• Michael Kostelnik

Some Advice to 20-Year-Old Me

There's an old phrase, "youth is wasted on the young," and it was right in my case. In my 20's I had a ton of opportunities, but wasted most of them. I missed some opportunities because I didn't see them, others because I didn't have the courage, and some because I was uneducated about money.  

Where I Came From


My family was around the poverty line until well into my high school years. A single mom raised me with two siblings. We each had different fathers, and not one of them was in our lives or paid child support. Yes, I grew up in an upper-middle-class white neighborhood but lived in the trailer park.  


When I was 22, I bought a house, except it wasn't a smart move. My grandmother needed help, so I began paying her mortgage. When I was in 4th grade, my grandfather died. The union he was a member of took the remainder of his pension and left my grandma on her own. They even kept his life insurance benefit. So, for the first time in her life, she had to work and live off Social Security.

I made pretty good money for a 22-year-old single guy living at home but didn't think about the future. I didn't save. I bought a truck. Then I got married. We fixed a lot of my mistakes, had kids, and it was off to the (rat) races.  


If there is one tip I can give you, make those years before kids count. Please don't put off kids, but make the years before having kids count.  

Here's the advice I would give my 20-year-old self.

1) Start a 401k or IRA today.  

We will get the obvious one out of the way. Start investing, even a little today. The power of compound interest is fantastic, but so is the power of starting a good habit.  


I cannot count the number of times I have started contributing to a retirement plan and stopping the contributions a few weeks later. I never learned the habit of saving. I never gave myself a chance to adjust my spending habits.  


Starting to invest $100 a month when I was 20 would not have changed the way I lived. I still would have been able to buy the same truck, gone out just as much, but would have also accumulated about $20,000 by the time I was 30. But instead, I ate McDonald's a couple of times a week.

2) Avoid Consumer Debt Like the Plague


Nothing will kill your finances like consumer debt. It can be a car or credit cards, but either way, it is poison. When you're young and don't have kids, it's hard to realize how long it will take to pay off the car. You also do not realize how much pain a $300 car payment can inflict.  


Just a $300 car payment for the average $25 an hour job means two days' work is spent each month only to pay for the car. Add a couple of credit cards, a mortgage, utilities, and food to that car payment and your budget becomes tight. Fast.  


Kids add an unimaginable amount of stress to your family and your finances. Getting into consumer debt before having kids can derail your life before it even starts.

3) Start a Side Hustle

You may not have much money in your 20's, but there is one thing you do have; time. I remember what it was like to be in my 20's. Between college, work, and just wanting to do something fun, I thought I had no time. I remember getting so mad at my 4o-ish-year-old friends telling me how great it is to have no responsibilities. It turns out they were right.  


I wasted so much time playing video games and shooting pool. I would give almost anything to have that time back. Nights, when I was watching a pointless TV show, should have been nights working on creating a second income stream.  


In 2003 I did not realize what was happening. I didn't see how easy it was becoming to start a business. The thing about starting a side-hustle is, you don't need to be the next Zuck's. You only need to add a few hundred dollars per month to your income and have a second source of income for emergencies.


Even with the increase in blogs and podcasts, there is an excellent opportunity to add little income to your pocket. It doesn't also have to be tech-oriented, you can start a landscaping company, auto detailing, do bookkeeping. There are so many options, find a skill or interest you have a figure out a way to make it happen.  


4) Buy a Duplex


Going along with the idea of having more than one source of income, I would buy a duplex. When I was 20 years old, I spent some time with a local realtor looking at houses. He took the afternoon and drove me around to look at 7 or 8 homes as possible rentals. I didn't buy anything.  

Looking back on it, I wish he would have sat me down and said, "buy a duplex, and you can live in one side and rent the other."  

Many duplexes will pay for themselves. You use the rental income to pay for the mortgage. When you get married or have kids, you can keep the duplex and rent out both sides. Raise the rent a little every year, take good care of the house, and next thing you know, you have a great side income (and some equity).


Duplexes are a fantastic way to get started in real estate. They add a little extra money to your pocket when you live there and can add a ton of money to your income when you rent both sides.  


5) Learn a skill

One significant self-criticism I have is that I know a little bit about a lot of subjects but am not an expert in any. As my life has progressed, there have been many times where I wish I had an expertise in something that would put food on the table quickly. This skill could have been anything from being more proficient at working on cars and handyman work, even to coding.  


When I say "skill," I mean anything you can learn that differentiates you from everyone else looking for a job. Yes, other mechanics are looking for work, but it's not a job everyone can do. Compare this to a retail clerk or call center worker (both jobs I have done), the competition is much more fierce.  


These skills give you less competition in the workplace, but they also tend to allow you to demand more money. Since you probably went through some training or certification, you can show your worth more plus less supply of qualified workers means higher pay for you.  


Here is a (non-exhausted) list of some of the skills I am talking about:

  • Auto Mechanic

  • Carpentry

  • HVAC Technician

  • Accounting/Bookkeeping

  • Coding

  • Electronic Repair

  • Tailor

  • Webdesign

  • Sales (but only if you're excellent, otherwise salespeople are a dime a dozen)

This list's goal isn't to give you every skill you could choose from, but to provide you with a few ideas to get your brain going. Auto mechanics may remind you that auto bodywork is a skill also. What other skills does this list bring to mind for you?

Conclusion

These five tips break down into two. 1) Find as many ways as possible to have more than one income source, and 2) Invest as much of the money you make into your future. If you do these two things in your 20's, your life will be rich (and not just with money).  


If you're in your 20's, what are you doing to lay a good foundation for your life? If you're beyond your 20's what do you wish you would have done?

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For informational purposes only.  Please consult a professional before deciding if concepts in this post are right for you.

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michael@saveforyourfamily.com   |   440-490-7526

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