Debt is a funny thing — it does not matter whether you are rich or broke, whether you are smart or dumb, whether you make other good decisions or not — everyone is susceptible to debt. You could be top of your class, king or queen of the road, and still.
Math is hard.
And it often starts with your very first paycheck.
My First “Real” Job
“We’d like you to start on February 18, and your salary will be $35,000.”
I gulped, excited. I was moving away, to Washington, DC, starting a new life, and I had a salary!
Before I even got my first paycheck, I’d signed a lease for a junior one-bedroom apartment in a very fun part of town, for $1150/month.
After I got my first paycheck, I realized that all but $13 of that check was going straight to my rent.
But it didn’t stop there. I was 23, in a city filled with young hard-working people. My company was, too. Of the 35 employees, 15 were under the age of 25, and most had just moved to the city as well. These were my first friends. At the time, these were my only friends.
And the work sucked. I mean, the jobs themselves weren’t too bad, but the leadership style was demeaning and we were all treated as cogs that were just as easily replaced as notebook paper.
So, we went out. Nearly every night. And it was fun! And, so, so easy to overspend.
We Borrow From Our Future Selves
DC is an upwardly mobile place, and we knew we’d get promotions and raises and so I spent. The first month I was only short a few hundred dollars. I remember feeling sick to my stomach when one of my friends said, “oh, I use my debit card, otherwise, I’d get in trouble.” I liked to put my credit card down and have people give me cash. “I get airline miles,” I’d say. But I liked having the cash.
What I didn’t like was looking at my statement.
I was borrowing from my future self, and I didn’t know what to do about it.
It just felt so normal. But it wasn’t. In the first couple years of living in DC, I was never invited over to friends’ apartments. We always went out somewhere and then to our respective homes.
A Proposed Solution
What if we got paid in advance? When we first start a job, what if we got that first two week’s pay already? Or month? Then we would know exactly how much money our salary that sounds so good translates to on a paycheck to paycheck basis. There would be no over estimation. In fact, there would be no need to estimate anything at all. You get a check. That’s cold, hard truth right there.
I think it would help. Now, of course this could only apply to salaried employees, but a lot of jobs fall into that category. I think when you earn something hourly, you already kind of do this in your head.
What do you think?
Are we just destined to borrow from our future selves? Do we all have to learn the hard way? Or is there something to my idea?