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Greetings from the dawn of your thirties. You’ve got 10 East Coast winters, 8 years of college, and 1 wedding to plan before we meet, but I’d like to share some suggestions that will deepen your pockets and expand your perspective before that day arrives. These next twelve years will be the best of times and the worst of times: you will have a beautiful daughter and lose your godfather; you will marry the woman of your dreams and watch your parents slowly separate; through all of it, you will transform from boy to man, and it is my hope that I can make this journey a little easier and more rewarding.
And hey, you’ve got a lot to look forward to. You own a 3 bedroom home in Sonoma County; you were just invited to play in an adult basketball league in San Quentin with Matt; you make a fresh Americano every morning using your Breville machine that Mom gave you…life is good.
For reasons beyond me, you are going to work very hard for your money for the next 9 years. From spending the summer in Alaska power washing a 200 foot deck and running errands for wealthy guests, to working overnights at Sullivan Street Bakery in Hell’s Kitchen, you will be like the Saints of old lashing their backs to find meaning and purpose. I’m here to let you know, it doesn’t have to be this way. Let your money work hard while you take it easy and not the opposite. I’m not saying be lazy; rather, take that management position at Sullivan Street Bakery when George offers it to you. And before that, take a teaching methods class at City College and become a teacher right out the graduation gate.
Nine years into your journey to meet me, the light bulb really goes off when Mom sends you that article from Money Magazine about Vicki Robinson. Vicki’s story, about buying a duplex and paying off her mortgage with her rental income, while conveniently living rent-free, comes at the zenith of your frustration. You’ve just been evicted from your apartment in Buffalo and are seeking a new place to live, without a vehicle to facilitate the search. You’ve become tired of the nobility of poverty narrative that somehow infiltrated your mind, and you are ripe for change.
Now, I’m really hoping this letter does not have some unforeseen consequences like in the Butterfly Effect, but nevertheless here are my recommendations:
First, you need to use your creative genius to save at least 10% of your income, every single month. By the time you finish college in 2012, you will have $42,410.00 of taxed social security earnings on record, yet less than $1000 to your name. With the same industry of spirit that led you to scan the walls of your college’s halls for scholarship offers and apply for every one that you were eligible for, figure out a way to save as much of that $42,410.00 as you can. This starts with learning how to track your income and expenses.
To do this, identify exactly how much income you bring to the table each month, and how much you are spending. Anything that is left over, ask Mom to show you how to invest in an index fund. She’ll want you to buy Apple, so do a little bit of that, but with the rest, go for a boring index fund like the Schwab 1000. If you really want to play your cards right, save up all your left over income, then wait until the stock market drops to its nadir on March 6, 2009 and invest everything in that index fund. Like Andrew told you, “When there is blood in the streets, that is when you buy.”
Next, focus on increasing your income. Learning how to leverage your unique talents for profit is one of the most intelligent, creative and fun things you can do. It doesn’t mean your a sell-out; it means you understand how to see things from the perspective of others and provide a meaningful service or product. You could start a tutoring business by posting on Craigslist; do informational interviews with authors, speech writers, and screen writers to learn about how they arrived at where they are at. Find stories of people who inspire you and figure out what steps you can take to move the ball forward in your own life.
And just for fun, don’t quit the City College basketball team. I know it sucks to get made fun of by your teammates, but you are a freshman in college and that is what happens. They aren’t hazing you and you do not need to take it personally. In this case, take it as a sign that they like you and you need to earn your spot in the lineup. And I acknowledge, it is a new feeling to be the only white kid on the team, however it is a vital opportunity for you to experience a minuscule fraction of what people of color feel like everyday. Learning how to move beyond your feelings and look at outcomes is going to be a big challenge for you.
I can’t wait to meet you! You have so many good things going. You’re curious, you’re in love, and you do so many things right. Stick with the Bronx Budgeteer, invest in your education and index funds, and don’t take anything personally. You are your own man.