💯 💯 💯 "If you're living rent free, you have this rare opportunity to kill off debt so much faster than the average working professional who has five times a living expenses as you do."
EP 47: There are a number of reasons why so many young adults in their 20's and 30's are moving back home with Mom and Dad, but it really doesn't matter in the grand scheme of things. What matters is you max out the opportunity laid in front of you. If you have a rent-free life, you open up a lot of doors for your future. The problem is many young creatives are living at home but not creating a plan that can help them kickstart their business and life. In this episode, I list the 5 things I wish I did when I lived at home.
Support the show (https://www.buymeacoffee.com/artrepreneurs)
Michael Der 0:02
You're listening to Artrepreneurs, a podcast that inspires photographers and visual artists to live their best creative lives. My name is Michael der and I am a full time photographer with nearly 10 years of experience in the freelancing world. And I'm sitting down with an amazing community of visual artists to talk about process, business, and the lessons that have helped them grow. So let's get to it. Artrepreneurs starts right now.
Good afternoon, everybody. Welcome to Artrepreneurs thrilled to have you tuning into our show and supporting this content. Now today, I wanted to talk to the creators out there living at home with mom or dad or any combination of your parents and living under their roof. Now, folks, I do harp on a lot on financial independence in the show because truly, I have no idea how anyone runs a freelancing business without some understanding of their flow of income and expenses. Now the mistake that I've made is I've assumed that the majority of people listening to this show are living on their own independent of parental help.
And in today's day and age, that may not be a reality, with college cost being two times of what they used to be the cost of home ownership far exceeding many people's grasp. And even certain technology like smartphones and computers no longer being luxuries, but rather essential equipment to your business. It seems like it's harder to be financially independent now than ever before. And while the cost of living in education has risen at such a high rate over the years, the overall pay of many jobs has seemingly plateaued for a lot of entry level positions. In fact, according to Pew Research, just around 55% of millennials are living with a spouse and have a child by the age of 38, compared to nearly 70%, of the boomer generation that did it before. Now on top of that homeownership rate in general is about 8% lower for millennials than it was for their parents generation.
Now, there are a lot of sociological factors that will help drive this changing behavior. But make no mistake, folks, the economics are a big part as well. The sheer fact that tuition is the highest it's ever been in a generation that is statistically the most educated means our young graduates have to deal with an insane amount of debt before they can start saving for homes and families. And one of the resulting factors that we have seen more and more of over the years, particularly after the 2008 crisis, and the COVID 19 pandemic are more young people are opting to live at home with one or both of their parents. And guess what, folks, if that is you, you are in a safe place, do not be embarrassed, I'm not here to shame you. I actually think it's an awesome situation to be in. I lived at home for about two years after graduating college and I wish I had taken advantage of my time at home. And so I failed to recognize how great of an opportunity that actually was for me to kick start my life.
And so today, I want to encourage you to make the most out of your time at home and build a runway for your career and your life. So I'm going to tell you the five things that I wish I had done myself in hindsight when I was living at home, but whether or not you use any of these options, I hope at the very least it inspires you to build a plan of your own.
Number one, attack your debt. Now I understand that maybe you're listening to this advice, and you're saying to yourself, Okay, no problem, Mike, I'm gonna I'm gonna chip away at my debt. But I didn't say chip away at your debt. No, I really actually mean attack your debt, like strap up and go to war with your debt type of mentality even better think of like medieval war where you bludgeoned people to death with a morning star, which is the craziest invention known to man, it's just a frickin ball with spikes on it attached to a chain. Its whole purpose is maximum damage, folks. And maybe that's a little bit of an overboard of a visual. But I do think it's, it's sort of apropos of an image of how you should visualize debt killing, you know, how can we inflict the maximum amount of damage to our debt, especially if you're living at home, and even if your mom or dad is charging you rent at the very moment, it's probably still less than what's going to be out there in the real world for you. So you have this amazing opportunity to do some serious damage right now. So here's a basic plan for you. First, take the total amount of your college tuition debt and write it on a piece of paper or on a whiteboard. Now think to yourself, how long can you legitimately live at home without going insane? Being under your mom or dad's roof? Is it 12 months? Is it 16? Is it 24? Is it five years, whatever your number is divide that number by your total debt. And now you'll have a monthly barometer of what you need to throw at your debt to kill it off entirely, launching you into independence free of student debt. Now, if you can't kill off the whole thing, because that's understandable, it's hard to kill off, let's say $100,000 worth of student loan debt if you're only working 12 months at it, but if you attack it with that intent, and you don't pay minimums, you will inflict serious damage even if it's only let's say 20% killed off by the end of the time you move out I just want you to see the opportunity. It is so hard to get aggressive on debt when your expenses include rent, mortgages, taxes, maintenance fees, utilities, furnishing, and insurances. If you're living rent free, you have this rare opportunity to kill off debt so much faster than the average working professional who has five times a living expenses as you do. So don't waste the opportunity. Attack your debt relentlessly.
Number two, max out your retirement. Now I get it when you're young. The idea of planning for a time 4050 years away seems sort of illogical you want to live your life without compromises right now. But understand this, The later you start, the less you're gonna get Get back. The best advantage that you have at 22 is simply time. Now I'm no financial advisor. But if you merely get the ball rolling on your retirement investing, you will have compound interest working for you to the max. If you're out in the world paying for all the costs that normally hold us down, you rarely have anything left over to invest into your retirement. And trust me, I have talked to colleagues of mine who could not even fathom maxing out a Roth IRA contribution, which folks is not realistically a lot of money in the grand scheme of things. A max is about $6,000 a year. But it's understandable when you're living paycheck to paycheck, asking that person to live off $500 less each month is no easy request. So my advice is to simply get educated on your options by reading books, by listen to podcast by talking to tax professionals, while you're young. Now one of the mistakes that a lot of young people make is relying solely on the advice of their parents when it comes to finances. And unless your parents are highly educated in this field and have success growing their money, I wouldn't seek out their help. In fact, I would actually just asked them to get you in touch with the appropriate people to help you get started. And if I could advise one last little thing when it comes to your retirement, just think diversity, much like how putting all your eggs into one client basket can be very risky, so can relying on one investment vehicle. So again, find a resource or many resources that can help educate you on the many different options to grow your money. So bottom line, if you're living at home with minimal financial output, use this time to build your retirement growth aggressively.
Number three, put a percentage aside for your business and emergency funds. Alright, so while you are maxing out your retirement and attacking your debt, also keep looking to build up your savings. So pick a percentage of your income that you can devote to these savings buckets. Now, if we look at the first two options that I gave you, if every check, you took 20% to throw at your debt, and then 20% of your income to throw at investing, you would still have 60% of wiggle room to work with to split amongst savings and spending money. So remember, you have leverage because you're living at home. So while the average worker who rents or owns their own home might only be able to put five to 10% aside each paycheck, you have the ability to get aggressive and put 2535 Even 50% of your checks to your savings. Now will that cut into your fund money, of course it will. But that's the discipline is going to build, you can still have a great time with your friends and create experiences and go out on vacations. But right now you're prioritizing your life and your career, you will want a reservoir of money not just for your business, but also the potential emergencies you may face when you're on your own. Now I've talked about the importance of having an emergency fund if not for your business, just your life in general. And it's not a matter of if but when something unexpected happens. So I think about the seasonal wedding photographers that dealt with 2020 coming off a very slow winter with little income to then have their prime wedding season effectively canceled in the blink of an eye. How does one save themselves from pure panic mode in that scenario? Well, an emergency fund does and what if you have plans to invest into new gear in a couple of years, you may not have the ability to pay for things right now. But in time without the monthly expenses of rent or mortgage, you could build that up very, very quickly. All this really is folks is delaying some of your impulse purchases now for the greater impact purchases in the future. And the great part about these first three steps is that if you do this, if you use part of your check to kill off debt, if you use part of your check to invest, and if you use part of your check to save, you will have invariably taught yourself how to budget and how to live off of less. It took me a while to learn. But I taught myself how to live off 50% of my income so that I can contribute to retirement and savings. But that doesn't happen without some thought, some planning and some habit building rituals.
Number four, experiment and take chances. So when you are at home, you have the leverage to try a lot of different jobs jobs that quite honestly, the average independent professional might not take and should not take because the expenses they have weigh so heavily into the equation. But when you're afforded financial flexibility, you can make decisions based on creative opportunities over financial ones, and you can build a greater network because of it. The reality is I turn down several jobs when it doesn't align with my business and financial principles. But the downside to that, of course is that I can close myself off to other opportunities. So why you are not burdened with mortgage and property tax and homeowners association fees and leaky faucets. Try a bunch of jobs to see where it takes you. You never know if you discover a style or a niche that speaks to you more than you ever thought. My caveat would be though, that if you try something and you don't enjoy it, and you don't see the potential growth from it, to have a quick exit strategy, so move on from things that don't give you a good return. Now another area that benefits experimentation and risk taking applies to your personal projects. And this I would suggest going absolutely bonkers on it is harder to spend as much time on projects that don't earn you any income when you have more bills to pay and more people that rely on your presence. So if you are at home for a couple of years really focus on spending a lot of time building a library of projects that will further develop your niche or your expertise.
Number five, involve your parents. Okay, so this last piece of advice is really me speaking to my younger self. Ever since I moved out on my own I think I've stepped foot back in my parents home maybe four or five times in the last 15 years combined. And so if I had one piece of advice to the younger me, it would be to take advantage of that time. And what I mean by taking advantage of that time is threefold. I wish I learned more from my parents. I wish I gave more to my parents, and I wish I collaborated more My parents, these three actions is really what I mean by involvement. So let's go through each one. Learn from your parents. So this is obvious, but it is worth stating, we all have areas of expertise, and it is worth absorbing as much as we can from those closest to us. So if dad knows how to fix a car, ask him what he's looking for when he's under the hood. And you may not be a car person, I know I'm not. But you might want to call bullshit on someone telling you, you need to pay for a new air filter or a new timing belt when you don't. And if mom has a signature dish, have her teach you how to cook that dish, because one day she may not be here. And as crazy as it sounds, if you can replicate that soup recipe or that lasagna, just a little bit, part of her is always going to be present with you when you make it for yourself or your family. Give more to your parents. So if you're living rent free, your parents are subsidizing your business and your life. So give back. If you have budgeted Well, which you have no reason not to do each month, take them out to their favorite restaurant. And I don't mean Chili's, no disrespect. But really, I mean their favorite restaurant, and don't skip out on the wine, the appetizers or the desserts if they so choose, this is something I really wish I did when I was living at home for those couple of years, it is truly the least I could have done and I didn't do it. So do your folks a favor and give them a treat every single month. Now, if you've budgeted horribly and you spent, let's say, 85% of your paychecks on personal crap, at least try to use some of that last 15% to buy the groceries maybe once a week or order in for the family. And if somehow you can't even do that, make them a meal, even if it's just lunch, do the dishes, do the laundry, something to consistently show the appreciation for what they're doing for you. It doesn't have to be a monetary payback one for one. But you know what your parents would appreciate No excuses, folks. Take care of your parents. And lastly, collaborate with your parents. So just because your parents may have no clue about the industry or profession that you're entering in, doesn't mean they don't want to be involved. So ask them for their opinions, run ideas by them and ask them to put themselves in your shoes and see what they would do differently. Let them know what areas concern you. Let them know if your business strategy changes, let them know what you plan on investing in. And even business aside, involve them on this whole staying at home game plan, like let what's the window here, let them know that you've listened to this amazing podcast called entrepreneurs, and that you're inspired to kill off all your student loan debt in the next 24 months, so that you can start earning your financial freedom before you hit the age of 25. So I wish I had done this when I was in my early 20s, I think it would have put my parents concerns at ease. At the very least, it would have inspired confidence in them to back my decisions to pursue such a creative life. Because not only would it have shown the initiative in my pursuit, but also the thought in the strategy to validate my course of direction. And for those of you who are paying your folks who live at home already, maybe they're more likely to reduce rent on you, when you show how serious you are about getting ahead in life, they might be more on board with your game plan if you actually show them a game plan.
So folks, collaboration is really about communication. And so it really starts there. So folks, as I wrap this up, stop, if you're living at home with your parents, I want you to see the advantages laid before you. The worst thing that you can do in my opinion, is to simply take advantage of your parents charity, and not come out of it having improved your attitude, or your approach to life. I wish I could go back and tell my 22 year old self what to do, but I don't have that opportunity. You do. And for those of you who are a little bit older in your late 20s, early 30s, mid 30s Even I'm not here to shame you. I understand I get it. It's tough out there. But don't wait for some white knight to swoop in and solve your economic issues. Build a plan for the time that you do intend to stay at home. Whatever plan it is, you don't have to follow my tips. But I implore you make your time at home worth it not just for you but for the people you share your life with so that you will come away with a far richer experience.
Hey, everybody, this is Michael der thank you so much for making it all the way to the end of the episode. I hope you'll follow tag and engage with us on our Instagram account at Artrepreneurspod. We've also launched our website Artrepreneurspod.com. It is the central hub where you can sign up for our newsletter, read our blog posts, send us voicemails, and even access discounts from our amazing affiliates. It's also the perfect spot to shout out entrepreneurs with what would be an immensely appreciated five star rating and review. And if you're feeling extra generous, you can even make a small donation that's really going to help accelerate the growth of this podcast. But no matter what you do, folks, I just want to say thank you so much for supporting this program. There are a lot of great photography podcasts out there and I am just grateful to have gained the trust even for take care of everyone. See you next
Transcribed by https://otter.ai