AlexOliver's Journal

[AlexOliver]

I’ve been posting here for a little over three weeks and thought I’d share my plans.
I’m seventeen and a rising high school senior. I participate in a dual enrollment program at a community college, mostly because I couldn’t stand going to high school anymore.
After this year, I plan on attending massage school, graduating in nine months, and getting licensed. Massage therapists make $50/hour and it’s very easy to be self-employed, which is something I’m attracted to. A potential downside is there aren’t many opportunities for raises, but I think I can live with that
I live in suburbia and don’t have a car, which makes it impossible to get anywhere. I don’t have a job at this point because 1) school and transportation to and from takes up most of my day in the school year and 2) there’s not much within walking distance. Once a month, I make the rounds and apply to all the fast food joints, because they throw out applications after a month. I don’t apply anywhere that requires online application because I don’t want to give out my SSN until I’m hired (what do they need it for?) because of the risk of identity fraud, so that rules out half of the businesses. The local business (mostly restaurants) are family-run enterprises and only employ their families or people of their same ethnicity.
Even though I haven’t had a job yet, I’ve saved $1500 from birthdays, Christmases, etc. in a year and a half. I should be able to double that by the time I leave for massage school. Even so, it’s looking like I’m going to have to take out student loans. Tuition, fees, and books/materials should cost $10-12,000. I’m not sure what the cost of living is in the area I’ll be moving into, but I would probably round up and get $30,000 or so, hoping to pay a lot of it back once I graduated.
I’ve always been good with money, but usually saved to spend. I can’t manage to keep cash on me, it gets lost on books and whatnot. That changed a lot when I got a bank account and was able to see a total on a screen. Cash to me is monopoly money, and is meant to be fun. Money in the bank is a game, in that “winning” is having the biggest number So I don’t carry cash anymore, just my debit card.
My goal is financial independence. I want to have kids though, so it’ll probably take longer than five years (ten to fifteen maybe?). Massage therapists usually work 30 hours a week, resulting in an annual salary of ~$48,000. If I stay frugal, find a cheap place to live after I graduate, live simply, etc, I should be able to pay my loans off within a few months.
What do you guys think?

[Cashflow]

My suggestion is to go to Meetup.com and search on Financial Freedom (or Financial Independence or Wealth Building or other similar terms). You will find groups in your vicinity you can attend to learn more about how to build wealth and become financially independent.
It doesn't matter how much you make; what matters is living well below that income and intelligently investing the rest. When the income from your investments exceeds your monthly expenses, you will be financially independent.

[Steve Austin]

Excellent instinct w.r.t. not giving our your SSN for any purpose, other than to file income taxes, or to an employer so that they may file your FICA payments and W-2.
Regarding debit card ILO cash, I did that 8+ years ago. But about 7 years ago, I decided to operate entirely on a cash basis. Doing so is an enforcer of spending discipline, in my experience. With cash, you can budget with an envelope, and it's easier to screw down your spending as your envelope dwindles/lightens for the month. There is no such analogue for card spending, that I know of. Let's take your "lost on books and whatnot" example: do you think your books-and-whatnot expenses have come done now that you only transact with a debit card vis the cold hard green? I suspect that you spend as much, and likely more, on books-and-whatnot because in some respects 1) the debit card is easier, and 2) it doesn't "feel" like real money.
I recommend an experiment. Continue your debit card only mode of transaction through the end of September, tracking everything (ex post if you can via your debit card reconciliation statement(s)). Then in October, flip over to the all-cash-no-cards mode of transaction. Presuming September and October will be qualitatively similar for you otherwise, this should make a reasonable and informative quantitative exercise.

[KevinW]

This sounds like a good plan. In hindsight I think I would've been better off financially if I had got a trade and gone into business for myself instead of pursuing years of higher ed.
A few thoughts:
Try to do whatever you can to minimize the student loans. It is difficult to get ahead financially with a large debt hanging over your head. In your case that probably means going double-down on getting a job now, having a part time job while in school, looking for any scholarships or grants you can find, and

minimizing living expenses with ERE techniques.
Thinking two steps ahead, it will be easier to get your first massage job if you have at least one job on your resume. This is another reason to emphasize getting a job before you graduate.
I agree in principle with the SSN privacy thing, but tactically you may be better off giving out your SSN in this round of applications. You have to weigh the risk of identity theft (IMO low for a teenager with few assets) and indignity of compromising your principles a little vs. the $30k plus interest of loans, and the possible setback in finding your first $50/hr job.
Ironically, in order to get to be financially independent and have the luxury of not worrying about these inanities, you first have to get good at playing the game and "break a few eggs to make an omelette."
I hate to rain on your parade, but don't forget about taxes in your income projections. Unfortunately it isn't as simple as hours*wage. Plan on losing at least 1/3 of that to taxes. There's federal income tax, usually a state income tax, social security, medicare, and usually a few miscellaneous other things. There are calculators on the internet if you want to be more precise. That first paycheck is a shocker.
@Steve

You could leave less than $100 in your checking account and use your debit card. That way you have a hard limit on how much you can spend, just like carrying a finite wad of paper cash. That only works if you have the discipline to treat an overdraft as completely unacceptable. You might be able to ask your bank to turn off overdraft "protection" so you'll be declined if you go over your self-imposed limit.

[AlexOliver]

@Steve: I actually track my spending ala YMOYL and have since Feb 09. I tally the results in a spreadsheet. If I'm out during the day, I'll write expenses on my hand and enter them in when I get home.
Cash to me doesn't feel like real money. I check my accounts online religiously (every time I make a purchase, to see if it went through, if they charged the right amount, etc), so even if I didn't track manually, the guilt of buying something would weigh heavy because I would be reminded of it constantly.
Carrying cash only isn't practical at this point as my dad frequently has me make trips to the store, get coffee, etc, and I hate carrying more than $100 in cash (have you noticed no one takes bills over $20 anymore?). Also envelope budgeting doesn't seem to work in my case, because I have no fixed expenses, but buy a lot for my dad (which he pays me back for). I don't know how I would budget for this.
@Kevin: I usually keep a few hundred ($100-300) in my checking and have the rest in savings. I have overdraft protection (drips into my savings, this is what od protection is right?) which I think is great for emergencies, but I've never had to use it. If I need extra cash I go to the ATM and manually transfer or do it online from savings -> checking.
No state income tax in Washington, thank goodness, but I'll remember to figure taxes in next time I do a projection.

[Steve Austin]

If you've got your budget system worked out, then I'm not one to steer you away from something that flies for you. "checking accounts religiously" is something that would wear (and has worn) on me.
I am rather fascinated by your comment that cash doesn't feel like real money (but an online statement does?). Feel free to elaborate on that sentiment as you write your journal. I am just curious, and I don't mean by asking to in any fashion pass judgment on your current system.
Regarding bills over $20, L-notes and C-notes are the ones I prefer (and what I request when I make my monthly stroll to the bank to withdraw my expense fund for that month). I wish the US still printed a D-note. Less than 10% of my transactions have resulted in a request for a smaller bill, and less than 5% of the time has a large bill inhibited a transaction. And in those cases it wasn't a matter of the vendor not accepting the bill, it was just that they did not have the change to break the bill (it's only happened in morning transactions).

[HSpencer]

When you fill out an application for anything at all, and you come to the SSAN Block, instead of filling in the xxx-xx-xxxx,

Simply overwrite "available on request". This is becoming common practice on applications these days. Anyone in business should be fine with that. We had an * on our applications for both apartments and jobs that indicated that if you did not wish to list your SSAN, you could enter the "available on request". Then if the deal went through, (the rental or a hire), the SSAN was provided in our office face to face. One should NEVER list one's SSAN on the internet for ANY reason.

Places that want my SSAN on line are:

Social Security

Dept of Defense Military Pay

Tricare Southwest Region Medical
I don't give it to them on line. I use the telephone instead.
Unlike Steve, I don't want any $100.00 bills in my current ramifications of life. There are two reasons:
1. You have to double check the clerk you spend it with isn't thinking it's a $10 bill when you hand it over. Some clerks even have a great deal of trouble making proper change back to you on a hundred. (can you spell skool?)
2. On weekends, a hundred bill will run some smaller places right out of cash. I don't like doing that. Also, some places have so little in change (management does not trust them), that it is nearly impossible to use them.

[Steve Austin]

HSpencer, it's possible that I'm such a light consumer that I don't transact anywhere than places that are likely to accept (grocery stores, the landlord, banks). I just remembered another C-note anecdote: about 50% of the time, the marker comes out and the register operator marks the bill in some fashion that will determine whether it's counterfeit.

[HSpencer]

@Steve
I have often wondered what would happen if it turned out to actually be counterfeit?
Can you spell handkuffs?

[Steve Austin]

I only get my C-notes from the Bank of America. If they're passing me fake bills, there's trouble.
What would happen if a vendor claimed a C-note I presented was counterfeit? I'd ask them for their manager's name / phone number, so that I could contact them after I took the bill to Bank of America and asked them to confirm it was real. I suppose there could be a mandatory call to the Secret Service.
I still feel safer getting $100 bills from a teller than I do $20 bills from an ATM (that isn't necessarily serviced by the bank).

[AlexOliver]

@Steve: I think I'm just motivated more by numbers on a screen than by a wad of paper. The concept of money is super abstract to me anyway.

[George the original one]

@AlexOliver - be aware that there are a lot of licensed massage therapists here in the Pacific Northwest, partly because we have decent licensing standards and partly because we have a couple of the best trade schools for it. Once you get a license, success is largely defined by your people skills and self-promotion rather than your massage skills.
Don't forget to check the local grocery stores for part-time jobs... someone has to clean-up after the baker & butcher, stock the shelves, etc. and that usually happens outside of school hours. You can also canvas the neighborhood for odd jobs in yard maintenance.

[AlexOliver]

Quick update... I managed not to spend any money in the month of September, while still collecting my small allowance, so my spreadsheet shows that I've hit "the" crossover point!
George, thanks for the advice regarding massage...the exam used to license massage therapists in Washington (NCTMB? or similar) is used in 39 other states, so I might move sometime after I graduate. You said, "a couple of the best trade schools", could you spare some names? I'm looking at Port Townsend right now, but open to others.

[George the original one]

I'm only familiar with the Portland area schools:

- East West College

- Oregon School of Massage
I've known a few students who went there and was pleased to see that their curriculum was engaging in addition to getting one through certification.
Port Townsend is a nice place, though finding an affordable place to stay may prove challenging. Winter might be bleak, like Astoria.

[AlexOliver]

I'll check those out. The one I looked at in Portland cost more and took twice as long to complete (as Port Townsend). Incidentally, I love the winters in Astoria I love gray, rain, etc.
I was thinking of living in a van while I'm in school, staying either in the van or at the hostel ($25/night) in Port Townsend for the two nights I'd have to stay there, and couchsurfing, staying in hostels, or camping around the Puget Sound for the nights I wouldn't.

[Kevin M]

Agree with George above - along with your massage classes, learn some marketing skills - either at school or outside reading. I'm a CPA but just having that designation doesn't mean people are beating down my door. The certification is a minimum step for most potential clients - ie they won't talk to you if you're NOT certified. I suck at marketing and networking so it is a rough go trying to find new clients.

[aquadump]

Alex, I'm not sure if you're into travel. If you are, check out the Cycle America staff positions. They pay massage therapists (and bike mechanics), along with free travel, housing, and food. Before you're a massage therapist, you can volunteer -- meager stipend and free housing/food -- if you have time to kill before the schooling.

[AlexOliver]

Wow! Thanks rePete! I'll definitely look into that.

[AlexOliver]

These last months of 2010 have been mired by financial setbacks.
November:

-art supplies, $120

-concert tickets, $110

-passport, $125

-ear gauging, $60

-tattoo deposit, $100

-wwoof membership, $30
December:

-tattoo, $300 so far, maybe $200 to go

-3-day trip to Victoria, $250?
Upsides:

-I should get at least $50 when I sell my textbooks back to my college

-Christmas money
I don't regret any of this, but basically, I should end 2010 with the same net worth I started with.