Lesson 3: If you can’t afford it, don’t buy it!
Okay, truth be told, my dad would tell me that. If you don’t have the money for it, don’t buy it. I was a kid then but it made sense. Being in credit was never a thought in my mind. I bought my first two cars cash. The first car wasn’t an issue. It cost the same as my net salary. Saving up for it wasn’t a problem. The second car for me was a major thing. I had saved for awhile. it was a goal I knew I had to reach. When I finally bought the car and got the papers for it. I felt some level of triumph. Self actualized if you will.
It’s easier to resist the first sin than to satisfy all the ones that follow
So my #StartUpAdvice is avoid credit card debt. Warren Buffet says that it is way easier to prevent financial trouble, than to get out of financial trouble. Revolving credit card usually come with interest rates in the 18-20% range. According to Buffett, once a person gets into this debt cycle, it is very difficult, if not impossible, to get out of it.
By the time Warren Buffet had graduated from college, he had already saved $10,000. He was already ahead of the game and this put him in a position of advantage in comparison to the rest of his peers. He compares this to getting a head start in a race. If a participant in a race is given the opportunity to start the race even 1 meter ahead of everyone else, it makes a huge difference in the outcome of the race. Similarly, the young professionals who graduate from college without any debt or even with some savings have a huge advantage over everyone else.
What Now: I know this will be hard but set aside a period of time to live frugally. You don’t need to go out every night. You most certainly don’t need to have take out all the time. Warren Buffett’s simple financial rule to follow is: “If you can’t pay for it, don’t buy it, and first get yourself in the position to pay for anything”.