Monthly Archives: July 2016

How Greatfull if you are free for debt

download-19Compared to some of my friends, my student loans are minuscule but nonetheless, it’s debt. And in the Personal Finance world, debt is as bad of a four-letter word as most cuss words.

Like most of us in this realm, getting rid of these debts was a main focus of mine for such a long time. It was an unhealthy obsession. I used to know exactly how much more we had left to pay. I used to know exactly how much we’ve paid in interest and I used to know that if we’d pay a little extra, exactly how much quicker we could become loan-free.

Those things were pointless.

Knowing those things isn’t fun. It isn’t going to help us get out of debt any quicker if I just knew the numbers but didn’t do anything about them. I know it was annoying to my wife because I wasn’t looking at the big picture.

It wasn’t helping anything.

All what it did was make me feel helplessly stuck and make me think that it wouldn’t be possible to enjoy life as long as we had these debts.

That’s complete and utter nonsense.

So I got to thinking recently and asked myself a couple of questions:

  • Would I be any happier if I was debt-free?
  • Would our quality of life improve?
  • What would my wife and I even do with the money that we save?

So would I be any happier if I was debt-free? That’s a difficult question because happiness is a complex concept. I used to be very money driven. I chased promotions that I didn’t even want and I stayed in an industry that I hated for way too long because “that’s where the money was at.” Literally.

My wife hit the nail on it’s head when I was thinking about being a life insurance salesman when she said that “all that I see is the money and not what I’d have to do get it.” It was true.

I don’t think that debt was my problem. My job was.

I had this mindset that these debts were forcing me to stay at my job…that if I finally got rid of these debts once and for all, that I could finally leave my job. That’s probably why I was so obsessed with our debts in the first place.

I hated our brand new cars. I hated that I got into student loan debt to get a degree that I didn’t even want anymore.

I was full of hate and it was easy to place the blame on our debts and that’s what caused this obsession.

If you asked me if I’d be happier if I was debt-free about a year ago, I would, without hesitation, say most definitely, yes.

But if you ask me that same question today, I’m not so sure because that’s not what I’m so focused on these days.

At this point, it is what it is when it comes to our debts. They’re something that we’ve dealt with for a couple of years now so it’s just something that we go through each month. We made the decision to get new cars and get a loan for them so we’re dealing with it. They aren’t making or breaking us but it would certainly be nice to have at least one car paid off but we have other things that we need to figure out first.

I’m happier than I was a year ago with all the other major aspects of my life that these debts have taken a backseat to the more important things; mainly just enjoying life and being content with all that I have.

I didn’t want to change jobs because I didn’t want to make less money.

I didn’t want to get a dog because all I could see was the dollar signs.

I didn’t want to go on vacation because it would cost money.

Screw that.

What’s the point of working so hard if you can’t even enjoy it?

Back to the original question at hand….would I be happier if I was debt-free?

Yes. I would be a little happier but not as happy as I already am from no longer obsessing over debt.

Onto Question #2:

Would our quality of life improve if we were debt-free?

To a certain extent, yes. But I don’t think it would be such a drastic change. We’d still live in the same place, drive the same cars, work at the same job, and live the same lifestyle.

The only difference is that we’d be saving more.

Maybe we wouldn’t feel as guilty treating ourselves to eating out after a crazy day at work? Maybe I wouldn’t feel as bad spending so much money to go on vacation to Germany to see family so we’d go more often? Maybe life could be more spontaneous since we’d have a little more wiggle room when it came to disposable income? Maybe we’d buy a vacation home?

Who knows.

But if you aren’t having fun while you’re in debt, you probably won’t have much fun once you’re out of debt too. You’ll probably splurge on things you don’t really need because you “deserve” them for working so hard and depriving yourself for so long, that you’ll get right back into debt.

Last question: What would we even do with the money that we save?

Most likely, we’d save it.

Debt change

When you’re suffering financially, struggling to make payments, or trying to break free from the debt you’ve accumulated over the years – you get lonely.

Debt can take a significant toll on us. It can completely change the way we view so many important things in our lives: relationships, careers, mental health, and beyond. These everyday things that used to feel so easy can become something completely different.

They can become fears and stressors.

“I can’t tell my partner I’m in debt or they’ll leave me”
“I can’t afford to pay for my child’s sports camp this year and it breaks my heart”
“I don’t remember the last night I’ve slept a full 8 hours”

It’s harsh. But it’s a feeling far too familiar to most of us. We’ve all been there.

So why do we feel so alone?

As much as I’ve felt money is a common conversation topic among my friends, family, and I – I’ve found that it’s only a common topic because I bring it up often. I encourage people to let me know their feelings and be honest in whether they can afford an outing. I feel guilty if I’m putting anyone into financial distress because that used to be me.

But it’s not a common topic of conversation among the majority. In fact, it’s not even a rare conversation. It’s more like a never kind of conversation.

Families can avoid talking about money together for their entire lives. They can assume it’s all going okay, or they can see that it’s falling apart. There is no in between. We never know the buildup, or how to help one another stop the path of destruction before it’s started. We just exist in our personal financial bubbles. Hoping that we get through it.

“More than 4 in 10 Americans with credit card debt (43%) say they would feel judged if their family members and friends knew how much credit card debt they owed.” – Time.com/Money

I think it’s time we change that. But how?


Talk money 24-7

I don’t mean that you need to boast about how much you make, the exact numbers in your monthly budget, or how much you put into retirement funds this year. I simply mean that we should talk more about money in general. Talking about pretty much anything can help put things in perspective, make others feel more comfortable in voicing their concerns, and provide the simplest way to avoid debt in the first place – education.

Create a safe zone

For me personally, my blog is a safe place for me to voice all of my financial concerns, and show others that we are all facing the same or similar issues. By creating a safe place – whether it’s a community meetup, or around your best friend’s table – you can provide a stress free moment in time for those facing financial insecurity.

Share your story

The reason I share my story of paying off debt so often is not to brag about how amazing I am for paying off debt (seriously not that arrogant you guys). It’s simply to encourage others to take the same steps. To fight back against the one thing that keeps us up at night. I hated the feeling of having no one to talk to because I was embarrassed. I turned to the online personal finance community and never looked back. And we can all do the same for our friends.

Find an accountability buddy

Much like it can be hard to go to the gym every single day, it can be hard to stay committed to debt repayment. By finding an accountability buddy to check in with you bi-weekly or monthly, you have a better chance of success. We need someone to rely on us, the way we once relied on our credit cards.

Let’s stop the vicious cycle that leaves those in debt feeling alone and unable to make the leaps we know they will. I’m here as an accountability buddy, a safe zone, and a place to share your story.

Control of My Finances

Imagine riding in the backseat of a car, cruising down the freeway.

Suddenly, you notice the driver is unconscious. The car is drifting off the road and heading for the ditch. From where you’re sitting, how much can you really do to save your life?

In all honesty– not much.

Granted, you can scream and brace yourself for the crash. But the reality is, your options offer little hope for getting out alive.

If you’re lucky (and that’s a big IF), you might come out with minor cuts and bruises, but most likely, the end result will be catastrophic.

You want to know a secret?

This is the financial state of most people.

Many of us have taken the backseat in our financial journey and have placed money (the unconscious driver) in control, to manage itself. Can you really get to your desired destination with this approach?

I don’t believe so. This might be why financial experts preach CONTROL.

With that being said, if you want to transform your financial condition and reach your target, YOU are going to have to guide it. You’ll have to start managing your money.

Are you in control of your finances? 

SIGNS YOU MIGHT NOT BE IN CONTROL OF YOUR FINANCES

A recent study done by Prosper Market Place, operators of a leading online marketplace that connects borrowers and investors, shows that 60% of Americans do not have the needed financial freedom to enjoy life.

Only 29% feel confident about being in control of their finances. But the most alarming finding, to me, is that, “a full 22% do not even think about their long term stability.”

I’m still trying to figure that one out. You can read all of their findings here.

The point is….

Some of us are struggling to take control of our finances. If you are wondering whether or not you’re in this group, just take a look at your transactions.

Still can’t decide, or need more convincing? Here are a few definite signs that you might not be in control of your money:

  • You have a habit of buying things even when you don’t have the money.
  • You’re opening more credit lines to have enough to spend.
  • You regularly come short in paying your bills and you have to push back the due date.
  • You’re using credit cards to pay other credit cards.

The list goes on.

If you’re exhibiting any of these in your spending, chances are you’re not in control of your finances. But here is the good news…

You can take back control. If I can do it, so can you. Check out how I did it.

THE BATTLE FOR CONTROL OVER MY FINANCES

Just six years ago, I was cruising down a destructive financial journey of my own. The condition of my personal finances displayed clearly in my transactions.

I was careless. I was uncommitted. I was inconsistent with my financial obligations. Notorious for exhausting and abusing the grace period, I would regularly wait until the last minute to pay my bills.

And some months, I wouldn’t1 even bother.

The friendly reminder from creditors would come and go with no action on my part. I would opt to pay the late fee instead. Somehow, I convinced myself it was easier that way. (Foolish, huh? Tell me about it.)

Tops About Money Ideas

My “awesome ideas” folder is piling up over here,  so I thought I’d release some of them on you today to help turbocharge your goals 😉 All these come from emails and comments that YOU ALL have sent over the months, so big thanks for dumping out your smarts on us! It all helps!

See if any of these ideas stick with you:

#1. The financial notebook

This one comes from Sarah who shared it on Millionaire Day this year:

“I started keeping a financial “notebook.” I write in it every time I do something that moves me closer to the FI mark. (Ok,  so I am rather liberal with what counts… reviewing the kids’ 529s counts, as much as paying an extra $100 to the debt monster.) Flipping through it helps keeps me motivated in the dry spells and reminds me when it’s time to review some bill or policy!”

So pretty much, a financial diary. Which is much more juicier than a normal one, if you ask me!

#2. An awesome way to charge your kids rent 😉

From Paul:

“I am going to provide my kids a (mostly) judgement free place to live when they are done schooling. My only Caveat is I will charge them rent, and that rent will be in the form of proof that they are maxing their 401(k) and IRA, and investing 50% of their net pay. As long as they do that they can live here ’till they get married.”

Another great benefit: they’ll be able to move out faster with all that money saved! 😉

#3. Chart your net worth progress against your goals!

LOVE LOVE LOVE this from Bill Furst:

“I wanted to pass along a neat little tracker I put together that I use monthly (now, and previously just yearly) with my own net worth updates.  It basically tells me that I am on track for my retirement goal ($$ and time) with a visual chart.  The larger the green section, the more ahead I am.  You just input in the grey boxes and the yellow parts calculate for you.

I filled this in with your stats dating all the way back from 2008… I did yearly from 2008-2015, and then monthly from 2016 on. Line 8 is your historical net worth amounts. I don’t know what your time line is for your cool $1M, but if it’s 2020, you’re ahead of the game.”

So smart, right? Looks like the first year and a half I was falling short of my goal of “a million,” but from there we took off and are set to hit it earlier than expected. I really like this because it gives you a super fast idea of how well you’re doing or not in relation to your OWN goals and not anyone else’s. And it’ll now be yet another addition to my sturdy spreadsheet I’ve been tweaking over the years – woo!

I’ll have to make a template of it one day for y’all, but for now here’s the spreadsheet Bill created above for any of you who’d like to copy/test it out yourself: Net Worth Comparison Chart

Thanks Bill! (And your wife is right – you totally need to share your thoughts online somewhere! Start a blog already so we can check out all your other ideas you’ve got brewing :))

#4. “How much freedom will this cost me?”

Great way to think about all your purchases, by Free-Range-Nation.com:

“I ask my clients to think carefully about every purchase, and ask themselves how much freedom do they have to give up to work for someone else for this item? 15 mins … ? One hour… ? One day… ? One week… ? One month… ? One year… ? And then, is it worth it? If it brings tremendous value or return on investment, go for it. If not, sit on it awhile. Then, when they decide not to make the purchase, I suggest putting that amount into their Freedom Fund, or FU fund, as many like to call it. How about the Middle Finger Fund to keep the fun there and the profanity out. 🙂

#5. Pay enough extra towards your mortgages to see a $1.00 decrease every month

Another interesting idea by Richard, in response to staying motivated paying off your debt:

“One of the things that made it simpler for me is focusing on a small detail. I call it my magic number: $310. That is the number (rounded up to next $1) at which the extra principle payment reduces my monthly interest by one dollar. It is great to know that by paying that extra amount, all my future payments will include $1 more principle, and $1 less interest. It’s a benefit I can see on paper. I can also see the compounded effects of making those extra payments over the years. It soothes the number crunching addiction I have.”

I used to love seeing the interest portion of the payments going down by a dollar too. I never calculated “my number” to make sure that happened every month, but I did round up to the nearest hundredthevery month – for both our mortgages – which sped up the debt killing immensely.