Broke Millennial: Stop Scraping by and Get Your Financial Life Together

2017·2.12 MB·English

by  Erin Lowry

ADVANCE PRAISE FOR
Broke Millennial
“If you haven’t quite got the hang of ‘adulting,’ follow Erin Lowry’s spot-on,
often funny financial advice. You’ll be inspired by how she successfully
sidestepped student loan debt, negotiated a 40 percent (yes, 40 percent!) raise,
and managed to tackle a host of thorny money situations in her relationship, her
friendships, and even with her parents and bosses. Best of all, Erin reveals how
you can do all this too. Broke Millennial is not your typical personal finance
book. This is the wisdom I wish I had before I made a financial mess of things in
my twenties and early thirties!”
—Lynnette Khalfani-Cox, cofounder of AskTheMoneyCoach.com and New
York Times bestselling author of Zero Debt: The Ultimate Guide to Financial
Freedom
“Broke Millennial takes the typical preaching out of money lessons and replaces
it with humor, empathy, and a fun, pick-your-financial-path twist, for
successfully navigating all the financial questions you’ll face in the real world.”
—Farnoosh Torabi, financial expert and host of the award-winning podcast So
Money
“This is the ultimate millennial guidebook on personal finance. Erin Lowry takes
you on a journey from basic money concepts to retirement fundamentals, and
from salary negotiation to home ownership. She also does a great job of reducing
jargon and sharing knowledge that is practical and actionable. If there is a book
you must read to get your financial life together, I highly recommend Broke
Millennial.”
—Jason Vitug, bestselling author of You Only Live Once: The Roadmap to
Financial Wellness and a Purposeful Life
“Broke Millennial is my go-to personal finance book when I am working with
millennials. It’s filled with practical step-by-step instructions and guides that any
twenty-or thirty-something can easily use to change their financial situation.”
—Lauren Greutman, frugal living expert at LaurenGreutman.com
“Lowry brings into sharp focus what’s going to matter money-wise to young
adults starting out in the world at a time when the odds seem stacked against
them. Broke Millennial is rich with specific advice to guide readers on the path
to financial wellness. Millennials who may be over-spending because of
#FOMO need to read this book—stat!”
—Bobbi Rebell, author of How to Be a Financial Grownup: Proven Advice from
High Achievers on How to Live Your Dreams and Have Financial Freedom
“Thinking about money, especially when you don’t have much, can be painful.
But Erin Lowry shows that you don’t need to be a mathematical genius to get on
the right track. She makes it easy for people to build a financially healthy plan
for life. Spend some time with this book and your financial decisions and
confidence will improve, no doubt.”
—Nick Clements, cofounder of MagnifyMoney.com

An imprint of Penguin Random House LLC
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Copyright © 2017 by Erin Lowry
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Library of Congress Cataloging-in-Publication Data Names: Lowry, Erin, author.
Title: Broke millennial : stop scraping by and get your financial life together / Erin Lowry.
Description: First edition. | New York : TarcherPerigee, 2017.
Identifiers: LCCN 2016055468 (print) | LCCN 2017008897 (ebook) | ISBN 9780143130406 (paperback) |
ISBN 9781524704056 (ebook) /
Subjects: LCSH: Finance, Personal. | BISAC: BUSINESS & ECONOMICS Personal Finance Money
Management. | BUSINESS & ECONOMICS Personal Finance Budgeting. | SELF-HELP Personal
Growth Success.
Classification: LCC HG179 .L696 2017 (print) | LCC HG179 (ebook) | DDC 332.024—dc23
LC record available at https://lccn.loc.gov/2016055468
This publication is designed to provide accurate and authoritative information in regard to the subject matter
covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or
other professional services. If you require legal advice or other expert assistance, you should seek the
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While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other
contact information at the time of publication, neither the publisher nor the author assumes any
responsibility for errors or for changes that occur after publication. Further, the publisher does not have any
control over and does not assume any responsibility for author or third-party Web sites or their content.
Cover design: Zoe Norvell
Cover image: JG Photography / Alamy Stock Photo
Version_1
THIS BOOK IS DEDICATED TO . . .
. . . my dad, for playing his self-proclaimed role of villain so
graciously and laying all the groundwork for my financial
education.
. . . my mom, for teaching me how to ask for the order.
. . . Cailin, for showing me why it’s important to never give up on
your childhood dreams.
. . . Peach, for knowing the best way to keep me awake on a road trip
is to ask about the difference between a traditional and Roth IRA
and being happy to listen to the answer.
Contents
Advance Praise for Broke Millennial
Title Page
Copyright
Dedication
Chapter 1: Money Isn’t the Worst! Seriously.
The moment in which I attempt to convince you that learning about money can actually be fun.
Chapter 2: Is Money a Tinder Date or Marriage Material?
Learn how to identify, understand, and overcome your psychological blocks when it comes to money.
Chapter 3: Do You Have a Gold Star in Personal Finance?
Discover how you’re doing financially so far and ways to take better control of your money.
Chapter 4: Dealing with the Dreaded B-Word
The basics of budgeting and how to find the budgeting method that suits you best.
Chapter 5: Picking the Right Financial Products (aka The Chapter in Which
This Book Pays for Itself)
Uncover the ways banks are screwing you over and what you can do to stop them.
Chapter 6: Credit Reports and Scores: The Report Card for Life
Get your credit score on fleek without taking on unnecessary debt, and learn how to handle items in
collections.
Chapter 7: Wait, I Shouldn’t Just Pay the Minimum Due on My Credit Card?
Make sure you actually understand how to use a credit card properly, and learn how to find the best one
with perks.
Chapter 8: Yikes, I Already Have Consumer Debt. What Now?
Ditch that debt effectively with one or several tools explained in this chapter.
Chapter 9: Student Loans: How to Handle Them Without Having a Full-On
Panic Attack
The title says it all.
The title says it all.
Chapter 10: I’ve Got Debt, So Why Should I Care About Saving? (Pay
Yourself First)
Find out why you should save and how to do so if you have debt; if you’re debt free, check out the tips on
saving and see your net worth skyrocket.
Chapter 11: I Can’t Afford to Split This Dinner Bill Evenly!
Navigating finances and friendship.
Chapter 12: Getting Financially Naked with Your Partner
How to have that first awkward money conversation with your partner without you or him/her running for
the door.
Chapter 13: Paying Rent to Your ’Rents: Overcoming the Emotional and
Financial Battles of Living at Home After College
Living at home can be a financial windfall, but don’t let it drive you or your parents crazy.
Chapter 14: How to Negotiate Salary (or Anything Else) by Learning to Ask
for What You Want
People can’t read your mind, so find out how to tactfully tell them what you deserve and why you should get
it.
Chapter 15: Investing: No, It Isn’t Gambling!
Decode the world of investing and learn how accessible and important it is for your financial plan.
Chapter 16: Retirement: Can It Ever Happen for Me?
Yes, let me show you how!
Chapter 17: I’m Not Rich Enough to Hire a Financial Planner
Doubt it! Uncover how the modern financial planning industry works and who you should trust with your
money.
Chapter 18: But My Broker Said I Can Afford This Much House
Homeownership may or may not be for you right now, but understand how to handle the process once you
get there.
Epilogue: Now That You’re A Financial Badass, Keep It Up!
Acknowledgments
Financial Resources Guide
Notes
References
Index
Chapter 1
Money Isn’t the Worst! Seriously.
IN THE SUMMER OF 1996, a glazed Krispy Kreme donut changed my life. Well,
okay, not just one donut: five dozen Krispy Kreme donuts.
It all began on a humid morning in North Carolina when my mom decided to
engage in one of the most dangerous and cutthroat suburban activities: hosting a
yard sale.
As my sister and I watched her spend the week leading up to it preparing to
sell off our unused goods to flocks of women wearing elastic-band sweatpants
and scrunchies (this was the nineties, after all), an idea began to germinate in my
seven-year-old mind. If people were willing to hand over their hard-earned cash
for a used Abs of Steel video at 7:30 in the morning, wouldn’t they be likely to
fork some over to buy donuts from two adorable children?
Suddenly, visions of Toys“R”Us store aisles—and, more specifically, a Nerf
Super Soaker I’d been coveting—started to dance in my head.
I pitched the idea to my parents. After a little deliberation, my dad offered to
be my backer and stake the capital required to fund my enterprise—as well as
drive the car to pick up the donuts. (Again, I was seven.)
My four-year-old sister, Cailin (no, this is not a typo—that’s her real name),
and I set up shop using our Fisher-Price picnic table as our storefront. I strapped
a teal fanny pack around my waist to hold my earnings, donned my purple
baseball cap, and we were open for business.
Cailin and I spent the morning of the yard sale calling out to haggard-looking
shoppers, neighbors walking their dogs, and gaggles of neon-track-suited moms.
We implored them to purchase a glazed Krispy Kreme donut for the inflated
price of 50 cents. And slowly but surely, the combination of my sister’s doe-like
eyes and my enthusiastic sales pitch won them over.
Handing over those donuts to die-hard garage sale enthusiasts and kind
neighbors felt like grueling work during an early morning of summer vacation.
Finally, with the last donut sold, I peeked into my fanny pack knowing the Super
Soaker was mine. Feeling the weight of all those quarters, I imagined I could
Soaker was mine. Feeling the weight of all those quarters, I imagined I could
even buy two Super Soakers and be the ultimate warrior of water fights at the
pool.
Then everything went horribly wrong.
My dad strolled over and asked to see the earnings. After having been
subjected to seven years of his tyrannical “candy tax” at Halloween (he claimed
first dibs on our loot because he chaperoned the trick-or-treating, which set me
up nicely to understand taxes in my first real-world paycheck), I clutched the
fanny pack to my chest, refusing to show him.
My dad took the fanny pack, dumped our earnings on our picnic table, and
carefully counted out the coins. He then proceeded to give me my first lesson in
economics.
“You have thirty dollars here,” he said.
“Yes,” I confidently replied. “I am going to Toys“R”Us.”
He looked at me and smiled in that all-knowing way parents do, which left
me with a sense of foreboding brewing in the pit of my stomach.
“Well, it cost me eight dollars to buy the donuts you sold,” he said while he
picked up eight dollars in quarters.* “Then you had Cailin help you sell them, so
you need to pay her.” He handed my four-year-old sister six dollars. “So, after
expenses, your net profit was sixteen dollars.” He smiled while pushing the
remaining piles of quarters toward me.
I had never felt so cheated in my life.
• • •
RATHER THAN CONVINCING ME that my dad was out to swindle us, the Krispy
Kreme experience instead has become the cornerstone of my personal finance
education. What my dad’s lesson started was a long tradition of my parents
teaching us essential lessons about money through the use of real-life examples,
which are still fresh in my mind 20 years later.
Even if you feel that taking a child’s hard-earned donut money is cruel—
which, in retrospect, I no longer do, and I could very likely do the same one day
to any future kids I may have (hey, apples don’t fall far from trees)—these
financial lessons served me well when I eventually struck out on my own. For
example, they enabled me to get off parental welfare only three weeks after
college and muster the confidence to move to New York, knowing I would
survive there as an independent early-twentysomething. And even when I wasn’t