The author of “Winning the Money Game” and the new “The Money Savvy Student” advocates building bigger lives rather than bigger lifestyles while disciplining habits.
If you do for two years what most people won’t, you’ll do for the rest of your life what most people can’t, said Adam Carroll, this he gleaned from amassing $28,000 in student loans, $8,000 in credit card debt and being “upside down” on his car.
“I owed more than it was worth. I was every Dierks Bentley song ever written,” Carroll said. He was a “debt disaster” subsisting on Totino’s Party Pizzas.
“Money-savvy students understand your financial condition right now does not dictate five years from now,” Carroll said. “You can have everything you want in life — just not at 22. If you do the right things, you can have it by 28. I’ve never believed in working 45 years to retire on a third of what you couldn’t live on in the first place. I wanted to work hard for 20 years, then party like Jimmy Buffett.”
“A lot of students don’t have a firm sense of what they’re doing with money,” Carroll said. “I existed like a rich college kid on credit cards and student loans, then quickly became a broke professional when I graduated and couldn’t ride that gravy train anymore. I was so broke I couldn’t afford to pay attention.”
Senior year he met the woman he married.
“Two years later I proposed, flying ‘Will you marry me, Jen?’ over a Rockies game at Coors Field in Denver.”
“Get rid of your debt or I’m getting rid of you,” she warned.
“My wife had $4,000 in savings. Her car was old with high mileage, but fully paid for. She paid most of college with scholarships,” Carroll said that she treated finding scholarship like her job.
“She spent 20 to 40 hours a semester on scholarship applications,” he said.
Carroll equated scholarships to $500-an-hour jobs.
“We lived on one income our first two years of marriage,” Carroll said. “She made $3,200 a month, I made $2,800. We lived on hers for mortgage, utilities and food. Mine went to blasting debt. Our friends lived high on the hog, buying new cars, furniture and big TVs. Colleges like SMC are perfect for students to get exposure at significantly less cost than what you normally pay. Use this as a springboard.”
While his wife worked as a night nurse, Carroll read Rich Dad Poor Dad, the first of 120 personal finance books in two years.
“We paid off almost $50,000 debt in 24 months,” he said. “Being debt-free with extra discretionary money gives you choices.”
“There are scholarships out there you have a one-in-five chance of winning. They’re low-hanging fruit,” he said. “If you work 20 to 40 hours a semester, Saturday mornings in your PJs or late at night, it will be the highest-paying part-time job you’ll ever have. If you spend an hour making an application and get $500, you made $500-an-hour.”
Working 10 hours a week for $8 yields $320 a month. Set aside $32 — 10 percent — in a savings account, not a “put-and-take account. It’s harder to take $320 when you’re making $3,200 unless you set the habit now. You are six times more likely to finish school if you have emergency savings. In Smart Couples Finish Rich, David Bach says men and women have different risk tolerances. My wife’s is very low. At 24 she needed $20,000 savings to feel safe and secure.”
Carroll recommends free budgeting tools available at vertex42.com.
“If you have a hard time separating swiping from spending use cash as much as possible,” he said. “You will overspend without impulse control.”
As far as Credit scores, he said: “determine interest rates you’re charged, whether or not you get a job offer, the cost of insurance,” Carroll said. “The higher your score, the cheaper your life will be on cars, student loans and mortgages. Credit scores range from 300 to 850. A good score is above 680. You can get a home with 620.”
Carroll’s sons and daughter, 8, 11 and 13, learn money management with a weekly allowance, $1 per year of age.
The middle child’s $11 is divided by 10-percent increments between savings, investment and giving.
“The rest (70 percent) is his to spend. By 5, they had $300 in emergency savings. By 7, $400. By 9, $500 from birthday and Christmas gifts from grandparents, aunts and uncles. Hopefully, a nine year old does not have emergencies, but if they have it at nine, they’ll have it at 59 because the habit is set.”
Carroll, a University of Northern Iowa communications studies alumnus — “I thought I was going to be Matt Lauer” — has presented at almost 700 colleges and universities nationwide.
In 2014, he crowd-funded a student loan debt documentary, raising $70,000 in 45 days.
“Broke, Busted and Disgusted” is coming to Netflix. CNBC last week picked up rights to broadcast the film in January.
EXCEL Student Support Services sponsored Carroll’s Academic Speaker Series appearance.