Monthly Archives: May 2016


download-20Minimalism isn’t deprivation, but sometimes temporarily depriving yourself creates a path toward financial freedom. That was certainly true for me: I had six figures in debt—nearly half-a-million dollars if you include my mortgage—but today I’m debt-free. Of course, it took diligent budgeting to get there:

Cut cable TV, wrote more.
Drove less, walked more.
Cut credit cards, spent cash.
Stopped eating out, cooked meals at home.
Silenced satellite radio, meditated more.
Canceled gym membership, exercised at parks.
Lived without home Internet, used public Wi-Fi.
Sold large home, rented a smaller apartment.
Canceled magazine subscriptions, borrowed from library.
Ceased upgrading, found a détente with “outdated” tech.
Refrained from purchases, better utilized possessions.
Separated needs from wants, developed a comprehensive plan.

You see, I didn’t simply go without—I replaced expenses with alternatives, which made my momentary forfeiture feel less like a sacrifice. Interestingly, once I becamedebt-free, I was able to bring some of these indulgences back into my life, doing so deliberately, discovering which ones I could afford, which ones would add value to my life, and letting go of the rest.

The Debt Snowball

When it comes to paying off debt, there are two popular strategies that are typically encouraged:

The Debt Avalanche method or the Debt Snowball method

Both of these winter-themed strategies are effective for getting you to debt-free, but each has pros and cons.

The Debt Avalanche method

The Debt Avalanche method consists of paying off your debt with the highest interest rate first. Once it’s paid off in full, you then focus on the next highest interest rate debt, and so on, until you pay off your lowest interest rate debt last. Because you get rid of your highest interest debts first, the Debt Avalanche method saves you the most money overall. For this reason, it is mathematically the best solution to paying off your debts. Using the Debt Avalanche method, you will likely focus on paying off things like credit cards and lines of credit before you tackle traditional low-interest debts like student loans.

The Debt Snowball method

The Debt Snowball method has you paying off your smallest debt balance first, regardless of the interest rate. Once the smallest debt is paid off, you then roll the payment into the next largest debt and so on, until you pay off your largest debt balance last. By tackling your smallest debts first, you rapidly feel a sense of accomplishment whenever you pay off a balance. This gives you momentum to tackle the rest of your debt. For this reason, it is often psychologically or emotionally the best solution to pay off your debts, even if it does end up costing you more money in the long run.

What about the emotional weight of debt?

What many people tend to neglect about debt is the weight behind the balances and interest rates. Some debt simply feels emotionally or psychologically painful to carry around. This could be money we owe a friend or family member, or debt from silly mistakes like unpaid parking tickets. Whether these are small balances or 0% loans doesn’t make them any easier to ignore. Sometimes it makes sense to get rid of your emotionally heavy debts even if they are not your highest balances or highest interest rate loans.

How to Pay Off Your Debt

When it comes to deciding between the Debt Avalanche and the Debt Snowball (or any other debt repayment strategy) the first thing you have to do is make a list of all your debts, their interest rates, balances, and minimum payments.

Boost Your Organic Motivation

My biggest weakness is being unable to generate enoughorganic motivation to keep on hustling. I used to get up by 5am every weekday to work for 2-3 hours before work. Then I’d get home by 8pm and work another 1-2 hours on my side hustles. There was this massive internal drive to go all out to one day break free.

Now that I don’t have a day job, I get up around 6am and then zone out on my phone for 30 minutes before checking the refrigerator several times to see if there’s anything good to eat!

No wonder why my weight continues to creep higher. I’m just not trying hard enough. I admit it. Reaching financial independence has made me less productive by at least two hours a day. What a shame to no longer reach maximum potential.

Then one day I realized I had been sitting on two, $2,100 rent checks from my Pacific Heights tenants for one week. They’ve been great so far in terms of paying promptly. The only reason why I remembered carrying these checks is because I told my tenants to just take the cost of fixing the leaky kitchen faucet off their rent.

They reminded me they had already sent their rent checks, and given rent wouldn’t be due for another 3.5 weeks, they’d rather just get reimbursed directly. Oh yeah, that’s right.

The main reason why I forgot to deposit the $4,200 for a week is because I paid off the mortgage in 2015. After 13 years, the bank is no longer helping me stay financially disciplined. 

Quarter Life Crisis

There’s so much history with this Pacific Heights rental property because I bought it when I just turned 26 in 2003. At the time, I was also losing my organic motivation after saving up around $200,000 and making $150,000 in a fortuitous internet stock four years after college. I knew I was lucky, but I was also tired of working 70+ hours a week.

9/11 was fresh on my mind and I was constantly wondering what was the point of working so long to make more money. I was incredibly tempted to just leave San Francisco and move to this beautiful 6.2-acre property my grandparents owned nestled in the Waianae mountain range in Oahu. Due to their advanced ages, they were no longer actively tending to the dozens of mango trees, pomelo trees, avocado trees, and orange trees they had planted decades ago. What a shame to see their hard work fade.

As I contemplate this quarter life crisis now as a middle-aged person, I realize how dangerous it is to grow up in a household with some wealth. As grade school teachers, my grandparents weren’t rich by any means. But they did buy this amazing property for $50,000 in the 1960s. If there wasn’t this property, I wouldn’t have even considered leaving work in my mid-20s due to a lack of options.

Taking on a $464,000 mortgage at 26 super charged my organic motivation. I changed from wanting to kick back in Hawaii to wanting to get into the office by 6am and outwork everybody every day. The last thing I wanted was to get laid off with such a large amount of debt. Debt saved me from short-circuiting my career by eight years.

If I moved to Hawaii at 26, I might be an incredible surfer by now. But I would have always wondered how far I could have gone in my career had I stayed. Now I have no regrets because I tried my best to get to Managing Director and failed.

Financial Stud Overnight

Years ago, there was a friend of a friend in my social circle who didn’t do too well with the ladies. I forget his name, but he was a good guy. He just didn’t have any animal magnetism. He was an average-looking man with an average-paying job who possessed average social skills. If I had to choose one word to sum him up, it would be boring.

But then something remarkable happened. I merrily walked into my default bar one night and came upon Mr. Boring with a shockingly beautiful girl at his side. And she wasn’t his coworker or his sister, she was his new girlfriend!

I remember thinking two things. First, WTF! Her with him? My second thought, though, was happiness. Like I said, Mr. Boring was a good guy. And it was nice to see that at least one Playmate-quality woman would rather have a mate with character and good sense than a mate with chiseled abs and a hot car. It gave all of us non-studs some hope.

But here’s the really interesting part of this story. Guys started to treat Mr. Boring differently. He wasn’t just there anymore. His thoughts and opinions mattered. Guys suddenly wanted to hang out with him. It was freakin’ amazing. One hot girlfriend had erased years of social mediocrity. Mr. Boring had become an Alpha-male overnight.

What Is a Financial Stud?

Don’t ask me why, but for some reason I’ve been thinking about Mr. Boring in a financial sense. Is it possible for someone, without the benefit of Powerball or a lucrative inheritance, to go from financial dud to financial stud overnight?

I think it is. But before I explain why, I first have to define what I mean by financial stud.

Given that a shockingly small number of Americans can come up with $400 without borrowing, the cynic in me says a financial stud is someone who has four hundred dollars in cash lying around. But that benchmark is ridiculously low. No one who lives with mommy and daddy and has saved half the median weekly earnings of a US worker can be considered a financial stud. Our definition has to be a little more formidable than that. For our purposes here, then, the working definition of a financial stud will be as follows.

  • Someone who is debt free (save his or her house).
  • Someone who has a six-month emergency fund.
  • Someone who is at least half Mustachean; that is, someone who has saved at least twelve and half times his or her annual expenses.

Okay, I got to cover one more thing before I explain how to become a financial stud. What’s my definition of overnight? Well, for starters, it has to be a realistic time frame. It can’t be a month or a year. But it has to be something challenging. After all, studs to do things mere mortals can’t. Hitting the above benchmarks over a sixty-year time frame isn’t that studly. But doing it in ten years or less is.

So there’s my arbitrary definition of overnight in a financial sense. Achieve the above benchmarks in ten years or less and you’re an “overnight” financial stud.

How to become a Overnight Financial Stud in Two Easy Steps

There are basically two steps to becoming an overnight financial stud: Get out of debt and save half your income for ten years. That’s it. I wish I had a more profound secret to share, but I don’t.

The math behind these two steps is pretty straight forward. According to Mr. Money Mustache, if you’re saving 50% of your income, you will have 12.5 times your annual living expenses saved in 8.5 years. If you continued to save 50% of your income for another year and a half, you would have an eighteen-month emergency fund. So overnight financial studism is doable. But you must avoid debt like the plague, and you must be super-good at saving.

Here, then, are some no-nonsense ways of avoiding debt and creating a prodigious gap between your income and your spending.

How to avoid for the debt

What would you rather have? No debt or a better credit score?

If you’re the folks at TD Bank, apparently you take the score.

Their PR department just shot me a pretty lame press release, and after asking if I was going to share it with my audience twice within 24 hours (impatient, much?) , I decided to give them what they want.

Though it probably won’t be what they were hoping for 😉

Here’s what they sent below, along with my gut reactions… Am I alone here??


Millennials, the largest generation, show a significant aversion to credit, perhaps because they’ve lived through the financial crisis and battled student loan debt. In fact, a recent study from TD Bank found that almost half (44%) of Millennials aren’t using credit at all. Those who don’t use credit are missing out on the opportunity to reap rewards and establish the credit scores they’ll need for big purchases down the road – like a house or a car.

Soo… risk debt for better credit?? So you can – wait for it – take on more debt??

TD Bank’s recent survey set out to find out why Millennials are credit averse, and uncovered the following:

  • Millennials Are Missing Out on Easy Cash:

Only one-fifth (19%) of Millennials say the biggest benefit of using credit is it allows them to earn rewards, meaning the other 81% may not realize how valuable earning cash back rewards for the purchases they make most often can be.

Or meaning they actually hate debt! Which your study clearly shows!

Only 17% of respondents make big ticket purchases with a credit card, missing out on the opportunity to earn even more cash back rewards when making large purchases like airline tickets, hotel reservations and electronics or large appliances, to name a few.

You know what else this shows?? That millennials are paying *cash* for big ticket purchases instead of credit. And what would you rather have – a few dollars cash back or 0% chance of going into debt? Good for them for having the funds to pick up this stuff!

  • Millennials Aren’t Establishing the Credit They Need for the Future:

Only 28% of Millennials say building credit is important so they appear trustworthy to mortgage lenders, meaning almost three-quarters aren’t considering the importance of establishing credit now.

This part I’ll agree on. While credit isn’t the end-all be-all, it’s definitely an important factor. And something that took me way too many years to catch onto, sadly.

Fewer (just 18%) say building credit is important so they can make large purchases in the future.

Awesome if they’re still planning on using cash (imagine buying a house or car in full??), but yeah – not so much if they are eventually looking to finance something.

  • Millennials Are Worried About Incurring Debt:

When asked what is the biggest benefit of using cash, most Millennials said using cash ensures they spend within their means and one-fifth say they worry using a credit card will make them incur debt. However, strategically using credit for regular purchases can help Millennials keep track of their overall budget.

COME ON!!!! If people are worried about going into debt AND spending within their means, then leave them alone already! They’re being smarter than most other adults out there! Who cares about the rewards if you’re just going to dig yourself into a hole in the end and pay more for the privilege of it.

The “better for budgeting” play only works for those who already trust themselves around plastic too, btw – not those who don’t. This is pretty much the worst pitch I’ve seen trying to get someone to sign up to their products, ugh…

Only 8% of Millennials say a high initial credit limit is important to them when applying for a credit card, indicating they are cautious about spending within their means.

YES! And this is bad, because?? We should all be cautious about our spending as financial security trumps credit all day, every day. And none of this, btw, means that you can’t have decent credit just because you don’t use credit cards. There are plenty of other ways to build up credit history, even if they take a little more effort.


Maybe I’m reading too much into this, but damn… This fires me up! And I’m a lover of credit cards too! I use them for all the great reasons most of you do too – convenience, cash-back, miles, and yes – even budgeting. No one’s going to deny the benefits they bring.

But you can’t discount the enormity of what debt can do to a person either – especially those who have clearly stated how nervous they make ’em (and rightfully so!). Pitch your cards to those of us already comfortable and looking for better cards, and not to those doing their best to stay out of trouble.

Good for every last one of you who have rejected the idea that you “need” a card to make it in this world. If anything good came out of all this, it was to see just how many of you are bucking the trend and doing  your own thing! 44% is freakin’ fantastic – stay strong!