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I recently read an article from The Atlantic 1 discussing the overwhelming financial plight faced by many young adults. The article broke out numerous graphs illustrating that those in the 25-34 age bracket are more likely to earn less than 150% of the poverty line. That’s certainly not the statistic you want to hear as you near the end of college and prepare for coming out into the “real” world.

The article struck a bit of a cord with me. At the start of this year, I was in the worst financial state of my young adult life. If you combine school loan debt and various credit cards, I was in one heck of a hole. So, one of my main goals in 2013 was to learn more about the finance industry in general and start to shape up my own personal finances.

As we round out 2013, I’m happy to say that I would consider this my biggest success of the year (and a lot of great things happened to me this year). I’ll cover everything else in an end-of-the-year reflection post, but for now, I wanted to share some lessons that I learned this year in the financial arena.

1. Create Opportunities

One of the biggest reasons I was able to slowly climb out of the hole that I had dug for myself was I had created many opportunities to earn additional funds outside of my main source of income. Honestly, the importance of these opportunities can’t be overstated. When I look back at my total income over the year, I would imagine that 30% came from something other than my daily 9-5 job.

2. Eliminate Alternatives

If I stay in one place long enough, I can clear a refrigerator in a matter of a few meals. In fact, our grocery bill was always relatively high for just two people. To help us save money and cut down on expenses, Charlotte and I agreed to only spend $50 each at the grocery store each week. There were two primary ways to do this:

  1. I could total the price of all of our current items in my head while shopping (the route we chose)
  2. I could leave my wallet in the car and only bring in a $50

While we chose the first method, we stayed true to our goal and pulled things off the conveyer belt if it tipped higher than $100 total. For those with less self-control, I recommend the second method. I applied this “eliminating alternatives” philosophy in other areas as well. For example, I decided to leave my credit card at home so I couldn’t rack up a higher bill. For things like coffee (to which I’m addicted), I would load my Starbucks card up at the beginning of the month with a predetermined amount and then leave my wallet in my car when I went to get coffee. Once the card was up, my java addiction slowed to a halt outside of the house.

3. Sell…Everything

You think I’m joking. Go through your closet and sell all of the stuff you haven’t touched in 30 days or more. Following this same principle, I sold all of these items:

  • An original iPad
  • A Kindle
  • An older MacBook
  • A MacBook Pro Retina
  • A GPS/HR monitor watch
  • An iPod

Combined with a fewer smaller items, this gave me about $1,000 dollars extra in income. Plus, I don’t miss any of those items at all.

4. Concentrate

The Mint app is the first thing I look at every morning and sometimes the last thing I look at before heading to bed. I have every bank account and credit card on it so I can see everything in one glance. The app isn’t what is important here. The important thing to realize is that you can’t turn a blind eye. For the longest time, I would avoid looking at my bank account because I was afraid of what I would see. In the end, that wasn’t doing me any favors.

5. Spend Money

Life wouldn’t be any fun if you lived as a hermit holed up in your house eating peanut butter and jelly sandwiches in order to get by. To some degree, enjoying life requires spending money. Rather than just eliminating my spending habits altogether, I just decided to refocus where I was spending money. Here are the three areas I decided to focus on:

  1. Great Experiences

    Previously, I viewed money as a route to buy material items. Instead, I now look at money as an enabler to do the things I want to do in life rather than just collect a bunch of things. Case in point: although we’re currently trying to save money, Charlotte and I decided to buy tickets to Greece for our honeymoon. I figure I would rather hold off on buying a new mountain bike for the chance to visit Europe for the first time and experience something completely unique (We also were able to score a sweet housing deal that made the offer impossible to pass up).

  2. Key People

    Great relationships are key to happiness. For that reasons, I think hanging out and enjoying the company of those you love shouldn’t be ignored even when trying to hole away some extra cash. I through the term “key” in front because some people aren’t worth your time or money. Direct your resources to improving relationships that energize you, not ones that zap your energy and leaving you feeling frustrated and annoyed.

  3. Phenomenal Food

    While I wouldn’t consider myself a foodie by any means, I do love a great meal. To me, it’s worth spending the extra $20 to eat at a better restaurant or order a better wine than just to skimp by at a cheaper place.

By no means am I any sort of financial Jedi. However, as I would consider it my biggest personal improvement over the past year, I wanted to share some thoughts and ideas regarding the subject. When I first read the opening article by The Atlantic, my first reaction was that being a young, American adult doesn’t have to be a financial nightmare. At the end of the day, you’re in charge of where you spend your money. This is a main lesson I’ve learned this past year, and one I’m sure I will continue to learn over the next few decades.

1. H/T to Chase Livingston as I pulled the link from his Twitter

Photo credit: The Atlantic

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