This is my favorite time of the year. Not only has summer arrived, but it’s graduation season. It’s my chance to impart some nuggets of wisdom onto impressionable graduates. To those who seem genuinely interested, I usually provide a brief run-down of the five most important things to avoid.
According to DivorceRate.org, it is estimated that around 50% of marriages will end in divorce. On average, first marriages that ended in divorce lasted about eight years. The divorce rate is highest for men and women who marry between the ages of 20 and 24 years. Waiting just a few years can almost double your chances of a successful marriage.
Divorce is called a destroyer of wealth and that’s an accurate description. When a divorce occurs, each person loses much more than 50% of their combined wealth. Between the lawyers, the court costs and the losses from costs of liquidating property, there isn’t much left over from years of work.
I have witnessed a number of divorces which led to foreclosure and bankruptcy. In almost all of these cases, the individuals had to basically start over from scratch. When you are in your thirties, forties or even fifties, moving back into a dingy apartment or moving back in with your parents can be pretty depressing.
2. Jail Time
According to the Bureau of Justice Statistics (BJS) in 2008 about 2.3 Million people were incarcerated and another 5 million were under correctional supervision (parole or probation). The United States incarcerates the highest percentage of the population of any industrialized nation.
People who do time not only lose their income while incarcerated; they lose future potential income because they now have a record. Also, they may have to pay fines or restitution and attend expensive programs. And, you don’t have to be a violent criminal in order to get yourself locked up. A couple too many drinks, a high-speed joyride or a scuffle at a bar can land you in jail. That mistake could cost you dearly for years to come.
I have a friend who recently wound up in the brig (military jail) and it was devastating for his family. They lost their apartment and had to move in with family. They had no money for food, clothing or daily expenses. If not for family and friends they may have wound up living in their car. He is out now and they have a new place, but I’m sure they are months behind financially and will struggle for quite a while to catch up.
3. Accidents & Injury
According to the National Center for Health Statistics (NCHS), the number of emergency department visits for unintentional injuries in 2006 was about 27.7 million. The average cost for an emergency room visit was $1,038 in 2007. Uninsured people under age 65 averaged $986 in expenses, of which they paid about 45% out of pocket. Medical bills are the number one cause of personal bankruptcy in the U.S.
It’s a lot of fun to drive fast or to go extreme with sports, but the risks usually outweigh the reward. I have a friend who became a quadriplegic after a horrific motorcycle crash. His name is Chris and he is often given a shout out on the X-Games from his fellow freestyle motocrossers. This is a very steep price to pay for a young person just starting out in life. Keep it real, wear all the safety gear and never drink and drive / ride.
4. Drug & Alcohol Addiction
According to the Substance Abuse and Mental Health Services Administration (SAMHSA) in 2006, 23.6 million persons aged 12 or older needed treatment for an illicit drug or alcohol abuse problem (9.6 percent of the persons aged 12 or older). The average cost of inpatient rehabilitation in the United States is around $7,000 per month.
At my last job, we had a lot of employees who were recovering from addictions. The company used them as telemarketers because they lasted much longer than regular employees. The reason they lasted longer, was because they were captive. Keeping a job was often a condition of parole and if they quit, they could be locked up. Very few companies would hire them with their records, so they didn’t have the option to quit, like I did.
These were mostly good people who made the mistake of trying drugs and it cost them dearly. Not only are some drugs more addictive than others, some people are more prone to addiction than others. So, experimenting with drugs or trying something at a party for some people can turn into a lifelong nightmare of poverty, legal hassles and health problems.
5. Teenage Pregnancy
According to the Centers for Disease Control (CDC), birth rates for mothers aged 15-19 years in 2007, were 42.5 per 1,000 women (4.25%) in this group. The Hispanic and non-Hispanic black teen pregnancy rates are three times higher than the non-Hispanic white teen pregnancy rate.
Teenage pregnancy is a poverty trap for young people. Girls now have an expensive new mouth to feed and child-care costs. Their shot at college and a high paying career will become extremely difficult. This is especially devastating to the minority population, who are often themselves from single-parent homes.
Males who father a child may lose up to a third of their paycheck for the next 18 years. Plus, they may be responsible for providing health insurance and other expenses. It’s no longer easy for men to avoid the costs of a pregnancy. Stricter child support laws and garnishments make it easy for the state to recover these costs. And, this leaves very little for the father to live on.
The Bottom Line
The bottom line is that a simple mistake or misfortune could change your finances dramatically. Failure to avoid the common pitfalls of life can cause you to become a poverty statistic.
“Did you ever observe to whom the accidents happen? Chance favors only the prepared mind.”
Louis Pasteur – French Microbiologist
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