I was recently profiled on Live Solid’s Facebook page in a segment called “Financial Myths Debunked”. I offer some tips on what I believe are common financial misconceptions and how to avoid them. Check it out!

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When I ended my keynote presentation last week at New Hampshire Jump$tart’s MoneySmarts, I was asked several questions.  (Candidly, the Q & A portion of any seminar is highly enjoyable because it always varies significantly. You really never know what you’re going to be asked.)  With an audience of about 150 teachers – mostly of high school – I knew I had an intelligent and motivated audience.  To paraphrase the question one woman asked:

What do you say to the newly graduating college seniors who are overwhelmed with enormous student debt obligations and low starting salaries?

To the best of my memory, here was my response:

Of all the challenges twenty-somethings face, I believe that the increased student debt burden is both the scariest and the newest. By new, I mean that it is a phenomenon that this generation faces that previous generations of twenty-somethings did not. While college tuition has never been free for the average student, the rise in the cost of tuition has risen well above the rate of inflation for decades. It’s causing huge problems.

I contrast this to many other challenges that twenty-somethings face that are not new.  I point them out now because some people feel as though the entire “struggling college graduate” package is new – it’s not. Twenty-somethings have always wanted more than their entry level salaries could provide.  They’ve also felt they deserved more than their entry level salaries and may have even wondered if college was worth it, given how little they are earning.

But those are not new phenomena.

While I believe there should be a huge national initiative investigating and even pressuring universities to reduce the cost of education, I won’t go into that here for two reasons.  First, it’s an inherently political topic and I see no point in opening that can of worms. Second, I won’t go into that any further because it won’t help the people who have already graduated deal with their loans – and that’s who your question concerned.

Instead, today’s twenty-somethings need to focus on what they do control.

Yet, I’ll tell you, I’ve been on college campuses a few times since I graduated about 15 years ago.  Have you? Have you seen what the dorms look like now?  You can tell I’m not 70 years old but the difference in the 12 x 12 room I had with another guy and the suites I see today is striking. When I see pictures of other dorm room, I feel like I went to college in the Stone Age.  Even the cafeterias look like restaurants.  Not only does this increase the cost, but it also changes what feels tolerable and appropriate for new grads to “endure” when they graduate.

The most striking circumstance is their living arrangements.  Rent is a huge twenty-something expense. Often, it’s their largest, so it’s an area of focus.

Don’t worry, I’m not advocating for returning to Mom and Dad. I didn’t do that and I turned out fine – at least financially speaking.

But think about renting a somewhat beat-up small apartment – with another person living with you to share the rent.  If you’re coming from the type of college housing I was used to, such a place represented a minor step-up. In fact, my rent did go up – but only by fifty cents per month.  Today’s college graduates have a harder time doing what I did because the places they’re living – palaces compared to what used to pass as standard college housing – are so much better than the small beat-up apartments I just described.  Furthermore, they may never have had a roommate, so sharing an apartment – even though they’d have their own room – doesn’t seem like enough of an upgrade to their current situation.

Today’s college graduates should – like the rest of us – only focus on what they control.  Ten minutes after the graduation hats land on the ground is not the time to think about how their student loans might have been a lot more manageable had they gone to a less expensive school.  Instead, they should concentrate on what they can do to keep their expenses down during the next couple of years. If that means living at home, so be it – especially if there’s no job waiting. But far better, in my opinion, is to find a very affordable residence and share it.  It won’t get easier to keep your housing costs down as you get older – in fact, it gets more difficult. When you start a family, it’s awfully hard to downsize.  Start by living at the smallest place you can afford and be comfortable.  From there,  and you can increase your standard of living steadily, while giving yourself a fighting chance to aggressively pay off that debt and – one day – to save.

When I finished my answer to the question, the head of NH Jump$tart said, “Now you know why I want to adopt this guy. He gets it.”

It nearly made me blush.  What does my answer say to you?

Yesterday, I read an interesting article in the Boston Globe highlighting the experiences of the many 18-29 year olds still depending on Mom and Dad.

You: Because they’re still living at home?

Actually, the examples in this case aren’t boomerangs. Instead, the article profiles people living in the big city who are still getting checks every month (or are having certain bills paid by) their parents.

You: Oh.

While there are exceptions to every rule, for the most part I found such behavior detrimental to one’s reaching financial maturity.

You: What’s financial maturity?

When you’re able to truly support yourself and your family. It means you can pay your bills and save for the future.

You: Sounds nice.

It is nice, but my experience shows me that it can only be achieved via earning it.

You: The old fashioned way?

Indeed. I loved that commercial.

No single person making $50,000 a year truly needs financial assistance.  Yet this article shows how Megan Brown has grown to depend on her folks to make ends meet.  Of course, given her lifestyle, it’s easy to see how she needs additional funds:

• She lives in the most expensive part of Boston.
• She has a parking spot – not cheap in Boston.
• She has a health club membership – probably not at the Y

Candidly, we know very little about her spending habits, but the fact that a single individual earning $50,000 can’t take of her own bills tells me that she’s spending too much somewhere.  Not sure who she’s dining with in the picture, but if you’re ordering Pellegrino, you pretty much lose any rationale for monetary assistance.

Yet, I have sympathy for her plight.

You: You do?

Yes.

You: Why is that?

Because most people would take the money if it were offered to them.  At 23 years old I probably would have to.  But for me, it was never an option – and not because my parents couldn’t have helped had I genuinely needed it.

It was clear to me, as part of my upbringing, that when I was done with college my folks were done supporting me financially.

So, I didn’t live in the best part of the big city right away – I commuted 45 miles each way.  I didn’t live alone – I shared an apartment.  I didn’t drive a nice car, I drove a freakin’ Neon. I could go on but I’m tiring of it and I had a great life so I don’t want to sound like I’m complaining. I’m not. I’m contrasting.

Still, I  have sympathy for Megan because it isn’t Megan’s fault.  It is her parents who are causing, via their enabling behaviors, Megan’s lack of financial maturity.  Yet it will be Megan who, long term, will pay the price.

A person with low income and high student loans who is making wise financial decisions but struggling despite them has my sympathy.  But not the people profiled in this article.

What do you think?  Is this a problem and, if so, who’s to blame?

Twice in the last two winters, we’ve lost power for about 36 hours.

You: You should just pay the damn electric bill.  I know you like to negotiate everything, but you’ve got two little kids –

Massive ice storm last year.  Massive windstorm last weekend.  My write-up of the December 2008 event:

Visiting Boston during an ice storm – Like most New Hampshire residents, we lost power for at least two days earlier this month due to an ice storm.  No way we were going to ride it out at home when the inside temperatures were expected to (and did) reach the thirties – we have an infant!  So we planned on heading to a hotel 20 minutes away.  Then my wife and I chatted: Why not make lemonade out of lemons?  If we’re forced to use all these hotel points (I travel a lot for work), why not go somewhere fun?  So off to Boston we went.  Now we have family memories of being tourists in Boston (riding the subway, going to the Aquarium, pressing buttons to go up and down on the elevator) with two little kids instead of hanging out in the confines of a breakfast nook in Dover, NH waiting for the lights to come back on.

The 2010 Version

When we awoke Friday morning without power and heard it might be a while before it returned, we contemplated doing the same thing – going to Boston on hotel points.  (After all, my four-year old daughter immediately suggested it.  My wife and I have learned that she now associates any reasonably lengthy power outage with an automatic trip to Boston.)

But this time my office, three miles away, had power.  No showers or beds, mind you, but it had the most important luxury:  heat.  So we decided to bank those hotel points for a future “real” vacation and hunkered down at night with the girls in an office building.  It worked, although arriving here this morning felt a little weird as things were just a bit “off.”

You: Forgot to throw away the dirty diaper?

Ugh – fortunately that didn’t happen.

Truth be told, we had fun and kept the costs to a relative minimum.  Of course, we went out to lunch and dinner (keeping the refrigerator and freezer closed at home saved a bunch of groceries from going bad) but went to fun, inexpensive restaurants.  For breakfast the next morning, I went to a grocery store and picked up some oatmeal packets (we have a hot water cooler at the office), yogurt, and some juice.  Lunch was deli meat and some wraps. All in all, we kept it fun, kept it inexpensive, and kept our sanity.

At 3PM, the power was on.  We were just about to cook dinner when friends invited us over. Together, we celebrated the little things. What else really matters?

Of my top ten saving strategies is Number 4: Enjoy Free Stuff.

You: How can somebody do that?

Easy.  Just play on the swings or dance in the leaves.

You: Seriously?  I’m an adult.

Not going to lie to you – you might get some looks on the swing set.   Still, well worth it.  Or try something similar like going for a hike, visiting the beach, or taking a newspaper to the park.

You: Gotcha.

Yesterday, I re-discovered one of the best free activities in existence.

You: Re-discovered?

I chose that word because I forgot how much fun the activity was. I hadn’t done it since I was in high school.

You: Is it legal? Not sure I want to do anything I did in high school again.

It’s not like that.

You: What did you do?

I went sledding.

You: Really?

Yup. Took my girls sledding down a big hill at a nearby farm.  It’s in the early running for the memory of 2010.

You: Why?

Sledding is A LOT of fun.  Riding down a big hill with virtually no steering control knowing that the worst thing that could happen is a face full of snow is a blast.

Admission charge: zero dollars.

Sled price per use: Negligible, especially when you consider that it was really inexpensive to begin with and we’ll have it for two kids and several winters.

Seeing two little girls go from slight fear to daredevil status in less than an hour?

Priceless.

What can you do next weekend for very little money that you’ll remember for years to come?

At the end of 2008, I put together a list of my favorite moments of the year.  These were personal memories, mind you, not political or otherwise newsworthy events, though they sometimes overlapped.

You: How?  You didn’t do anything newsworthy.

Here’s an example: the Red Sox coming back to beat the Tampa Rays 8-7 in Game 5 of the ALCS made my list.

You: How is that a personal memory?  Just because you were watching the game as Red Sox fan?

No.  Becuse I was at the game.

You: Gotcha.

Other memories had less to do with sports and more about highlights of the year with my wife and children.

While I plan on maing the same list again in the next couple of weeks for 2009, I am also going to make a new type of list this year. It’s one I’ve been thinking about making for a long time, but now I am actually going to do it.

You: What is this list?

It’s a list of all the memories I want to have.

You:  A list of memories you want to have? Do you suffer from amnesia? How old are you?

No, no, no.  I’m talking about my future; things I want to experience that I haven’ yet done.

You: Such as?

I’ve never been to a Dave Matthews Band concert. I’d like to change that.  I would also like to attend the NCAA Final Four one year.  I’d like to learn enough about playing the piano that I could play a couple of basic old Billy Joel songs.  My list could (and will) go on

For some people, such a list could provide a great incentive to save.  For others, such a list would give a greater incentive to spend some of their savings.

After all, life is all about balance.

I’d love to hear some of your dreams – might help me grow my list. Do tell – and consider creating a dream list of your own.

Numerous studies have demonstrated weak correlations between happiness and wealth. (The sole exception are the truly impoverished, who are most likely to report being unhappy.)  Still, once you are out of poverty, there is very little relationship between happiness and financial stature.

Before I had children, I learned the most from my parents, grandparents, and other mentors of my personal and professional life.  Nearly all were at least several years older than me.  Yet, since I had my first daughter in 2005, I have to come to appreciate just how much I can learn from both her and her sister (who was born nearly two years ago).

For example, did you realize:When you spend less, you get more value out of life or How Kids Save You Money?  Did you know that, while Money doesn’t fall from trees, leaves do or How a Swing Set Can Keep You in Balance?  These are some of the most important lessons in life.  Far less important is Why the government is subsidizing golf carts. Still, the latter is among my most popular posts of late and was featured in this week’s Carnival of Personal Finance. While reading through many of the carnival’s, I discovered Enemy of Debt’s Enjoy Frugal Entertainment Without Breaking The Bank, an article after my own heart.  The enemy provides a solid, though by no means exhaustive, list of family-oriented legitimately enjoyable activities available for little or no cost. It’s a good reminder of what’s really important.

In my own life, I continue to see this everyday from my two girls.  The older one wants to play Chutes and Ladders almost every night.  (In less than a year, I think we’ve amortized the cost of the game to under a dime per play – a rate that is sinking fast).  Better yet, she’s getting better at counting and we’ve created a bit of a ritual, even a memory that will stay with us for years to come.

My youngest one’s joy comes from even simpler pleasures.  While I was playing with her at the playground over the weekend on a vintage New England fall day, the wind suddenly picked up.  Leaves were blowing everywhere and her face was beeming as she felt the breeze upon her little body and could see little things flying through the air.  You could see she was experiencing a sensory overload but was thrilled by the moment.  A few seconds later the wind calmed down. Immediately, she looked at me and asked “More?”

It’s too bad that I don’t have the power to make wind.  On the other hand, I am glad no amount of money could change that – perhaps I would have been tempted.

Remember what really counts in life.  If you ever forget, spend time with a child or a senior citizen, who often have very different perspectives.  Recall this isn’t about being cheap. Rather, it’s about being fiscally responsible. Want more examples? Here are Five ways to be (or not to be) fiscally responsible.

Thoughts?

Identity theft is a serious business.

You: Are you in it?

No, I’m not in that business.  I’m just saying, far better for you to take the risk of identity theft seriously vs. very easily becoming a victim of a stolen identity crime.

You: What should I do differently?

Not sure. It depends largely on what you do and don’t due to today.  Fortunately, David from Money Under 30 recently published Seven Signs You’re At-Risk for Identity Theft.  In my opinion, it was the best article among many featured in this week’s Carnival of Personal Finance, a well hosted event by Fabulously Broke.  The carnival also included my article Learning From The Same Accident, where I discuss not only my (now full) recover from a recent concussion, but also a rehash of the financial and life lessons from Flight 1549, the flight that landed safely in the Hudson River earlier this year.

For more on identity theft, check out my post from earlier this summer, Avoiding Identity Theft.

As I wrote earlier this week, I recently suffered a concussion.  Fortunately, this was my first head injury.  I now hope it is my last.  In the grand scheme of things, I was very lucky. There will be no long-term damage and the main impacts were limited to lost sleep, lost money (hospital bills), and a bit of lost pride.

You: Lost pride?

I received a concussion as a result of my head colliding with the head of one of my volleyball teammates.

You: Ouch.  Volleyball’s not supposed to be a contact sport.

Definitely not.  But there has been some upside to the experience.  Notwithstanding the primary side effect of the anti-brain swelling medication keeping me up to all hours of the night, I’ve had plenty of time to think.  In the last few days, I’ve even been able to read.  Obviously, I’ve avoided the super technical stuff.  One of my favorite reads of the past few days was What We Can Learn From Sully’s Journey.  Written by Jeffrey Zaslow, the co-author of Captain Sullenberger’s soon to be released book of his landing of the US Airways plane in the Hudson River last winter, this article really hit home for me.

Numerous times.

If you’ve seen Captain Sullenberger interviewed, you’ve probably been struck by his authentic humility.  He sees himself as anything but a hero, frequently pointing out that he didn’t choose to fly a plane that would lose both of his engines. Rather, he was simply the pilot of the one really unlucky plane that happened to have those facts.  The entire ordeal lasted but a few minutes, compared to an aviation career spanning his entire life, yet it is for those few minutes that he will be forever judged, and in some circles, worshiped.

While I can’t help but be incredibly impressed by Sully’s talents and personality, I have come to agree with his conclusion: he is no hero. Quoting a letter he received after the events of last winter from Paul Kellen of Medford, Mass.:

“I see a hero as electing to enter a dangerous situation for a higher purpose,” he wrote, “and you were not given a choice. That is not to say you are not a man of virtue, but I see your virtue arising from your choices at other times. It’s clear that many choices in your life prepared you for that moment when your engines failed.

“There are people among us who are ethical, responsible and diligent. I hope your story encourages those who toil in obscurity to know that their reward is simple—they will be ready if the test comes. I hope your story encourages others to imitation.”

Well said, Paul.  We can all be an inspiration, even if we will never know if anyone is even watching.  Long time readers of my blog may recall I was moved by the events of Flight 1549 immediately.  I hope you’ll take a minute to read my previous post: Lessons from Flight 1549 (Note: these are personal finance lessons from the days events, based on the crews and the passengers actions.)

Thank you for your patience during my recovery. Next week, I’m off to Vegas for a speaking engagement.  The irony of visiting the least mainstream place on the planet is not lost on me.

Answer the following three questions in the comment box below. Answer each one separately  (i.e., try not to think about questions two and three as you answer the first one.)

1.  Name the three most enjoyable things you did last weekend.

2.  Name the three most expensive things you did last weekend.

3.  What do you think about these two lists?

There are no right or wrong answers, but there should be some interesting information.