My First Deal
I did my first financial deal while attending Purdue University. It was at the beginning of my Junior year, 1980. My roommate received a grant. The state gave him money to pay his college tuition, fees, and living expenses for the semester.
Larry received his grant a week before the semester started. After paying his tuition, he had $1,100 remaining that had to last till the end of December. The arrangement caused him concern. It was more money than he had ever had under his control. Larry was unsure he’d have the discipline to avoid spending it partying. I suggested a solution.
Why not give me the money? I'd pay him back in monthly increments for the rest of the semester.
Larry trusted me but wanted to know why I wanted to do this. I told him I wasn’t worried about my discipline with the money. In fact, I was going to spend it immediately on two things: A receiver and amplifier, and tower speakers.
My drugstore job paid me $900/month. Larry’s cash would fund the amp and speaker system buy. I would pay Larry part of my monthly paycheck for the rest of the semester. This sounded like a win-win deal to me.
Larry liked the idea.
In effect, Larry’s $1,100 was an interest-free loan to me. I used the $1,100 to buy the equipment and paid him $367/month during the fall semester. Larry got a monthly allowance that provided discipline. I got the money to spend on a stereo. We both enjoyed listening to music. That's capitalism.