TIP OF THE WEEK – My Advice for Young People

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More generally, by focusing attention away from oneself, things become clearer and it’s easier for a person to do the "responsible" things like avoiding impulse purchases and doing the extra work needed to bring in more income.

This last point is crucial for people who are suffering from depression and are in a financial hole. Part of what keeps them there is that, deep down, they don’t think they deserve to live stress free like the other people they see around them, who somehow have their act together and don’t let bills pile up on the kitchen table. By bringing in the church (or a charity that the person really respects), the depressed and financially beleaguered person can stop dwelling on self-loathing and instead focus on helping others.

Eliminate Variable-Rate Debt as Quickly as Possible

If a person already has a decent amount of cash on hand, I think the next goal should be to eliminate variable-rate debt as quickly as possible. The most obvious example is credit-card debt rolling over at an APR that moves with the prime rate. If the dollar crashes as many Austrian economists fear, we can expect massive jumps in interest rates. This will wipe out many people who thought they were doing just fine the month before.

Note that "eliminating" variable-rate debt doesn’t have to mean paying off the balances. Using a new balance-transfer promotional offer, for example, might allow a person to lock in a fixed rate for a year or more.

I have written on these pages about the pros and cons of credit-card use. Unlike my other suggestions, this particular one — namely to get out of variable-rate debt quickly — is based on our current situation, where I believe there is a real danger of interest rates spiking with little warning.

Acquire Some Physical Gold and Silver Coins

Once a young person has accumulated at least a month’s window in cash and has neutralized variable-rate debts, I think an excellent outlet for some of the saving each month is the acquisition of gold and silver coins. These don’t need to be collector’s items; in fact my favorite thing is "junk silver," because if the Big One comes it will be easy for other Americans to recognize US coins that were minted before the 1960s and have an easily verifiable silver content.

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$25 $22

"Anybody who babysits or cuts lawns for neighbors is an entrepreneur."

From an Austro-libertarian perspective, the other great benefit of buying at least some physical gold and silver is educational: This is what genuine, market-produced commodity money feels like.

Conclusion

The above tips are mostly common sense. Except for the warning about variable-rate debt, they are good ideas in any setting. Yet they are particularly important, especially for young people, in our present environment.

In closing, I want to stress that I am by no means a role model in this arena. I can write with confidence on the above matters precisely because I have seen firsthand what happens when you don’t follow those guidelines. If you want to keep your hair, you will give serious consideration to my recommendations.

Robert Murphy is an adjunct scholar of the Mises Institute, where he teaches at the Mises Academy. He runs the blog Free Advice and is the author of The Politically Incorrect Guide to Capitalism, the Study Guide to "Man, Economy, and State with Power and Market," the "Human Action" Study Guide, The Politically Incorrect Guide to the Great Depression and the New Deal, and his newest book, Lessons for the Young Economist. Send him mail. See Robert P. Murphy’s article archives.

For more tips, go here:

http://www.myhighdividendstocks.com/category/tip-of-the-week

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Published in: on September 16, 2011 at 12:05 pm  Leave a Comment  

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