Getting Started Young: Your Path to Financial Freedom

In the past, we have written posts about financial mistakes. These articles are helpful; they allow those of us on the brink of a financially disastrous decision the opportunity to foresee the future, based on the problems encountered by others. However, these stories really don’t lay out what to do in an ideal life journey through finances. So let’s take a look at how to ensure excellence in finance when the road ahead is long.

A Young Couple, a House and an 813 FICO Score

When I worked in mortgage lending, I was never more impressed with anyone’s credit than I was with a young married couple. Sure, I had seen FICO scores in the 800s before, but I had never before or since seen a pair of perfect credit scores on a couple in their early twenties.

Of course, being the chic geek that (I hope) I am, I had to find out more about how a couple of 23-year old, fresh-faced youths (yes, I am dating myself here…) could manage the financial wizardry required for perfect credit from their dorm rooms, and this is what I found:

• They had Credit Cards: Each person in this party of two had a credit card since mid-teens. That being said, both used them as tools to build credit, not as open invitations to charge that unaffordable pair of shoes. Instead, these savvy teens used the cards for affordable necessities and paid them off each month.
• They were Employed: Both worked since they were old enough to collect paychecks. Through high school and college, this pair bussed tables, wrangled calves, and generally worked their fannies off to make a few bucks.
• They Saved: Squirreling away cash allowed each person in this dynamic duo the opportunity to build a sizable savings account by the time collegiate efforts were complete.
• They Found Free Money: Each of these young ‘uns also figured out they could basically be paid for their grades: landing scholarships and grants allowed them to attend college for free or nearly for free. This also meant they could squirrel away even more cash into the post-college savings accounts.

Continue to Save for Large Goals

This pair of financial wizards met and married young, and by 23 years old, they were sitting in my office, waiting for home loan approval. They didn’t have to wait long: their scrimping and saving (and general credit-savviness) landed them the starter home of their dreams. With their $40,000 down payment and combined 813 credit score, this young couple bought a small house with a $60,000 15-year loan.

They bought well below their means so that they could continue to save for things that were really important to them: early retirement, a vacation home, and a few children. With priorities set, they were able to lay the groundwork for a lifetime of 813 FICOs.

If you or a loved one are just beginning your financial journey, take heart: you too can make all the right choices to guide you through life with excellent credit. Not all hope is lost for those of us who have made some financial mishaps: if we all start now to live beneath our means, pay off our credit cards, and save our cash, we can all come out ahead in our own financial paths.

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