anyway. I don’t think the callow twentysomething who started his financial journey those long years ago -- and learned a few hard lessons along the way -- would have minded.
Andrews is managing editor of the Investing Channel for BusinessWeek.com
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